As bankruptcy hearings continue in Detroit to determine the financial fate of the city, some retirees could face a significant haircut to their pension funds.

The city, which filed for a historic Chapter 9 bankruptcy protection in July, has an estimated $9.5 billion in pension and health-care liabilities for retired city workers.  FOXNews.com reports the city has bid 16 cents on the dollar for these workers’ retirement funds in order to shore up its balance sheet.

Nearly two weeks ago, the city announced major health-care changes for retired public workers under age 65. These former city workers will no longer receive full health coverage from the state, and will instead receive a $125 monthly to shop in Michigan’s health-care exchange under the newly- implemented Affordable Care Act website, Healthcare.gov.

The situation unfolding in Detroit should serve as a wake-up call for those relying on pensions in order to retire comfortably, says Eric Thorne, senior vice president of Bryn Mawr Trust. Pensions, once common among workers and considered guaranteed income in retirement, have become obsolete over the last decade because of the financial burden they often place on  employers.

“You have to think about what you can do if you can’t rely on pensions,” he says. “Social Security isn’t a big amount, and it’s causing a lot of people to reassess their retirement.”

For people counting on pension funds that might not be as plentiful as expected, Thorne offers the following tips to help make ends meet:

No. 1: Avoid intermediate bond funds. Although these investments are traditionally safe, Thorne says they are susceptible to losing money if interest rates go up.

“These have been safe because interest rates have gone down,” he says. “But if interest rates go up, they will lose their value. That would be terrible on top of having your pension impacted.”

Thorne also says to keep some stock exposure. “Many people think that because they are getting older they should avoid the stock market,” he says. “Stocks have been the only asset over long periods of time to keep up with inflation.”

No. 2: Do a personal budget. Six months to one year ahead of your retirement, Thorne recommends evaluating your spending and creating an honest budget.

“See where your money is going—it can be really surprising to people,” he says. “You should work hard to reduce your expenses. Especially if you don’t have the right income coming in.It’s not fun to think about, but these things can really add up.”

No. 3: Consider part-time work. If you will have a reduced pension, or need to supplement your Social Security benefits, Thorne says to consider a part-time job,

“Retirement means different things to different people, but taking control of your own income stream and maybe supplementing it is something they may have to do,” he says.

Follow Kate Rogers on Twitter at @KateRogersNews