(MoneyWatch) Following a challenge from a reader, my last post addressed how a typical retiree can make ends meet. This new post looks at the situation for a working couple who are both age 60 and who have about $200,000 in retirement savings, along with some home equity.

As with the current retiree, the financial solutions are limited for this couple. Their most important decisions will be when to start taking Social Security benefits, how long to work, how to deploy their retirement savings, and how to manage their living expenses to make ends meet. Let's look at the most important decisions one at a time.

Social Security

For the sake of this example, let's assume the primary breadwinner has been the husband, who currently earns about $75,000 per year. To make the most of his Social Security income, he should delay starting Social Security until age 70, when his benefits would be about $2,700 per month. Let's also assume the wife has only worked sporadically throughout her career -- not enough to earn her own Social Security benefits -- so her Social Security income will consist of her spouse's benefit based on his earnings history. In this case, I suggest that she start her spouse's benefit at age 66, which would amount to roughly $1,000 per month.

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In this scenario, they would have a combined Social Security income of about $3,700 per month starting at age 70, or $44,400 per year. In addition, they would receive about $12,000 per year from age 66 to 70 from the spouse's benefit.

How long to work

In this couple's case, the best choice would be for them to not touch their retirement savings until age 70 in order let them grow as much as possible until they fully retire. To cover their living expenses until that time, the husband and wife will need to continue working.

They don't need to make as much money in their sixties as they did when they were younger, since I'm assuming that they're no longer saving for retirement. All they need is to earn enough money to cover their living expenses until Social Security kicks in for the husband at age 70, at which point they can start drawing from their retirement savings. AARP and T. Rowe Price have called this strategy "practice retirement."

They can ease up a little at age 66, when the wife's Social Security benefit adds an income of $12,000 per year. An important job criterion would be for one of them to be eligible for medical insurance from their employer, at least until age 65 when they're eligible for Medicare.

Continued here:
A retirement plan for the working 99 percent