Ask Liz Weston

Get smart with your money

Liz Weston

Thursday’s need-to-know money news

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Today’s top story: How the pandemic has shaken up retirement. Also in the news: 6 steps for financial spring cleaning, what to know if you’re listing your home in 2021, and how to avoid having to pay back the $3600 child tax credit.

How the Pandemic Has Shaken Up Retirement
When to retire isn’t always in our control, but too early an exit can bring financial instability.

6 Steps for Financial Spring Cleaning, Pandemic-Style
This year, spring cleaning includes reevaluating your budget, updating insurance and setting new goals.

Listing Your Home in 2021? Here’s What to Know
Roughly 1 in 6 (17%) homeowners plan on selling their home in the next 18 months.

How To Avoid Having to Pay Back the $3,600 Child Tax Credit
Find out how the credit works.

Wednesday’s need-to-know money news

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Today’s top story: Travel might not be the stress reliever you hoped for in 2021. Also in the news: The Travel Nerd on airline loyalty, considering the value of daily tasks when buying life insurance, and the easiest hands-off way to prevent your card from being closed for inactivity.

Travel Might Not Be the Stress-Reliever You Hoped for in 2021
Even if you’re vaccinated, be prepared for new, and old, hassles of travel.

Ask a Travel Nerd: Should I Be Loyal to a Single Airline?
If you fly mostly one airline, you’ll earn rewards faster, but it might limit your flight options.

Consider the Value of Daily Tasks When Buying Life Insurance
The everyday supporting services you perform for your family may be just as valuable as income.

The Easiest Hands-Off Way to Prevent Your Card From Being Closed for Inactivity
Putting your subscriptions to work.

How the pandemic has shaken up retirement

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Pandemic-related job losses forced many older Americans out of the workplace i n the past year, perhaps permanently. But the COVID-19 crisis also seems to have delayed some retirements.

Remote work eliminated commutes and often allowed more flexible schedules with fewer interruptions. At the same time, the pandemic restricted many traditional retirement activities, including travel and visits with family. While some employed older workers look forward to retiring when restrictions ease, others say teleworking has made staying on the job more tenable.

in my latest for the Associated Press, a look at how the pandemic has shaken up retirement in both good and bad ways for Americans.

Monday’s need-to-know money news

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Today’s top story: How to fill in your financial blind spots. Also in the news: A new episode of the Smart Money podcast on cannabis investing and keeping too much cash, what to do if a credit card lowers your credit limit, and the best credit card welcome bonuses right now.

How to Fill In Your Financial Blind Spots
Taking in the whole picture.

Smart Money Podcast: Cannabis Investing and Too Much Cash
Just in time for 4/20.

What to Do if a Credit Card Issuer Lowers Your Credit Limit
Your main option is to ask your issuer to reconsider. But there are also some steps you can take to mitigate the effects of a cut and minimize the risk of future ones.

The Best Credit Card Welcome Bonuses Right Now
It’s a good time to be a traveler.

Q&A: Pension: to lump or not to lump

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Dear Liz: I’m 67 and I’m going to retire later this year. My wife is already retired, and our kids are grown and on their own. I have a 401(k) that I’ve contributed to for most of my working years, and a small traditional IRA. I also have a grandfathered pension plan through my employer. I’m leaning toward taking the pension benefits as a lump sum and rolling it directly to either my 401(k), which my company allows, or my IRA. Would you recommend using the 401(k) to receive the pension rollover? Or would the IRA be the better choice?

Answer: Before you decide where to put the lump sum, please reconsider taking a lump sum in the first place.

Pensions are normally taken as a stream of monthly payments that last for the rest of your lives. (You may be offered a “single life only” option that ends when you die, but that could leave your wife without enough to live on, so the “joint and survivor” option is typically better.) You can’t outlive this money, fraudsters can’t steal it and you won’t lose it to bad markets or bad investment decisions. Most pensions are protected by the Pension Benefit Guaranty Corp., so even if the plan goes broke, your payments will continue.

Contrast that with the lump sum. Theoretically, you may be able to invest the money and get a better return than what you would get from the annuity option (the monthly payments). But that’s far from guaranteed, and one misstep could leave you far worse off.

There are a few situations where taking a lump sum may be smart. If the pension plan is woefully underfunded, and your benefit would not be entirely protected by the PBGC, you could take the lump sum and either invest it or buy an immediate annuity that would replicate those guaranteed monthly payments.

Q&A: She counted on pandemic rent relief but didn’t qualify. Now what?

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Dear Liz: I have a friend in dire financial straits. She has borrowed from her retirement, spends too much and didn’t pay her rent thinking she would get pandemic relief, but she makes too much to qualify for emergency rental assistance. She has mental health issues, which are being addressed by a therapist, but I would love to offer her financial counseling services as well. She is in her late 50s and desperately depressed over this. It’s hard to stand by when the rest of our friend group is doing well, and we’re not sure how to direct her. I would possibly be willing to pay for a financial counselor but will not “loan” her money because that is a losing proposition.

Answer: Congress approved nearly $50 billion in emergency rental assistance to help pay back rent and utilities for low-income people impacted by the pandemic. The key phrase is “low income.” The help isn’t available for people who earn more than 80% of the area’s median income, and many programs are limiting the aid to those with incomes below 50% of the median. The aid is being distributed through more than 100 state and local agencies, and more programs are on the way. The National Low Income Housing Coalition is keeping a list.

Currently, landlords are mostly prohibited from evicting non-paying tenants, but eviction moratoriums will someday end. Your friend could find herself not just turned out of her home but unable to rent decent housing, since many landlords won’t consider anyone who’s been evicted. Avoiding that fate needs to be a top priority for her.

Nonprofit credit counseling agencies, such as those affiliated with the National Foundation for Credit Counseling, offer a variety of low-cost or free services that may help your friend, including housing counseling, budgeting help and debt management plans. She also should consider discussing her situation with a bankruptcy attorney.

Her depression may make it difficult for her to take action, so you could help her make the appointment and even offer to accompany her. Ultimately, of course, it will be up to her to make the necessary changes, but supportive, nonjudgmental friends could be an enormous help.