Q. My wife and I have a little over $100,000 in annuities and a 401(k).  I will be 70 in March, and my wife will be 69 later this year.  The bulk of this money is in teacher retirement annuities spread over six different companies.  Can we combine all of the annuities in some other tax-free vehicle? Would it be worthwhile considering her age?  My 401(k) is only $10,000 and I have let it ride since I was laid off several years ago.  I really don’t want to pull money completely out until we might need it.  What happens if we pass 70 ½ and leave the funds where they are? —J.M., Wimberley, TX

A. You can roll money invested in a 401(k) or 403(b) — as the annuities are— into an IRA once you have left your job so if your wife is retired she can consolidate accounts in an IRA. Teachers have to be careful about back-end fees that may come from getting out of their 403(b) investment vehicles. There is no reason to move, however, unless you are moving with the purpose of changing your investments or reducing investment expenses.

Many workers, for instance, have 401(k) or 403(b) plans whose choices are expensive managed funds or expensive insurance-based products. If their plan choices have, say, an average cost of 1.75 percent a year, it would be beneficial to move to lower cost options in an IRA rollover.

While I have advocated index funds for many years and have shown how to easily manage your money at a typical cost of about 0.20 percent, it is also possible to move to some of the large managed funds at firms like Fidelity and T. Rowe Price. At these firms you can have your money managed at a cost of about 0.70 percent. Either way, the cost saving is substantial.
Both 401(k) and 403(b) plans, like IRAs, require that you start withdrawing money by age 70 1/2.

Q. I want to ask you about an event at a Social Security office.  When I turned 65 in November, I made an appointment to talk with a representative.  The representative recommended that I start taking a check at the beginning of this year —even though I am still employed and have made no final decision to retire. The representative said that taking the benefit early would reduce my monthly Social Security benefit by $69 per month, but getting 10 checks from January 2012 until my 66th birthday in November at the lesser benefit would make it worthwhile.

I'm not expecting to earn over $37,680.  A Social Security brochure says that in the year you reach your full retirement age, your benefits will be reduced $1 for every $3 you earn over a different annual limit ($37,680 for 2010) until the month you reach full retirement age. Once you reach full retirement age, you can keep working and your Social Security benefit will not be reduced no matter how much you earn.

Should I have started taking the check at the reduced benefit? Or did I do the right thing when I decided to defer taking benefits until I actually retired? —-D.G., by email

A. You made a good decision. Since you don't need the income now, why not wait and enjoy a higher Social Security benefit next year or the year after that? The dominant experience that Social Security representatives have is with people who need benefits immediately, if not sooner. It's also very convenient for them to sign you up for Social Security benefits at the same time they sign you up for Medicare.

Why?  Because the premium is automatically deducted from your benefit check. When you decline to take benefits, as you did, but register for Medicare they have to sign you up for quarterly billing.

By delaying benefits, whether it is for months or years, you will be increasing your future benefit. You will also be increasing the benefit your spouse will receive if she survives you. So while you may collect a few more months of benefits by signing up today, you or your spouse is likely to be collecting a higher inflation adjusted benefit for about 25 years. You're getting a higher yield by delaying benefits than you could get on any private investment you could make.

Finally, while you will not have your benefits reduced for taking them before you reach full retirement age, a portion of the benefits is likely to become subject to federal income taxes due to your earned income.