Tuesday’s need-to-know money news

Today’s top story: Disability and Credit Access: why scores are key in a crisis. Also in the news: 4 features to look for in the best credit cards of 2022, considering the suburbs, and is trading employee equity a good idea?

Disability and Credit Access: Why Scores Are Key in a Crisis
Having good credit can help you get low-interest loans or credit cards to help you cover your bills in an emergency. Here’s how to get started.

Best Credit Cards of 2022: 4 Features to Look For
Credit card issuers are offering more choice and flexibility as they add features to new cards.

Can’t Buy the House You Want? Consider Moving Out of the City
Suburban and small-town living has its perks, including more spacious and affordable choices for first-time home buyers.

Is Trading Employee Equity a Good Idea?
Buying or selling employee equity has become easier and more accessible, but is it right for your portfolio?

Q&A: Balancing disability and survivor benefits

Dear Liz: My 70-year-old husband is retiring at the end of the month. I’m 64 and collecting Social Security disability. If he should pass away before me, which is not likely considering my medical conditions, will I still get at least half of his Social Security income instead of my own, if it’s more than what I’m already collecting? I do understand that my disability benefit will stop at 65. I will then be collecting a regular Social Security benefit at my retirement age of 67. We are totally confused and trying to decide whether to forgo getting a retirement annuity benefit for me from his employer pension if he should pass before me.

Answer: Your disability benefit doesn’t stop at 65. It continues until you reach your full retirement age of 67, and then converts to a retirement benefit. The name for the benefit changes but the amount doesn’t.

If the amount you’re receiving is less than what your husband gets, and your husband dies first, you will get a survivor’s benefit equal to what he was getting. Survivors don’t get their own benefit plus their spouse’s; they just get the larger of the two benefits.

With pensions, it would be smart to get expert advice before you sign away your right to a survivor benefit. The default payout option for a married person is typically “joint and survivor,” which means the survivor would continue to receive the checks after the person dies. Opting for a “single life” payout instead increases the monthly check, but the money stops when he dies. While it may seem more likely you’ll die first, there are no guarantees and waiving your right to a survivor benefit could lead to a steep drop in your income.

The pension may offer different joint and survivor options, such as 100%, 75% and 50%. With the 100% option, the payments continue to be the same if he dies first. The 75% and 50% options reduce the payment after his death to 75% or 50% of the previous amount. Choosing 75% or 50% could be a decent compromise that allows you to get more money now but still get payments should he die first.

Friday’s need-to-know money news

help-parents-manage-moneyToday’s top story: What retailers don’t want you to know about Black Friday. Also in the news: What to know about tax breaks for disabled individuals, how managing your money is like losing weight, and three retirement tips your not thinking about.

4 Things Retailers Don’t Want You to Know About Black Friday
You might not be getting the best deals.

What to Know About Tax Breaks for Disabled Individuals
Taking advantage of deductions.

How Managing Your Finances Is Like Losing Weight
One day at a time.

3 retirement tips you’re not thinking about
Tips that fly under the radar.

Thursday’s need-to-know money news

321562-data-breachesToday’s top story: Starbucks is the latest hacker’s delight. Also in the news: Getting control over your spending, advice that could ruin your retirement, and money fears that could sabotage your net worth.

Reports: Hackers Targeting Starbucks Mobile Users
How to protect your caffeine fix.

3 Tips for Getting Control Over Your Spending
Reining it in.

This Popular Financial Advice Could Ruin Your Retirement
Why dying broke is a bad idea.

6 Fear-Driven Money Moves That Sabotage Your Net Worth
Coping with financial anxiety.

5 Ways to Mitigate the Financial Downside of a Disability
Reducing money stress.

Q&A: Surviving on Social Security Disability

Dear Liz: I’ve been on disability for over 10 years, and I currently receive $1,527 a month in Social Security Disability Insurance. My rent starting in March will be $1,400. I’m not opposed to moving, but after checking literally thousands of listings, I found that what I’m paying is not unusual for my area. I’m living on savings now. I’d like to have a job but am hard-pressed to find work. What should I do?

Answer: You don’t have to do anything if you have enough savings to last the rest of your life. Assuming that’s not the case, you need to do something to dramatically lower your cost of living.

