Ask Liz Weston

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Liz Weston

Wednesday’s need-to-know money news

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Today’s top story: Fed hoists key interest rate as mortgage rates reach new heights. Also in the news: A new episode of the Smart Money podcast on recession prep, a quiz to cut your credit card costs, and how long it could take for business travel to return to normal.

Fed Hoists Key Interest Rate as Mortgage Rates Reach New Heights
Some 30-year fixed mortgage interest rates surpassed 6% even before the Federal Reserve’s 75-point increase to the federal funds rate.

Smart Money Podcast: Recession Prep, and Lightning Round Money Questions
This week’s episode starts with a discussion about how to prepare your finances for a recession.

Pass This Credit Card Quiz and Cut Your Costs
Put your credit card knowledge to the test. Knowing the correct answers could save you money.

How Long Until Business Travel Returns to Normal?
Business travel is down, big-time, with experts anticipating a slow return to 2019 levels.

How to afford your meds and support your health

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The cost of prescription drugs in the U.S. can be enough to make you sick.

What you pay varies enormously depending on the drug, the pharmacy, your insurance plan and your deductible, among many other factors. A drug that may have been cheap or at least affordable the last time you filled it could be far more expensive or not covered at all the next time.

Often, people have no idea what a prescription will cost until they get to the pharmacy counter, says Leigh Purvis , director of health care costs and access for AARP’s Public Policy Institute.

Still, finding a way to afford your meds is important. In my latest for the Associated Press, how to afford your meds and support your health.

Q&A: Identity theft fears? Get a credit report, credit freeze

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Dear Liz: I divorced 32 years ago. Recently, I received calls from a collection agency about a debt that has not been paid. I discovered that my ex used my phone number as one of his contact numbers. My number is supposed to be unlisted and unpublished, but he found it online. I have stopped receiving calls from the agency, but how do I stop this from happening again?

Answer: Please check your credit reports to make sure your ex didn’t swipe even more sensitive digits: namely, your Social Security number. If his credit is bad, he may be tempted to pretend to be you in order to get credit cards, loans or other accounts. That’s identity theft, and there are steps you should take now to protect yourself.

You can access your credit reports for free at AnnualCreditReport.com. (If you’re asked for a credit card number, you’re on the wrong site.) Look for any accounts that aren’t yours and consider freezing your credit reports at each of the bureaus. Credit freezes prevent someone from opening new accounts in your name. You can thaw the freeze whenever you need credit, also for free.

You can’t prevent someone from adding your phone number to their credit applications, but under federal law you can tell a collection agency to stop contacting you, and it must comply. Make the request in writing.

Q&A: Revisiting a Medicare penalty

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Dear Liz: As a county employee of 44 years, I was offered the option to contribute to Social Security in the mid-1970s. It was not mandatory and I declined. When I retired in 2004, I did not apply for Medicare as I wrongly assumed that I would not qualify. I have since learned that I can apply for Medicare but that I would have to pay $499 per month as a late enrollment penalty on top of the monthly premium. Do you know any way that I can get a portion of the late penalty waived?

Answer: As your situation shows, not getting sound advice about Medicare can be expensive. Failing to sign up for Part B coverage, which pays for doctor’s visits, can incur penalties of 10% for each 12 months you were eligible but didn’t enroll. The penalties are typically permanent.

There is an appeals process, but your chances of success may not be great unless you can prove that you delayed enrollment because of bad advice you got from a government representative. Medicare has more information on its site.

Q&A: Profit sharing and retirement

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Dear Liz: I work for a wonderful company that has a generous profit-sharing plan. I am 61 years old and plan on working until I am 65 and eligible for Medicare. Due to some health issues, I am reducing my hours and this will significantly reduce my income for the next four years. I thought this was a good plan because it keeps my health insurance intact, but now I am wondering if the lower earnings will affect my profit sharing when I retire. I know the final distribution is based on earnings and time on the job. Should I retire now, while my income is up, or should I wait until I am 65?

Answer: There are a lot of moving parts to any decision about retirement. How much will health insurance cost and how will you pay for it? How much do you have saved and how long are those funds likely to last? What’s the best time to apply for Social Security and how will that affect your retirement fund withdrawals? (It’s often best to delay Social Security as long as possible and draw down retirement savings instead, especially if you’re the primary earner, but individual situations vary.)

Money is a finite resource, but so are time and energy. Every additional year you work could put you in better financial shape, but means one less year in which you could be enjoying retirement.

Consider talking to your human resources department to find out exactly how your reduced hours are likely to affect your profit sharing payout. Then take those numbers to a fee-only financial planner who can examine the rest of your finances and talk with you about the best glide path into retirement.

Friday’s need-to-know money news

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Today’s top story: Curb inflation with 5 credit card perks. Also in the news: What you need to know about Apple’s Buy Now Pay Later feature, how to tell if free business software will cost you, and how one person ditched $20K in debt.

Curb Inflation With 5 Credit Card Perks
Your credit card may hold some valuable money-saving features or benefits, whether your goal is to pay off debt or save on costs.

What You Need to Know About Apple’s Buy Now, Pay Later Feature
Apple Pay Later divides your purchase into four equal installments with zero interest or fees, but there are risks to “buy now, pay later” plans.

How to Tell if Free Business Software Will Cost You
Free business software may have no upfront costs, but you could pay for it in other ways.

How I Ditched Debt: From $20K to $0 in Five Years and 8 Steps
I dug deep into a bag of tricks and tips to pay down debt. Here are the ones that made the most difference.