Claudette and Manny Wise couldn’t be more different in their views about money.
Claudette, 71, likes to follow the markets, having initially learned about investing by watching her father carefully track his stocks and bonds. Manny, 83, and a former band leader and drummer, takes a simpler approach. He’s invested his money in mutual funds that specialize in buying Ginnie Maes - pools of mortgages guaranteed by the Government National Mortgage Association. That investment produces a monthly check Manny puts right in the bank.
“I like getting that check every month,’’ he said.
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.
Given uncertainty about interest rates, volatility of the financial markets, and inflation, Nevils said some careful restructuring would not only secure the couple’s income stream, but also provide for reasonable long-term growth.
What …
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