Wednesday’s need-to-know money news

debt-freeToday’s top story: How to perform a debt autopsy. Also in the news: How to choose between leasing and financing a new vehicle, spring break travel tips, and how to tell if a credit card has a good interest rate.

If You Really Want to Kill Off Your Debt, Do a Debt Autopsy
Not nearly as scary as it sounds.

How to Choose Between Vehicle Leasing and Financing
Deciding what’s best for you.

12 Major Travel Sites Reveal How to Save on Top Spring Break Destinations
Spend less on travel and more on fun.

How to Tell If a Credit Card Has a Good Interest Rate
Do your research.

Q&A: Social Security survivor benefits

Dear Liz: I earned more than my wife, who died at age 57 after 18 years of marriage. When I turn 60, can I take survivor Social Security benefits based on her work record and then request my benefit at age 70?

Answer: In a word, yes, and doing so may be smart.

Survivor benefits are different from spousal benefits, which inflict some severe penalties for starting checks early. When you start spousal benefits before your own full retirement age, you’re locked into a permanently smaller check and you can’t later switch to your own benefit, even if it’s larger. The only way to preserve the ability to switch is to file a restricted application for just the spousal benefit at your own full retirement age (which is 66 for people born from 1943 to 1954 and gradually increases to age 67 for people born in 1955 and later). Then you preserve the right to change to your own benefit when it maxes out at age 70.
With survivor benefits, starting early means a reduced check — your widower benefit at 60 would be 30% smaller than if you waited until your full retirement age — but you can switch to your own benefit later. And if you don’t work, starting survivor benefits at 60 is the better course, said economist Laurence Kotlikoff, coauthor of “Getting What’s Yours: The Secrets to Maxing Out Social Security.”

“Getting a reduced benefit for 10 years, from 60 to 70, is better than getting an unreduced benefit for fewer years,” Kotlikoff said.
If you work, however, the math becomes less clear. When you start benefits early, your check is reduced $1 for every $2 you earn over a certain limit, which in 2015 is $15,720. That penalty disappears once you hit your full retirement age.

Online calculators can help you determine the best Social Security claiming strategy. AARP and T. Rowe Price are among the sites that provide free calculators, but they don’t factor in survivor benefits. Consider spending about $40 for one of the more sophisticated calculators, such as Kotlikoff’s MaximizeMySocialSecurity.com, that can include this important benefit.

Tuesday’s need-to-know money news

o-CREDIT-REPORT-facebookToday’s top story: Changes to the credit report dispute process are on the way. Also in the news: What to do with your tax refund, things you should consider as you approach retirement, and the biggest tax law changes you need to know about.

Your Biggest Credit Report Complaint May Be Getting Fixed
Changes in the dispute process are on the way.

What to Do With Your Tax Refund
Suggestions other than an Apple Watch.

7 Items for Your To-Do List in the Year You Retire
Things to consider as you approach the finish line.

The Biggest Tax Law Changes You Need to Know About This Year
April 15th is just around the corner.

Big changes afoot for credit bureaus and your scores

check-credit-report-easilyCredit bureaus will have to hold off on reporting delinquent medical bills and supply actual human beings to review disputes under an agreement announced today with New York’s attorney general.

The Wall Street Journal reported that the agreement, to be announced later today, will change how credit bureaus operate nationally. Bureaus will have to wait 180 days before reporting any medical debt on people’s credit reports. When an insurance company pays a medical bill, all references to it will have to be deleted from the individual’s reports.

This is a big deal, since the Consumer Financial Protection Bureau estimates about 43 million Americans medical collection accounts on their credit reports. One such collection can devastate an otherwise pristine credit report and cause credit scores to plunge.

Having human beings review disputes is another significant change. Currently, humans stick a code on disputes before they’re sent to lenders, but the process is highly automated. Errors that have been removed from a report can crop up again (and again and again) when the lenders upload their data files to the bureaus. Getting problems fixed can be a frustrating process when you can’t get a human being to intervene.

