Ask Liz Weston

Get smart with your money

Q&A

Q&A: Windfall creates Medicare headache

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Dear Liz: A couple of years ago, I was forced to receive a windfall by the sale of a company in which I held stock. Besides taking a huge tax hit, I just got my Social Security estimate for 2021 in which my Medicare bill went up by 47%. This year my income will go back down to normal levels. Is there any way to convince Social Security that this was a one-time event and it shouldn’t adjust my Medicare premiums?

Answer: There’s typically a two-year lag between receiving a windfall and potentially having your Medicare premiums raised because of IRMAA (Medicare’s income-related monthly adjustment amount). You can appeal the increase if your income dropped in the meantime because of one of the following life-changing events:

Marriage
Divorce or annulment
Death of a spouse
Work stoppage
Work reduction
Loss of income-producing property (because of a disaster or other event beyond your control, not due to a sale or transfer of the property)
Loss of pension income
Employer settlement payment (due to employer’s bankruptcy or reorganization)
If any of those circumstances apply, you can call Social Security at (800) 772-1213 to arrange an interview. Alternatively, you can download form SSA-44 from the web and mail it in. You will need to provide proof of the event, such as a death certificate, divorce decree or documents from an employer.

Q&A: How to help your adult kids build their own credit

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Dear Liz: My first house is paid for, and my oldest daughter and her husband are living there now. I added her name to my credit card, which is paid in full every month, but otherwise she hasn’t established any credit. I have been paying the utilities up until now, but they are going to take them over. Will changing my name and direct debit bank information to theirs on the accounts help establish her credit?

Answer: Some alternative credit-scoring systems do use utility payments to supplement the information in people’s credit reports. Experian Boost, for example, allows people to add such payments and potentially increase their Experian credit scores. Still, your daughter would be smart to continue adding traditional credit accounts to her reports.

One way to do that is with something called a “credit builder loan,” which is offered by some credit unions and at least one online lender, called Self. Essentially, the applicant borrows a certain amount, which the lender puts in a savings account or certificate of deposit. The borrower can claim the money after making a certain number of payments. The payments are reported to the three credit bureaus, contributing to her scores.

She also could apply for a credit card on her own, to supplement the one you added her to. If her credit isn’t yet good enough to qualify for an unsecured card, she could consider getting a secured card that gives her a line of credit equal to the amount she deposits with the issuing bank.

Q&A: Don’t get creative with mom’s money

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Dear Liz: My 91-year-old mother lost her mobile home (and everything else) in a fire. I was able to put her in assisted living and she is actually doing better than when she was by herself. There was insurance money, which is now in a joint account, but considering her age, we have decided not to buy another place. Is there something I should do with this money? Friends have told me I should invest it. Her new home will keep her whether she pays or is (eventually) on Medicaid.

Answer: You should talk to an elder law attorney before doing anything with the money. Typically, your mom wouldn’t be able to get on Medicaid until she spends virtually everything she has. If she tries to avoid spending her money by transferring it improperly, the transfer could delay her eligibility. You can get referrals from the National Academy of Elder Law Attorneys.

Q&A: Her dead ex’s kids can’t dictate benefits

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Dear Liz: My husband and I were living apart but not legally separated when he passed away. He was receiving disability benefits. His children, who are grown, tell me I am not eligible for widow or survivor benefits and that only they can collect his benefits. I am disabled myself and 51. Do their claims hold any weight? Could he have removed me as a recipient?

Answer: No and no. The children are wrong, not just about your eligibility for benefits but also about their own. Social Security survivor benefits typically aren’t available to children over 18, but they are available to widows and widowers starting at age 60, or starting at 50 if the spouse is disabled.

As long as you weren’t divorced, you would be eligible for survivor benefits. And if you had divorced, you could still be eligible for survivor benefits if the marriage lasted at least 10 years.

You can call the Social Security toll-free number at (800) 772-1213 for more information.

Q&A: When your friends seem to have more money than you: Getting over money envy

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Dear Liz: I am a 41-year-old man who is married with small children. I have finally reached the point financially where I am meeting or exceeding personal goals for retirement, college savings and reduced monthly expenses. I have a high income. I drive a piece-of-crap car because it’s paid for, but I am still hemorrhaging cash! Yet my peers are buying second homes at the lake or in ski country. What am I doing wrong?

Answer: Congratulations! You’re doing a lot right with your money, and you may not be doing anything wrong. To borrow a phrase, you can’t judge your insides by other people’s outsides.

Some of your peers may have inherited money, or received infusions from generous parents. More likely, they’re not saving enough, or at all, for retirement or their children’s educations.

They also may be deeply in debt. Although their lives may look good on the outside now, their futures may be a lot less flush.

You can’t know how other households conduct their financial affairs, so keep focusing on your own situation and how you can make it better. If you feel like you’re hemorrhaging cash, track where the money is going for a while. If you discover as a family that you’re spending on things that aren’t important to you, you and your spouse can look for ways to redirect spending to better support your values.