Preserving capital and maximizing retirement income

November 13, 2012 

You're 60 and can't afford to retire. Or maybe you're 71 and fear outliving your savings. Stock market crashes, real estate downtowns, and recessions have affected all of us.

It hasn't always been this way. A generation of retirees came to Bradenton to live the good life in the 1980s and 1990s. Social Security benefits, savings and stable pensions enabled retirees to buy condos, for cash, in planned residential communities like Wildewood Springs, Pinebrook, or Perico Bay Club. These retirees had plenty of disposable income for golfing, cruise vacations and early-bird specials.

The classic Bradenton retirement is now tough to achieve, and even tougher to maintain. Baby-boomers are finding it difficult to obtain the comfortable retirement of their parents. Many don't have decent pensions or enough savings. To make matters worse, according to a GAO study, there's nearly a 50 percent chance that one married spouse will live to age 92.

Relying primarily on Social Security is becoming a major retirement risk. Here are some tips to explore so you, hopefully, won't have to move in with your kids:

Invest wisely and try to avoid losing principle. All the money you've saved has to last you as long as you live. Dipping into principle works against you. That dip won't compound interest or build future capital gains. Some retirees like using a part

of their retirement funds for annuities for periodic income payments.

Make extra income by working part-time. Jobs often provide seniors with financial stability, friendship and socialization, too.

Retiring early often means paying for your own costly health insurance. Keep working longer until you qualify for Medicare.

Postpone taking IRA distributions. Let your individual retirement account grow tax deferred to help keep taxes low.

Remember to take required minimum IRA distributions starting for the year you turn age 70 1/2, though.

Pay less income taxes by putting money in 401ks and IRAs. If you're still working, you can still contribute to traditional IRAs in your 60s, and there isn't an age limit for 401k contributions.

Payouts for Social Security increase each year you delay social security from 62 to 70.

Social Security benefits may increase by about 8 percent from retirement age to age 70. Many factors enter into this decision.

Pay off mortgages and car loans. Try to be debt free in your sixties. Life is less stressful if you can live within your means. One option is to use that CD you haven't had to touch.

Cut spending. Learn how to do your own yard work and home repairs. Consider becoming a one-car family if you have multiple cars.

Cook at home. Eat out less.

Economize by sell-ing that big house and moving to a smallcondo.

Also consider moving to a low cost of living state, like Arkansas, if you have to.

Draw up a realistic retirement budget. A GAO study notes that nearly 50 percent of retirees, due to living longer, may run out of money.

That's why many financial advisers suggest, if prudent, withdrawing 3 to 6 percent of savings each year at retirement.

Jim Germer, a Bradenton,CPA and financial adviser, can be reached at 941-746-5600 or by email at

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