Retirement Income

We spend years (we hope) saving for retirement and years (again, we hope) managing the nest egg while in retirement. But what about that pivotal year when we hang it up? Miss a deadline or miscalculate a 401(k) payout and you could be in real trouble. So here's a guide to getting the proverbial ducks in a row in that final 12 months leading up to quitting time: Make sure you can do this. Many workers start dreaming about quitting long before their bank accounts would justify doing so. "They get it in their head that they're going to retire by a certain age, and it's hard to shake," said Patricia Wiley, a New York-based principal with Ernst & Young who co-wrote the firm's retirement planning guide.

T. ROWE PRICE Associates Inc. has launched a service for investors who are about to retire that some people believe could reshape the face of the company.Price's new program uses sophisticated computer modeling as well as the firm's financial experts to help retirees determine how much money they can spend without draining their nest egg.The company has spent millions of dollars developing "Retirement Income Manager," and it believes that the service is far more precise than the competition's.

Gov. Parris N. Glendening's slim lead over Republican Ellen R. Sauerbrey has evaporated in the past six weeks and the two are locked in a virtual dead heat, a new poll shows.If the Nov. 3 general election were held today, Glendening would win 45 percent of the vote to Sauerbrey's 44.4 percent, according to the poll of likely voters conducted for The Sun and other news organizations.A similar poll in mid-July found that Glendening was leading Sauerbrey 44 percent to 38 percent among voters who had made up their minds.

Dear Mr. Gisriel:My wife and I have retired and have decided to purchase a condo. Can we use our Social Security and retirement income to qualify for a mortgage?Michael ParrBaltimoreDear Mr. Parr:Yes. A mortgage lender will need to see your Social Security award letter and proof that you are receiving this income. Ask your lender what documentation is needed for retirement income.If the Social Security and retirement income is nontaxable, your lender should calculate what the equivalent taxable gross income would be, and then use that to calculate the expense-to-income ratios that determine whether you qualify for a loan.

NEW CASTLE, Del. -- Baby Boomers are turning 50 at the rate of 10,000 a day. As they retire, 15 years from now, we'll go from 40 million seniors on Social Security to more than 80 million by 2030. But the work force paying the benefits is not growing proportionately.In 1945, 20 workers supported one beneficiary. Today, 3.1 workers support one. By 2030, less than 2 workers will be available to support one retiree, and they will be asked to accept a 60 to 70 percent lifetime tax rate. This is not possible.

NEW YORK -- Either Americans are kidding themselves or they know something about their lives that the financial experts don't.The experts say, over and over, that the boomer generation isn't saving nearly enough for its retirement. Yet two-thirds of working Americans 26 and up say they're pretty confident that they'll achieve security in old age, according to a poll by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates in Washington, D.C.Around 20 percent think they're saving more than enough, Greenwald says.

NEW YORK -- There have been many stories in the press bemoaning the baby boomers' prospects for a comfortable retirement. The bottom line is always the same: Boomers' pensions are poor, they're saving too little, they'll wind up broke, their parents' generation had all the luck.But it's far too early to make such sweeping statements, says the Employee Benefit Research Institute (EBRI) in Washington. There are legitimate reasons to worry. But in many ways, the boomer generation's retirement savings are looking unexpectedly strong.

Q: I recently decided to buy a home after renting for several years. I called several lenders and each lender asked for the same documents. I was surprised at the amount of documents needed. When I purchased my car, they ran a credit report and gave me the loan within one hour. Why does a bank need somany documents for a home purchase?J. Woody, Severna ParkA: Most mortgage lenders follow guidelines set by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp.

Buffeted early yesterday by news of the Orange County, Calif., bankruptcy and Federal Reserve chief Alan Greenspan's warning about a renewed inflation threat, the Dow Jones industrial average tumbled 28 points in the first hour, but regained part of its loss and closed down 10.43 points at $H 3,735.52. Bond prices also finished lower.DECEMBER DIARY: Speaking of stocks, Working Woman magazine says, "You're being 'taken' if your broker says, 'Trust me; it's too complicated to explain.' An adviser who can't or won't give clear explanations either doesn't understand the investment or doesn't want you to understand it for fear you'll say 'No' " . . . "42 percent of retirees say their main income is Social Security; 14 percent of non-retirees say they expect it will be their main retirement income."

A federal bankruptcy judge has ruled that former Maryland health secretary and diet guru Neil Solomon cannot shield all of his retirement income from the claims of three former patients who have sued him, alleging that he lured them into sexual relationships.U.S. Bankruptcy Court Judge E. Stephen Derby said yesterday that if Dr. Solomon refuses to draw income from his $1.5 million retirement savings or takes too little in order to minimize payments to his accusers, the court may determine a "reasonable" income that could then be tapped to pay them.

