Simple savings account is best for small contributions

Dear Bruce: I am in my late 60s and I want to purchase a long-term annuity for my grandsons. I currently put $50 per month each in a savings account for them, and I give them 1 percent of my gross income from my part-time hot dog cart business.

When I try to discuss putting away this small bit of money, no one wants to be bothered. — P.C.

Dear P.C.: Unfortunately, the small amount of money that you’re putting aside, $600 a year, plus the 1 percent of your hot dog income, is not going to be enough to attract anybody’s attention.

I would continue to put all of the money in savings. Just put their names on the account, which will make them the beneficiaries upon your demise.

Dear Bruce: As a single, 56-year-old with a yearly salary of approximately $28,000, I would value your opinion on how I am set for retirement at 70. I have $260,000 in a 401(k), $10,000 in 12 CDs, $20,000 in an IRA and $30,000 in an emergency fund account. I live a very frugal life.

A friend and I were having a discussion and he feels I should have about $1 million in total by the time I retire to live comfortably. I feel if I keep living the frugal life and continue to add $6,500 to my IRA each year, I should be fine in my golden years. — J.S.

Dear J.S.: Seems to me that you’ve got things in control. You’re living frugally, which is the key to having a substantial retirement fund, given the relatively modest amount of income you’re earning. Living on $28,000 is not easy, but the math says you’ve done it!

Dear Bruce: I understood from a relative that as long as I am still working, I’m not obliged to take a percentage of my 401(k) every year. I am 74 years old and still work. Am I obliged to take the percentage deduction from my 401(k), or may I leave it intact? — M.D.

Dear M.D.:You’re 74 and still working. That’s terrific, but you were required to start drawing on your 401(k) at 70½. There’s no way you can leave it intact.