Profile: Pamala Garoutte, 64, Tacoma. Nest egg: Social Security and disability payments, tiny pension.

Pamala Garoutte raised six children and once owned a small business, but now, in retirement, she's a dollar-stretcher. "I don't buy anything unless it's on sale, preferably really drastically on sale," she says with a laugh. Garoutte, who lives in a paid-for manufactured home in Tacoma, is careful with her $15,000-a-year retirement income.

With no mortgage or credit-card debt, she budgets carefully for a $5,000 minivan loan, medical expenses, food and utilities. In seeking a manufactured-home park she researched which was located in the lowest utility-rate area and bought there.

Garoutte, who receives disability payments from Social Security in connection with back problems, is most worried about rising medical and drug bills. She uses discounts available to low-income retirees to help with prescription costs. A recent drugstore order totaled $182 until she handed over a discount card that brought the bill to $16. "It makes you wonder how you'd pay it otherwise."

Her husband, Jack, died in 2003 after a long illness, including a heart transplant and dialysis treatments. Her share of his pension from Texaco is just under $300 a month; Social Security and disability payments bring her monthly income to about $1,250.

His life insurance and a small inheritance from her mother provided a nest egg of $102,000, which Garoutte is reluctant to spend. "I want to hold on to it as long as I can. I am trying to live on my income for now. Women in my family live into their late 80s."

She has divided her savings into mutual funds and stocks as well as money-market funds. She owns shares of Costco and Starbucks as well as some medical-device companies she learned about during her husband's illness. "I like companies I am familiar with." With two years of investing under her belt, her market strategy is to buy and hold, reinvesting dividends for growth.

Take-away tip: Garoutte's willingness to buy and hold stocks with part of her nest egg is a good plan to combat inflation since she is an early retiree. In the 20-30 years you have to live in retirement, planners say, you want to live a little, so don't tie up all your funds in fixed-income investments. Says Roger Scott, Kirkland certified financial planner and enrolled agent, "Why be stingy with yourself?"