Dan Celia

Financial Issues

December 2017 – Q: We live on Social Security and a small pension. We do have money in CDs and we would like to earn some income to supplement what we have. What advice can you give us?

A: In retirement, earning investment income can be a balance. Retirees have to be conscious of preserving their principal, yet they can be so conservative that little if any income is earned.

One thing worth considering is putting a portion of their retirement money into a charitable gift annuity to generate permanent income. At the same time, some money must produce income.

But it is also important to understand that the value of the investment account could go down during any bad times in the markets. But this should be of no concern as long as the income continues to flow.

So, here’s the balance: in order to generate more income you cannot expect to totally preserve your principal. Taking a too conservative approach will not result in earning income.

In short, you can’t have your cake and eat it too … we only wish.

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Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).

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