Ask Liz Weston

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Liz Weston

Q&A: Authorized credit card users

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Dear Liz: Following your advice on building credit, we recently added our son as an authorized user on one of my credit cards. My question is, what happens when I pass away? Does the card remain with him as the only user? Do I need to address this in my will?

Answer: Your executor, the person you named in your will to handle your estate, will be responsible for closing the account when you die. If there are any balances owing, the debt will be paid from your estate. There’s no need to make special provisions for the account in your will. By that time, your son, one would hope, would have cards of his own, so the closure shouldn’t affect his credit scores much if at all.

Sharing a roof, and money, with adult kids

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When Amanda Claypool was 28, she left a government contracting job in Washington, D.C., and moved back to her parents’ house in upstate New York while she figured out her next step. Then the pandemic struck, and her temporary return lasted longer than she’d planned.

Living with her parents for several months “helped give me more flexibility to pivot to a new career,” says Claypool, who is now a content creator in Asheville, North Carolina. Her parents covered her expenses related to food and housing. In return, she helped them declutter and sell about $10,000 worth of vintage toys and collectibles online.

Claypool’s decision to return home is increasingly common. The Pew Research Center found that one quarter of U.S. adults ages 25 to 34 lived with parents or other relatives in 2021 and that the portion of young adults who do so has steadily climbed over the past 50 years.

Stefanie O’Connell Rodriguez, host of Real Simple’s “Money Confidential” podcast, has noted the trend. “Even prior to this latest round of inflation, we saw a greater share of millennials moving back in with parents and staying at home longer. The pandemic accelerated that,” she says.

While moving back home can provide a financial safety net for young adults, it can also negatively affect their parents’ finances and stymie their own growth toward becoming financially independent. In Kimberly Palmer’s latest for the Associated Press, learn how to navigate intergenerational living so it benefits everyone involved.

This week’s money news

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This week’s top story: Smart Money podcast on rising interest rates, and budgeting with apps. In other news: How the Airbnb ‘gold rush’ could impact the homebuying market, avoiding 5 banking mistakes to earn more interest, pay less in fees, and co-buying a house.

Smart Money Podcast: Rising Interest Rates, and Budgeting With Apps
This week’s episode starts with a discussion about who is hurt the most by the Federal Reserve’s rate hikes.

How the Airbnb ‘Gold Rush’ Could Impact the Homebuying Market
A swoon in short-term rentals could result in a glut of properties in some areas, but make room for home buyers in others.

Avoid 5 Banking Mistakes to Earn More Interest, Pay Less in Fees
You might not know you’re making these common banking mistakes. Find out what they are and how to easily avoid them.

Co-Buying a House: How Platonic Partners Make It Work
Platonic partners are affording homes by combining their purchasing power. Here’s what to know if you’re considering this route.

Q&A: When to take survivor benefits

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Dear Liz: My wife started collecting Social Security at her full retirement age six years ago. I’m waiting to file to get my maximum Social Security payout at 70 in 2025. If I were to file today, my current benefit would be significantly higher than hers, and even more so if I wait. If I predecease her without filing before reaching my maximum benefit at 70, what are her options for survivor benefits? Would her new benefit amount be based on my date of death or my full retirement age, or can she delay filing until I would have turned 70 in 2025?

Answer: Your wife would receive a survivor benefit equal to whatever you had earned as of your date of death, including any delayed retirement credits. She wouldn’t increase her survivor benefit by delaying until 2025, if you die before then. On the other hand, she also wouldn’t face a reduction in the benefit for starting early, since she has already reached her own full retirement age.

You’re making the smart move by delaying because you’re maximizing both your own benefit and the sole Social Security check that one of you will receive after the other dies. But you don’t have to be married to benefit from delaying. New research by economists at Boston University and the Federal Reserve has found that virtually all American workers ages 45 to 62 should wait beyond age 65 to start Social Security and more than 90% should wait until age 70.

Q&A: How to buy U.S. Treasuries

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Dear Liz: Can I purchase a U.S. Treasury bill myself or do I need to go through a bank or a financial advisor?

Answer: You can buy government-issued securities — including Treasury bills, bonds and notes —from TreasuryDirect, which is operated by the U.S. Department of the Treasury. Setting up an account usually takes just a few minutes, but you’ll need a valid Social Security number, a U.S. address and a checking or savings account to complete the process.

You also can buy Treasuries in a brokerage account. You can purchase a Treasury bill on what’s known as the secondary market, where securities are bought and sold, or you can invest in a Treasury money market mutual fund or a Treasury exchange-traded fund.

Q&A: Don’t do this with your retirement funds — unless you want to pay tax

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Dear Liz: I recently switched jobs and realized that I have multiple 401(k) accounts from prior employers over the years that need to be consolidated. When I reached out to my current employer’s 401(k) administrator to understand the rollover process, they said I would actually need to have a paper check mailed to me for each prior employer and then arrange to mail the checks to them. Liz, we are talking about four checks totaling a very substantial amount of money! They said there is “no other way” to process the rollovers. I cannot understand why we are still dealing with such an archaic process in this day and age. Should I be worried or should I just go ahead and take care of this now since I don’t seem to have much say in the process?

Answer: You should definitely be worried, and you also shouldn’t assume that your employer’s 401(k) administrator understands the options at other companies. Getting a check in the mail from an old plan is not only unsafe but triggers a 20% withholding requirement.

If you want to avoid taxes and penalties on the missing 20%, you’d have to come up with that money out of your own pocket. (If you didn’t deposit the check with the new plan or in an IRA, you’d owe taxes and potentially penalties on all of the money.)

When you contact the old plan’s administrators, ask if they can do a “direct rollover” to your new 401(k) account. Often, the transfer can be made electronically.

Even if the old plan uses a paper check and the U.S. mail to deliver the funds, you can avoid the 20% withholding requirement if the check is made out to your new account rather than to you.