The changes won’t happen overnight. The bureaus have three and a half years to roll them out.

Monday’s need-to-know money news

download (1)Today’s top story: The right card to get when you’re looking to build or rebuild your credit. Also in the news: How to cut your monthly expenses, what you need to know about renter’s insurance, and the habits of successful early retirees.

5 Credit Cards to Help You Build Credit
Cards that can help you establish or rebuild credit.

Ways to slash your monthly expenses
How to make your monthly expenses more manageable.

8 Facts You Didn’t Know About Renter’s Insurance
Protecting your belongings.

The 9 Habits of Highly Successful Early Retirees
Could you follow in their footsteps?

The 20 Worst (and 20 Best) Cities For Saving Money
Did yours make the list?

Q&A: Balancing savings vehicles and tax benefits

Dear Liz: I’m 26 and make $45,000 per year. I currently have about $60,000 saved with no debt. Roughly half of my assets are in retirement accounts, and the other half are in non-retirement accounts. I strive to save 30% of my income (about 15% in pre-tax retirement accounts and 15% in taxable accounts). I hope that my savings habits will provide me the option to retire early. But I am concerned that I am locking up too much of my money in retirement accounts and that a couple decades down the road, I will not be able to access my money when I would like to. How should I balance various savings vehicles and tax benefits, so that I have most options down the road?

Answer: Your savings habits are admirable, but you shouldn’t worry too much about “locking up” your money. There are a number of ways to tap retirement funds if you really need the cash. Ideally, you’d leave the money alone to grow tax-deferred until you’re ready to retire, but you’re not required to do so.

One way to save for retirement with plenty of flexibility is to fund a Roth IRA each year. You don’t get a tax deduction upfront, but you can withdraw your contributions at any time without penalty. If you don’t tap the money until you’re 59 1/2 or older, your contributions and your earnings are tax free if you’ve had the account at least five years. Another advantage of a Roth is that you’re not required to start distributions after age 70 1/2, as you are with other retirement accounts.

Friday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How to find the most important information in your credit report. Also in the news: Financial scams that target seniors, questions for first time tax filers, and how to cut your tax bill with credit card deductions.

5 Things You Absolutely Need to Find in Your Credit Reports
How to find the important information.

7 Financial Scams that Target Seniors
What to look out for.

5 Questions First-Time Tax Filers Need to Answer
Welcome to the real world!

Cut Your Tax Bill with Credit Card Deductions
Business owners should pay close attention.

Thursday’s need-to-know money news

22856641_SAToday’s top story: The comeback of the 529 plans. Also in the news: Who’s to blame for the TurboTax scam, how to pay off student debt, and the top cities for identity theft.

529 Plans Make a Money-Saving Comeback
The college savings plan is back from the brink.

Who’s to blame when fraudsters use TurboTax to steal refunds?
It’s been a rough year for TurboTax customers.

Planning Key to Paying Off Student Debt
Tackling a long-term debt.

10 Cities Where Identity Theft Is a Huge Problem
Did yours make the list?

Wednesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How to manage your credit cards while traveling abroad. Also in the news: The biggest financial mistakes each generation makes, tax mistakes you need to avoid, and how to protect your bank account from being looted by cyber criminals.

5 Credit Card Tips for Traveling Abroad
Don’t get hit with heavy fees.

3 biggest financial mistakes made by each generation
Which one is yours?

9 Tax Mistakes You Should Never Make
Simple errors that could end up costing a lot.

5 Ways to Keep Your Bank Account From Being Looted
Protecting your money.

Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How you may be accidentally wrecking your credit. Also in the news: What an unexpected windfall means for your taxes, the money moves you should make in March, and how to give your 401(k) a boost.

5 Ways You’re Accidentally Wrecking Your Credit
Ignorance isn’t bliss.

Received a Bunch of Cash? How It Will Impact Your Taxes
Don’t book that trip around the world just yet.

Your Best Money Moves for March
What to do to get ready for spring.

Amp Up Your 401(k) No Matter How Much You Earn
Give your savings a boost.