TAKING STOCK: If you'll be dead in a decade, don't go broke on your way out

Dear Mr. Berko: I know you've heard this sob story before, but we need your help, and I have to get this off my chest. I've worked for 52 years and never missed a day. I've been married for 58 years, and we raised two boys. We have $172,000 in 5 percent CDs and own a home, and the taxes plus insurance costs are killing us. I was wounded in Korea, came home in 1953, got married and got a job as a bookkeeper at a trucking company that merged with another trucker in 1985. My job was cancelled after 32 years. I walked out with a $32,000 severance package, which we used to pay off our home. I was then hired "off the books" with the same trucker, which then went bankrupt in 2003 after I had spent 18 more years on the job. We lost $30,000 investing in a mortgage bond in 2008, and I had to go to work part-time at a chain store, where I made $125 a week. I figured we were OK, though; we were getting $1,200 in Social Security, $700 a month from our $172,000 in CDs and $550 a month with my part-time job. Then two disasters hit us. My back went out. I had to quit my job because I couldn't stay on my feet for three hours a day, and the insurance company (should have stayed with Medicare) wouldn't approve surgery for my back. Then our CDs began coming due, so we lost our interest income of $700 a month. We still have $49,000 at 5 percent that comes due in February, but the other $123,000 earns 1.05 percent. We are hurting badly. Our two sons either can't or won't help us. Now my wife of 58 years and I are worried because everything seems so up-in-the-air and difficult. Some of our church friends seem to be in the same situation. My wife and I would like to join those Occupy Wall Street people because they express exactly how we and our friends feel, but at 77, we don't have the energy. It's so hard to believe that after getting shrapnel wounds in Korea, working for 58 years, raising two boys and saving $202,000 that I would be in such a tight money bind. We need your help. We've been reading your column for 30 years, we trust you and we hope you can give us some good investing advice that'll get us the additional income we need very much. JP, Durham, N.C. Dear JP: I can't answer for your two sons, but I can answer for your government. You and your wife are caught between a rock and a hot plate for two reasons: 1) You're neither wealthy nor poor enough for the government to give a flying fox about your welfare, and 2) since you're both in your late 70s and will probably be dead in a decade, your government has no use for you. Like it or not, that's the gospel. But thank you for your long letter and for our enjoyable phone conversation. To reiterate, here are my recommendations. We spoke of a reverse annuity mortgage (RAM) that can pay you between $950 and $1,000 a month. Call one of the two banks of which we spoke or MetLife. Each will treat you fairly. Then, cancel your insurance policy of which your sons are beneficiaries, have Met send you the $31,600 cash value and join the Neptune Society. You'll now have more than $200,000 in cash, but don't put a dime into the stock market. You can't afford the risks of a market that falls 600 points on Wednesday and then shoots up 400 points on Friday. This is not a market for investors; rather, it's a market for psychopaths. Ally Bank has five-year CDs that pay nearly 2 percent. Put your entire $200,000 with Ally and withdraw 5 percent ($10,000) a year, which is 3 percent principal plus 2 percent interest. At that withdrawal rate, it'll take you about 25 years to reduce $200,000 down to zero. Now, with the $14,300 you get from Social Security plus the $11,000 you can get from a RAM and the $10,000 from your cash, you'll receive $35,000 a year. And in a year or so, when interest rates rise, consider taking an extra $1,000 to $4,000 a year from your pile of cash. Finally, get rid of your useless Medicare Advantage Plan. Call the person whose name you have at AARP who can help you with a better plan so you can get your back fixed and return to work. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2011 Creators Syndicate Inc. Published: Fri, Dec 16, 2011