Ask Liz Weston

Get smart with your money

Liz Weston

Wednesday’s need-to-know money news

By

Today’s top story: Why you may overspend on the holidays and how to stop. Also in the news: One woman’s way out of debt, why a late credit card payment may cost more in 2019, and how to get on the same page with your partner about money.

Why You May Overspend on the Holidays and How to Stop
Curbing your holiday spending.

How I Ditched Debt: Thrifty Living and Side Gigs
One woman’s story.

A Late Credit Card Payment May Cost You More in 2019
Late fees are on the rise.

How to Get on the Same Page With Your Partner About Money
Financial compatibility is essential.

Tuesday’s need-to-know money news

By

Today’s top story: Avoid costly mistakes with the car buyer’s checklist. Also in the news: How to be the holiday host with the most credit card rewards, what you should know before making your first student loan payment, and illegal tax moves to avoid.

Avoid Costly Mistakes With the Car Buyer’s Checklist
Take this list with you to the dealership.

Be the Holiday Host With the Most Credit Card Rewards
Reward yourself for being an excellent host.

Read This Before Making Your First Student Loan Payment
The first day of the rest of your payment life.

Illegal Tax Moves to Avoid
Tiny fibs can lead to big trouble.

Monday’s need-to-know money news

By

Today’s top story: How to manage student loan debt without making it worse. Also in the news: How to get credit when you have none, why it may be time to stop itemizing your tax deductions, and the state most burdened by credit card debt.

How to Manage Student Loan Debt Without Making It Worse
Don’t let interest get out of hand.

How to Get Credit When You Have None
Starting from scratch.

It May Be Time to Stop Itemizing Your Tax Deductions
The standard deduction could be enough.

This state is the most burdened by credit-card debt
Is it yours?

Q&A: What to consider before becoming an estate executor

By

Dear Liz: A lifelong friend has made me executor of his will. He has one brother who is named in the will only to be told that he is not included. My friend’s estate is left to two other lifelong friends. If his brother protests the will, what are my duties or liabilities? Can I be pulled into court at my own expense and time? Should I tell my friend that I don’t want the role?

Answer: Being an executor can be a huge hassle, but it’s also an honor and a way to offer a final, loving gesture to your friend. Learn as much as you can about the situation before deciding whether to refuse.

If the brother does contest the will, typically your friend’s estate will pay the legal fees and other expenses. Executors also can be compensated, with the amount determined by the will. If there’s no mention of a fee in the will, state law determines how much the executor can be paid. The fee would be taxable income to the executor. It’s certainly worth discussing the potential costs and fees with your friend before you decide whether to take on this role.

Family members and friends often waive the executor’s fee as a gesture of goodwill, but there’s no requirement to do so. The job typically requires considerable time and effort, even when unhappy relatives aren’t threatening lawsuits. Also, executors can be held legally and financially liable for mistakes. If you do take on this role, consider hiring an attorney to guide you through the process. The attorney’s fees also can be paid by the estate.

Q&A: Social Security benefits confusion

By

Dear Liz: In a past column, you discussed a potentially advantageous option for people who started Social Security early. You wrote that when they reached full retirement age, they could suspend their benefits and allow them to grow by earning delayed retirement credits. I am turning 66 this month and have been collecting Social Security benefits since age 62.

I went to a local Social Security field office to request the suspension but was told this option is not available. They couldn’t provide definitive documentation to support their statements but said that by starting benefits at 62 the option to suspend and earn delayed credits from 66 to age 70 doesn’t apply. Can you please clarify your comments and, if correct, suggest how I might be able to convince the representatives at the local office that it is still an option? I have been speaking to a supposed “expert” at the office, not the first person screening my request.

Answer: Unfortunately, the advice you get from local Social Security offices isn’t always accurate.

The representatives you talked to may be confusing benefit suspension with the so-called “file and suspend” option, which Congress eliminated a few years ago. With file and suspend, a higher wage earner could file an application for benefits and immediately suspend it. This allowed a married partner to start claiming spousal benefits while the higher earner’s benefit could continue to grow. Under current rules, partners can claim spousal benefits only if the primary earner is actually receiving retirement benefits.

For those not familiar with Social Security claiming strategies: It’s generally advantageous to wait as long as possible to apply for retirement benefits. The amount you can get grows at roughly 7% annually between age 62, which is the earliest you can apply, and your full retirement age, which is currently 66 but which will gradually rise to 67 for people born in 1960 and later. Between your full retirement age and age 70, you can earn so-called “delayed retirement credits” that further boost your check by 8% each year.

If you start early and realize you made a mistake, you can suspend your benefits at your full retirement age. Your checks will stop, but you don’t have to repay past benefits. And the amount you receive — although still reduced by your early start — can earn delayed retirement credits.

This probably isn’t a good option if you have other people drawing benefits based on your record, such as spouses or dependent children, because the suspension would stop their benefits as well.

Suspension also is different from the “do over” option that allows you to repay any benefits you’ve received and completely restart the clock on your benefits, as if you’d never started them. That option is allowed only in the first 12 months after your initial application.

Given that your local reps are confused, you should point them to the Social Security Administration’s web page on the matter.

It couldn’t be clearer. The first sentence reads: “If you have reached full retirement age, but are not yet age 70, you can ask us to suspend retirement benefit payments.” The page goes on to say your benefits will be automatically restarted at age 70, when those benefits max out, but you can restart at any time before that if you want.