Ask Liz Weston

Get smart with your money

Liz Weston

Q&A: Giving a gift without strings

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Dear Liz: My brother and his wife are living modestly on Social Security and delivering for a food service. Occasionally, I send him some money when I can. I have some money put aside and am able to send him about $5,000 now instead of leaving it to him in my will. (He is six years older.) I am afraid that he and his wife may spend it on a trip or frivolity and will not put it aside for home health or nursing care when they need it. Your thoughts?

Answer: Please make the gift and hope that they do spend it on a trip or something else fun.

According to the U.S. Department of Health and Human Services, someone turning 65 today has about a 70% chance of needing long-term care services. Women typically need care for 3.7 years on average while men need 2.2 years of care.

Medicare, the government healthcare program for people 65 and older, typically doesn’t pay for nursing home and other custodial care expenses. However, Medicaid — the government health insurance program for the poor — does. If your brother and his wife do need custodial care, chances are good they will quickly run through their assets and wind up poor enough that Medicaid will pick up the bills.

The amount you can give them wouldn’t make much of a dent in the bill if they need potentially expensive custodial care someday. Your $5,000 gift would pay for about a month of an in-home health aid, and a couple of weeks in a typical nursing home.

But $5,000 could go a long way in delivering a memorable experience while they still have the health and energy to enjoy it.

Q&A: Social Security survivor benefits can be confusing. Here’s how they work

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Dear Liz: My husband passed away, and I am 59 years old and no longer working. Social Security’s site says that once I turn 60, I can get 71.5% to 99% of what he would have received at his full retirement age. What determines whether I get 71.5% or 99% or something in between?

Answer: The range you mention applies when you start survivor benefits before your own full retirement age for such benefits. For people born in 1962 and later, the full retirement age for survivor benefits is 67.

(This is different from the full retirement age for retirement benefits, which is 67 for people born in 1960 and later. Just in case you thought Social Security benefits weren’t quite complicated enough.)

It also matters if your husband was receiving Social Security benefits when he died. If so, the survivor benefit would be based on that check. If not, the survivor benefit would be based on the amount he would have gotten at his full retirement age (if he died at or before that age) or the benefit he earned (if he died after full retirement age).

In general, though, the earlier you start Social Security benefits, the less you get. If you start survivor benefits at 60, then you’d get 71.5% of your husband’s benefit. If you wait until right before you turn 67, you could get 99%. If you wait until you turn 67, you get 100%.

Your check also could be reduced if you start survivor benefits early and then go back to work. The earnings test would reduce your check by $1 for every $2 you earned over a certain limit, which in 2023 is $21,240. The earnings test would apply until you turned 67.

Something else you should consider is the Social Security benefit you’ve earned based on your own work record. This benefit can continue to grow if you put off claiming it until the amount maxes out at age 70.

You’re also allowed to switch between survivor benefits and your own, or vice versa. (Switching is something that’s not typically allowed with other benefits, such as spousal benefits.)

You could start receiving reduced survivor benefits at 60 and switch to your own maxed-out benefit at 70 — or start your own reduced benefit at 62 and switch to the unreduced survivor benefit at 67, for example. The right course will depend on the amounts involved and the math can be complicated, so consider consulting a financial planner or Social Security claiming strategy sites such as Social Security Solutions or Maximize My Social Security.

Q&A: Delaying Social Security benefits

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Dear Liz: I get conflicting answers on whether my wife, who turns 62 in April, should take her Social Security now. I am 68 and am holding off taking my benefits until 70. Will her survivor benefits include the 8% annual increase I will receive when I start benefits in September 2024? And should she take her benefits now at age 62 (especially since we both plan to retire this year)?

Answer: Your wife’s survivor benefit would include the delayed retirement credits you’re earning by putting off your application. In other words, if you died tomorrow, her survivor check would be about 20% larger because you waited. (That assumes you turned your full retirement age of 66 in September 2020, and have earned about 2.5 years’ worth of 8% annual increases.)

If you make it to 70, she would receive all four years’ worth of 8% annual increases (plus, of course, all the cost-of-living increases your benefit earned in the meantime).

Because your benefit determines the survivor’s benefit, it’s more important for you to delay than for her to put off her application. Still, she most likely will maximize her lifetime benefit by delaying if she can.

The right strategy depends on the details of your financial situation, so consider consulting a fee-only financial planner for personalized advice.

How your ex could boost your Social Security

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Katja Rivera, 64, is a massage therapist and theater director in Berkeley, California, who says she’s never earned more than about $30,000 a year. When her two daughters were small, she sometimes earned much less.

But Rivera was married for 10 years to a man who has consistently earned much more than she has. When Rivera retires in a few years, she expects to receive a Social Security check based on her ex’s greater earnings.

Many divorced people don’t realize they can get Social Security benefits derived from their ex-spouse’s work history, says William Meyer, founder of Social Security Solutions, a website that helps people determine when and how to claim Social Security. Those who are aware of the benefits often misunderstand crucial details and can make decisions that cost them tens of thousands of dollars over their lifetimes, he says.

In my latest for the Associated Press, learn how your ex could boost your Social Security.

This week’s money news

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This week’s top story: Smart Money podcast on how to leverage inflation for your benefit. In other news: Justice department sues to block JetBlue, Spirit merger, 3 tax credits not to miss when you file this year, and 3 ways to get your income and other money faster.

Smart Money Podcast: How to Leverage Inflation for Your Benefit
In this week’s episode, we’re sharing NerdWallet’s recent webinar, which was about inflation.

Justice Department Sues to Block JetBlue, Spirit Merger
On Tuesday, the Justice Department sued to block JetBlue Airways from taking over Spirit Airlines in a $3.8 billion deal.

Don’t Miss These 3 Tax Credits When You File This Year
Credits are a more powerful tax-saving tool than deductions, and common programs, such as the earned income tax credit, can save you thousands.

3 Ways to Get Your Income and Other Money Faster
To get money faster, use early direct deposit, Zelle or instant cash-out on Venmo or Cash App. But availability varies.

5 ways to deal with money envy

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If you’ve ever scrolled through social media posts only to be gripped with envy when you see a friend posing in front of their beautiful house or enjoying themselves at a luxurious resort, then you understand how easy it is to want what other people have. Financial envy is real, and sometimes it can be ugly.

“Financial envy is absolutely normal. It’s part of the human condition,” says Yvonne Hampton, who holds a doctorate in personal financial planning and runs a financial therapy practice in the Kansas City, Missouri, area.

And it’s not necessarily a bad thing, she adds. “It’s an opportunity to dig more deeply internally about why we have that feeling so we can work through it and be happier in our own lives.”

In Kimberly Palmer’s latest for the Associated Press, learn five steps to take to deal with money envy.