If you don't lift it's around 30% of lean that gets lost. Try cranking up the protein and lifting heavy twice a week.

Don't do squats if you don't know what you're doing.

What you describe is typical of calorie-restricted, "balanced" diets. It's caused by a lack of protein.

When losing weight, the two most important things to do to maintain LBM is to 1) eat enough protein and 2) maintain muscle mass through strength training.

1) Consume 1 gram of protein per LBM goal. If you want 130 pounds of LBM, consume 130 grams of protein per day.

2) Your body is smarter than you. If you tell it to lose weight, it will lose weight; BUT, you are reducing your caloric intake. Your body takes this as a signal to reduce caloric maintenance. Muscle has a high metabolic cost. So your body will lose muscle mass UNLESS you give your body a compelling reason to keep it. Strength training 2-3 days per week will maintain your muscle mass. You measure this by establishing bench marks in your major lifts (Squat, Deadlift, Bench, OHP, BB Row) and maintaining through out the weight loss period.