When he started at Maryland State College in 1962, Daniel M. Maddox envisioned a career working with young people, preferably in physical education. But as often happens, life got in the way and Maddox decided he needed a steady paycheck more than a college degree. So at 20, he took a job at General Motors and worked there almost 40 years. Now that he's retired at 63, Maddox has renewed his interest in helping young people by volunteering during the school year at Tench Tilghman Elementary School as a part of Experience Corps, a Civic Ventures program that places people 55 and older in urban classrooms.

A retiree recently wrote to Your Money asking for suggestions on where to invest the savings he has been generating by not spending all of his retirement income. He has $30,000 in a taxable savings account, but the bulk of his income is generated from retirement accounts. He's looking for longer-term returns, not income that he can spend right away. But he may be locked into the assumption that because he can no longer contribute to his individual retirement account, his options for investing in his taxable account should be limited to ultra-safe bank products.

Thinking about retirement? Think hard. A new study warns that about 75 percent of "near retirees" - those ages 58 to 65 - will outlive their savings unless they reduce their pre-retirement standard of living by more than one-third. For many Americans, that could mean moving to a smaller home, selling a car, not eating out as often and giving up planned vacations. The latest alert about prospects for retirement comes from a new study by the Ernst & Young accounting firm undertaken for Americans for Secure Retirement, a coalition of interest groups concerned about retirement affordability.

From 50,000 feet, your retirement doesn't look so good. Bearish financial markets, gloomy long-term projections for stocks, a sputtering economy - and that's just the big picture. Down at eye level - where you actually have some control over your finances - things aren't much better with milk and gasoline at $4 a gallon. But making the most of what you can control about your retirement finances can make a substantial impact, experts say. "Investors have at least four levers: how much they withdraw, how they allocate their portfolio, when they actually begin retirement and when they start taking Social Security," said Christine Fahlund, senior financial planner for T. Rowe Price Group.

I am 63, my wife is 61, and we both still work. Our goal is simple: We want to maximize our net retirement income. If we have too much income, our Social Security will be taxed, and our Medicare payment increased. After 70 1/2 , there are mandatory withdrawal rules for our IRAs. The IRS, Social Security and Medicare all provide calculators, but none includes all these rules. Can you recommend a calculator that includes all these rules so I can determine my actual retirement income? - B.L. Your goal may be simple, but calculating a comprehensive strategy that minimizes taxes during retirement isn't.

A retired reader in Painesville, Ohio, echoed what a lot of seniors are feeling when they read about historically low inflation but struggle nonetheless to keep up with the costs of real, daily living. "My guess is that inflation is running at between 4 and 6 percent a year on most things consumers have to buy," the reader complained, scoffing at "official" estimates around half that. This year's cost-of-living adjustment for Social Security income was 3.3 percent, which is based on the Consumer Price Index.

To generate lifetime income in retirement, my goal is to tap our savings and investments as needed without having to rely on insurance company guarantees. If it turns out my wife, Georgina, and I need those guarantees, or if insurance products such as lifetime income annuities become more attractive, we stand ready to change our plan. But, for now, we favor what financial planners call a "systematic withdrawal" strategy, one we intend to personalize rather than rely on rules of thumb.

We spend years (we hope) saving for retirement and years (again, we hope) managing the nest egg while in retirement. But what about that pivotal year when we hang it up? Miss a deadline or miscalculate a 401(k) payout and you could be in real trouble. So here's a guide to getting the proverbial ducks in a row in that final 12 months leading up to quitting time: Make sure you can do this. Many workers start dreaming about quitting long before their bank accounts would justify doing so. "They get it in their head that they're going to retire by a certain age, and it's hard to shake," said Patricia Wiley, a New York-based principal with Ernst & Young who co-wrote the firm's retirement planning guide.

Everyone needs some help from time to time. And planning for retirement or other long-term investments can be one of those moments. As a result, employers and investment companies are starting to offer free advice - in some cases, even to small-fish investors. The big question: Is the advice helpful? What to expect: I called Fidelity Investments, the mutual fund company where I have retirement funds. Fidelity allows investors to call a toll-free number to speak with a "retirement specialist," a licensed broker familiar with the fund company's services and investment principles.

I'm not going to preach, because, as I have been reminded, preaching doesn't work. I will simply lay out the facts, which are bad enough, and discuss things that we can do. The subject is a new National Retirement Risk Index, developed by the Center for Retirement Research at Boston College. The index, built on data from the most recent Federal Reserve Board's Survey of Consumer Finances, estimates the percentage of working-age American households considered at risk of being unable to maintain their pre-retirement standard of living in retirement.