Suddenly retired? Here’s what to do next

The pandemic seems to be driving a surge of early retirements as businesses close or downsize and older people weigh the health risks of continuing to work.

The share of unemployed people not looking for work who called themselves “retired” increased to 60% in April from 53% in January, according to a study by three economists. The study was done in the early days of the pandemic, well before tens of thousands of businesses nationwide closed permanently and others began offering early retirement packages to trim their workforces.

In my latest for the Associated Press, how to avoid making hasty decisions that could cause you to run out of money.

Friday’s need-to-know money news

Today’s top story: How to choose a Medicare prescription drug plan in 5 steps. Also in the news: Should you go back to school like many grads are, it’s time to audit your autopay subscriptions, and 1 in 5 Americans could be out of money by Election Day.

How to Choose a Medicare Prescription Drug Plan in 5 Steps
It’s important to remember that the drugs covered and the costs you pay under Plan D can change year to year.

More Grads Are Going Back to School: Should You?
Consider the options, price and return on investment before returning to graduate school.

It’s Time to Audit Your Autopay Subscriptions
Stop paying for services you don’t use.

1 in 5 Americans could be out of money by Election Day
More than 20% of Americans have less than three weeks of financial runaway

Wednesday’s need-to-know money news

Today’s top story: How to shop during Medicare open enrollment. Also in the news: Don’t wait to apply for student loans for next year, 6 things you should add to your pandemic travel kit, and how to handle a suspicious inquiry in your credit report.

Medicare Open Enrollment: How to Shop
Two Medicare-related open enrollment periods offer a chance to switch your coverage. Here’s how to compare plans.

Don’t wait to apply for student loans for next year—some of the money could actually run out
Apply for the FAFSA now, there is ‘a lot of risk in applying late’

6 things you should add to your pandemic travel kit
It’s a whole new ballgame.

How to Handle a Suspicious Inquiry in Your Credit Report
Contact the lender directly.

Tuesday’s need-to-know money news

Today’s top story: No credit? 3 steps to qualify for a great credit card. Also in the news:Ugrading your space while working at home means a call to your insurance agent, how to avoid impulse buying by disabling Amazon’s 1-Click ordering, and how to budget for long-term unemployment.

No Credit? 3 Steps to Qualify for a Great Credit Card
If you’re eager for a rewarding credit card but have little or no credit, these steps can help you qualify.
Upgrading Your Space While Stuck at Home? Get It Insured

Upgrading Your Space While Stuck at Home? Get It Insured
Notify your insurer ASAP.

Avoid Impulse Buying by Disabling Amazon’s 1-Click Ordering
Prime Day is coming up soon.

How to Budget for Long-Term Unemployment
Understand the steps for building a budget after experiencing a job loss.

Beware high-risk homes that drive up insurance

When house hunting, the price of homeowners insurance probably isn’t top of mind. But homes with hidden risks can make getting coverage difficult, expensive or both. Learning how to identify them could save you a bundle.

This could be a particularly important concern for first-time homebuyers and those moving from cities to suburban or rural areas who may not be aware of common hazards, says Jennifer Naughton, risk consulting officer for North America for Chubb, an insurance company.

In my latest for the Associated Press, learn how to identify high-risk homes.

Monday’s need-to-know money news

Today’s top story: Mortgage Outlook: A pre-election pause for October rates? Also in the news: A new episode of the SmartMoney podcast on the unequal employment recover and the case for used cars, many avoid bankruptcy out of fear, and how to opt out of pre-screened credit offers.

Mortgage Outlook: A Pre-Election Pause for October Rates?
Rates are standing still.

Smart Money Podcast: Unequal Employment Recovery, and the Case for Used Cars
Used cars are a no-brainer if you’re trying to save money.

Many avoid bankruptcy out of fear
People often wait too long to file, draining retirement accounts or other assets that would be protected

How to Opt Out of Pre-Screened Credit Offers
Reducing your junk mail.

Q&A: Changing tax law may have made home trust unnecessary

Dear Liz: I was told my father’s house did not qualify for a step-up in tax basis at his death because he had put the house in a qualified personal residence trust (QPRT). With your recent column mentioning the step-up when a home is inherited, I’m wondering if I paid unnecessary taxes.

Answer: In at least one sense, you may have.

Qualified personal residence trusts were a popular technique when the estate tax exemption limit was much lower. (Currently the limit is $11.58 million per person, but 20 years ago it was $675,000.) Putting a home in this kind of trust essentially froze its value for estate tax purposes while allowing the person who created the trust to continue living there for a certain length of time. At the end of that period, ownership of the home was transferred to the heirs and the person who created the trust had the option of renting the home from those heirs.

If the house hadn’t been put in a trust, the heirs would get a new tax basis when the owner died. The basis would be “stepped up” to the home’s current value, so there would be no capital gains tax owed on all the appreciation that occurred during the owner’s lifetime.

When a home has been placed in a QPRT, on the other hand, there’s no step-up in tax basis when the trust creator dies because the home already belongs to the heirs. When the heirs sell the home, they typically have to pay capital gains taxes on the appreciation that happened during the trust creator’s lifetime.

People who created these trusts were gambling that the estate taxes they would avoid would be substantially greater than the income taxes the heirs might owe. When estate tax limits were raised, many lost that bet.

So you didn’t pay unnecessary taxes in the strictest sense — you had to pay the taxes by law because the house was given to you before your father died. But in the larger sense, the tax bill you paid could have been avoided if the home hadn’t been put in that type of trust. If your father’s estate wound up being below the estate tax limit in the year he died, then the trust provided little benefit.

Friday’s need-to-know money news

Today’s top story: Credit card preapproval vs. pre-qualification. Also in the news: 3 ways to keep your distance with contactless payments, why sustainable investing could get a lot harder, and a look at your debt options.

Credit Card Preapproval vs. Pre-Qualification
Pre-qualification is a soft yes on qualifying for a card. Preapproval is a guarantee — but it can be a red flag.

3 Ways to Keep Your Distance With Contactless Payments
Touchless methods are convenient and secure, but the hygiene factor in the pandemic era could get more people on board.
Sustainable Investing Could Get a Lot Harder
The Labor Department wants to keep socially responsible investments out of 401(k)s and private pensions.

What Are Your Debt Relief Options?
Exploring the possibilities.

Thursday’s need-to-know money news

Today’s top story: Sustainable investing could get a lot harder. Also in the news: Why you should file the FAFSA ASAP, why savings accounts and CDs are still worth it despite low rates, and how to find your lost 401(k).

Sustainable Investing Could Get a Lot Harder
The Labor Department wants to keep socially responsible investments out of 401(k)s and private pensions.

The FAFSA Just Opened: Why You Should Apply Now
File the FAFSA early to get a better shot at more free money and more time to appeal if you need to.

Savings Accounts and CDs Are Still Worth It Despite Low Rates
Rates will rise again.

How to Find Your Lost 401(k)
Don’t leave hard-earned money behind.