Ask Liz Weston

Get smart with your money

Q&A

Q&A: Is it wise to have all your accounts under one roof?

By

Dear Liz: I’m setting up accounts post-divorce, while learning personal finance on the fly. Is it “safe” or advisable to have all of my larger accounts — IRAs, 401(k), cash management — with the same institution, or should I spread them around? I have smaller checking and savings accounts with a good credit union.

Answer: Using a single investment firm is certainly convenient, and most people will be just fine having all their accounts in one place.

The Securities Investor Protection Corp. covers accounts up to $500,000, including up to $250,000 in cash. This insurance protects you if the brokerage fails and your cash or securities go missing.

Customers with multiple accounts often get more coverage. For example, IRAs and Roth IRAs would each get up to $500,000 in coverage, as do individual and joint brokerage accounts. A person with all four types of accounts would have $2 million in coverage. Accounts for corporations, trusts, estate executors and guardians of minors also get separate coverage. For more details, see SIPC’s brochure, “How SIPC Protects You.”

Your 401(k) has its own protections. Assets in 401(k)s are placed into trust accounts, separate from the investment firms that administer the plans and the employers that sponsor them. The money can’t be touched by creditors of either one.

Q&A: Caught between Social Security’s two retirement ages

By

Dear Liz: I’ve received multiple conflicting answers from Social Security and hope you can clarify. My husband waited to collect until he was 70 and unfortunately passed away soon afterward. I am 66 and was instructed to apply for survivor benefits because I would be eligible to collect his enhanced benefit at age 66 plus two months. I received an “approval of application” letter in January 2024 and was expecting payment on March 20, but nothing! I went on the SSA.gov website and saw my status was “ineligible due to being employed or still working.” I’m an independent human resources consultant. I finally got through to Social Security on the phone and was told I wouldn’t be able to collect his benefits (which would be higher than mine due to his age and earnings) until I was at full retirement age, 66 plus six months. Is this true?

Answer: Yes. You just got squeezed between two different types of full retirement age.

Many people don’t realize they have two full retirement ages, one for retirement benefits and a slightly younger one for survivor benefits. At 66 and two months, you qualified for your full survivor benefit, meaning that the amount wasn’t reduced because of an early start. However, the earnings test applies because you hadn’t yet reached your full retirement age for retirement benefits. The earnings test reduces your benefit by $1 for every $2 you earn over a certain limit, which in 2024 is $22,320.

The good news is that the earnings test will end when you reach 66 years and six months, and you’ll start receiving your survivor benefit regardless of how much you get paid.

Q&A: How do I find an estate planning attorney I can afford?

By

Dear Liz: The question from the couple who wanted to leave a home to their four children hit home with me. I’m in the same boat but with only two kids. How do I go about finding an estate planning attorney that I can trust and also afford?

Answer: Start by asking for recommendations from friends, family and any financial professionals you trust. If you already have a CPA, for example, chances are they can refer you to a good estate planning attorney in your area. Consider interviewing a few candidates to make sure they handle situations similar to yours.

If you’re trying to keep costs down, consider the attorney’s overhead. Fancy buildings in expensive areas may impress, but you can find competent attorneys in less ornate offices, perhaps in suburbs or smaller towns, who charge less.

Q&A: Be patient! Find an expert!

By

Dear Liz: I have a quick question and would like a personal response. What email address can I use?

Answer: You can use the email address of the financial planner you hire to advise you.

Just because a question is quick doesn’t mean the answer will be. Answers to financial planning questions take time and effort to craft, plus the appropriate response may vary depending on the details of the questioner’s circumstances. This column answers a few questions of general interest for educational and entertainment purposes. A hired advisor can answer an array of queries and provide truly personalized guidance to help you get the most from your money.

Q&A: Update on that CPA search engine

By

Dear Liz: I am trying to find a CPA personal financial specialist per your column. Using the link you provided, I was told that there are zero people who fit that description in my area, which is hard to believe. Can you help?

Answer: A spokesperson for the American Institute of CPAs, which provided the link, notes that the directory’s “search by Zip code” function isn’t working properly and suggested searching by state or city instead.

Q&A: Clearing up the deal with Social Security survivor benefits

By

Dear Liz: I read your column regarding the wife who filed for her Social Security benefits at 62 and received $1,500, while her husband filed at 70 and was receiving $4,600. You noted that after the husband died she could receive his entire $4,600 payment, but wouldn’t the amount she receives as a survivor’s benefit be reduced due to her early filing?

Answer: That’s not true. An early start reduces retirement and spousal benefits. Survivor benefits operate by different rules.

A survivor benefit can be up to 100% of what the deceased spouse received or had earned. If the husband had filed for his own benefit earlier, for example, that would reduce the survivor benefit the wife could receive. Survivor benefits also can be reduced if the survivor starts receiving them before reaching his or her own full retirement age for such benefits.

But the wife’s early start on her own benefit doesn’t affect the survivor benefit she could get if he dies first.