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The Boston Globe Money Makeover: Falling interest rates have taken a toll on retired couple’s nest egg profiles Claudette (71) and Manny (83) Wise of Danvers, MA. The couple receives $20,000 per year from Social Security and needs to supplement that with $30,000 a year from their retirement portfolio.

But the Danvers couple agreed on one thing: Falling interest rates have taken a toll on their retirement income. With money market yields now averaging less than 1 percent and five-year certificates of deposit below 3 percent, their portfolio was throwing off far less income than it used to. “Our Ginnie Mae checks have been going down, down, down every month,’’ Claudette said, noting that their combined Ginnie Mae monthly payout dropped from $1,415 in January 2009 to just $933. “It is getting a little bit tight.’’

Concerned they would soon have to start tapping their principal, Claudette applied for a Boston Globe Money Makeover. Her goal: To make sure that they wouldn’t outlive their money. Manny agreed to go along with the makeover, but made it clear he really didn’t want anyone messing with his Ginnie Maes.

When the two sat down with fee-only financial planner Barbara Nevils of Lynnfield, they found that they were in the enviable position of having lots of options. The couple’s financial needs are relatively modest – just $30,000 a year from their investments to supplement the $20,000 a year provided by Social Security. “If you want $30,000 a year for 30 years, that’s $900,000,’’ said Nevils. “You’ve got that.’’ But not much more.

They are fortunate to have such a healthy balance in their retirement accounts and have kept their living expenses low. While I can understand the fear of out-living their money – I could not quite understand their concern about tapping principal. Are they hoping to leave a legacy behind? The article does not mention children or charity ambitions – so hard to tell.

I just hope I am in as good a shape financially as they appear to be when I am that age!

Labels: Money Stories

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