I recently received an email that contained some personal finance advice from two individuals I’ve always held in high regard - Scott Burns and Laurence Kotlikoff. Burns is a syndicated personal finance columnist, chief investment strategist for AssetBuilder, and originator of the couch potato lazy portfolio. Kotlikoff is a professor of economics at Boston University and the two teamed up to write The Coming Generational Storm, a book that doesn’t paint a rosy picture about retirement in the future America. They’re teaming up again to write a new book, Spend ‘Til the End — The Revolutionary Guide to Raising Your Living Standard Today and When You Retire, and offered up these two tips for retirees:

1. A tip for retirees: Buy TIPs.

For households who are retired or close to it and relying on the stock market to finance their retirements, moving their funds to inflation-protected long-term Treasury bonds (TIPs), makes good sense. So does using their regular financial assets to pay off their mortgages. There is no guarantee the stock market will rebound any time soon. And it could get worse before it gets better.

2. Another tip for retirees: See if Uncle Sam will give you a better deal on Social Security.

Retired or soon-to-be retired households should also ensure they are getting the best possible deal from Social Security. This includes considering repaying the Social Security benefits received in the past and reapplying for higher benefits. It also includes deciding when to take Social Security, integrating that decision with the timing of retirement account withdrawals, and deciding which account to tap first. Most important of all is determining how much one can safely spend. Spend ‘Til the End focuses on making sure households have enough funds to maintain their living standard all the way to the end — to their maximum ages of life. It also has a strong message for retirees who invest aggressively, namely spend defensively.

An important question you should ask yourself, as a couple nears retirement, is whether they should stagger retirement. It’s a topic that is worth exploring with your loved ones because there are many financial and relationship issues that accompany retirement and those can be, in part, alleviated if you opt to stagger your retirements. An article on TheStreet.com outlines some of the financial considerations but there are also relationship ones to consider as well.

Retirement Contributions

By keeping one spouse at work, he or she can continue to contribute towards IRA and 401(k) programs. Every extra year of contributions will help ensure a solvent and fruitful retirement because it’s adding more into the retirement nest egg. Plus, the one income acts as a source of money so that the retired spouse can turn to that, rather than his or her accounts, for funding - thus increasing the longevity of their retirement nest eggs as well.

Healthcare

One of the biggest costs of retirement is medical and health insurance. With one spouse working, you can have a company help alleviate that cost (or more depending on the generosity of the company), which can help the bottom line. By waiting, you can have one spouse retire before 65, when Medicare kicks in, and then have both retire once they reach that age limit.

Social Security

You can begin taking Social Security as early as 62 but to maximize your total gain from the program, you have to wait until “full retirement age,” which can be four years later. By keeping one income, you can put off taking SS payments and maximize your total payout.

Relationship

One of the biggest complaints about both couples retiring is that they now find themselves spending nearly every waking moment together. It can be difficult on a relationship to spend that much time together. By staggering, one spouse gets to try out retirement, find a rhythm and some hobbies, such that both aren’t sitting there watching TV and not knowing what to do. When one discovers a routine, the other can join or discover their own routine. There isn’t a case of two people not knowing what to do other than they have to do it together.

The Social Security Administration recently released a report on an investigation into the practice of banks garnishing Social Security and disability payments for third party creditors, a practice that is illegal. It was discovered that approximately $171.4 million was garnished from accounts receiving direct deposits of SS benefits and other direct deposits and an additional $6.3 million was garnished from accounts that contained only Social Security payments. In addition to the garnishments, they found that in some cases the banks would freeze accounts and charge penalty fees after the freezes. Those fees totaled just over $1 million between September 2006 and September 2007!

Unfortunately, consumers can do little except wait for relief from lawmakers. Some states already have laws in place that protect SS recipient accounts. In New York, the governor is expected to sign a bill that would protect the first $2,500 of a depositor’s money from being frozen if they are getting SS direct deposits, a law that is similar to those in place in California and Connecticut.

Banks Continue to Prey on Social Security Recipients [Yahoo! Finance]

A week wouldn’t be complete without a nice myth busting post like the one put out by Rich White and Investopedia today. This week, it’s the top six myths about Social Security Benefits and some of these aren’t even myths I believe but here are the ones I think are worth noting.

Myth #1: Take Payments ASAP

The idea behind this myth is that the earlier you take it the better, because you can invest the money as it comes out. The flip side is the fact that you get less by virtue of taking it sooner. The fact of the matter is that each person is different so you have assess your situation before making any decisions.

Myth #3: Working Reduces Your Benefits

This is in part true because your Social Security benefit is reduced by 50% of your earned income above $13,560. If you earn $2 over, then your benefit is reduced by $1. As it turns out, your Social Security benefit isn’t reduced permanently… it’s just deferred until after your full retirement age.

Top 6 Myths About Social Security Benefits [Yahoo! Finance]

You can start receiving Social Security payments as soon as you turn 62 but you pay a penalty for taking payment so early. If you wait until full retirement age, which varies with the year of your birth, you maximize the total amount you can get from the Social Security program. If you begin taking it at 62, your benefit could be as low as 25% less than if you waited until full retirement age.

If you started taking payments early, before your full retirement age, there’s a way to reset the clock. It’s called the Social Security redo and the subject of a segment on Marketplace Money last Friday. Essentially all you do is repay all the money you’ve received so far and the clock will be reset.

Not bad!

Last friday, Democratic Presidential hopeful Barack Obama announced that he would try to apply the Social Security payroll tax to include incomes above $250,000; in addition to the current payroll tax which collects 6.2% from earnings to to $102,000 a year. It would create a “doughnut hole,” that is an area of no additional tax between $102k and $250k (though he did no elaborate on what income would be subject to this tax), in the amount of income subject to the tax. This was his plan to extend the solvency of Social Security without increasing the retirement age or reducing benefits.

Obama: Payroll tax on salaries above $250,000 [Associated Press via Breitbart]