You may qualify for housing assistance. You can use federal government sites such as Benefits.gov or HUD.gov to explore your options, or search for the name of your community and “rental assistance programs.”

You may discover that your low income is still too high for the available programs or that there’s a massive waiting list. If that’s the case, you still have options.
If your disabilities allow, you could earn low or even free rent by working as an apartment manager, a companion to an elderly person, a babysitter for a family with young children or a caretaker for a home or estate.

If your apartment is in a desirable area, you may be able to rent it out a few days a month on Airbnb, Homeaway or another vacation rental site to offset your cost. (Check with your landlord first.)

You could look for a roommate or other shared housing in your community, or consider moving to a less expensive area. You may need to move only a few miles to find a more affordable place, or you may have to consider transferring to a different city or state.

If you’re willing to be truly mobile, you could do what some retirees on limited incomes do and live full-time in a recreational vehicle. Some get jobs as camp hosts or other campground workers in exchange for a free site.

In general, you shouldn’t pay more than about 30% of your gross income for housing. Limiting your rent to 25% is even better, since it will give you more wiggle room to afford the rest of your life.

Q&A: Social Security disability insurance and survivor benefits

Dear Liz: My first wife died six years ago at age 60. I was 52 and we had been married 27 years. My wife was on Social Security disability for 15 years before her death. My only dealing with Social Security after her death was to cancel her payments. I received no benefits of any kind. I am now remarried. Were there any Social Security benefits that I failed to request? Is there any effect on my future retirement?

Answer: You may have been eligible for a one-time payment of $255, but that’s likely all.

We’ll assume your wife was receiving Social Security Disability Insurance payments, which are disability checks paid to workers who have enough work credits in the Social Security system. SSDI is different from Supplemental Security Income, or SSI, a need-based federal program for low-income individuals who are disabled, blind or over the age of 65. Survivor benefits aren’t available under SSI, but they are under SSDI.

The rules for SSDI survivor benefits are similar to those under regular Social Security. Survivor benefits typically are available starting at age 60. Survivors who are disabled can begin receiving the benefits starting at 50, and survivors at any age can qualify if they’re caring for the deceased person’s child who is under 16. When you remarry before age 60, you can’t claim survivor benefits based on your first wife’s Social Security record unless the subsequent marriage ends in death or divorce.

Monday’s need-to-know money news

crop380w_istock_000009258023xsmall-dbet-ball-and-chainToday’s top story: Becoming debt free and staying that way. Also in the news: How to find the leaks in your budget, six ways to become “rich”, and what to do if you need a credit increase.

How to Become Debt-Free — and Stay That Way
It’s not as impossible as it sounds.

How to Find & Fix Your Budget Leaks
Sealing the money drips.

6 ways to become rich without even trying
Well, maybe a little trying.

Need Some Flexibility? 6 Ways to Increase Your Credit Limit
Proceed with caution.

Disability Benefits: How Social Security Decides If You Deserve Them
Deciphering the formula.

Unexpected ways to save on insurance

Zemanta Related Posts ThumbnailMost ideas for saving money on insurance are pretty shopworn. You know the advice: Raise your deductible. Get discounts. Shop around.

So I was pretty psyched to hear a Certified Financial Planner talk about less common ways that advisors can save their clients money. CFP Mark Maurer is president and CEO of Low Load Insurance Services, which caters to fee-only planners. Maurer recently conducted a webinar that covered ways to save money on the big-ticket policies: life, disability and long-term care insurance.

What I learned:

Beware of riders. Two commonly-pushed riders are “waiver of premium” and “return of premium.” Maurer calls these the “undercoating” of the insurance business; in other words, they’re pricey add-ons that may not have the value you’re told.

Premium waivers allow you to stop paying your premiums if you’re disabled, but you typically have to be totally disabled to qualify (unable to work in any occupation, vs. your own occupation, for example). Some policies have the same definition of disability as Social Security, which is notoriously tough to qualify for.

If you’re really concerned about not being able to pay your premiums, then the solution may be disability insurance, Maurer said. Each dollar you’d spend on a DI policy would likely buy you far more insurance than what you’d get from a waiver of premium rider.

Return of premium also sounds good—the idea being that if you don’t use your long-term care policy, your heirs will get back the money you’ve paid in. These riders come with restrictions, too. Typically you have to own your policy at least 10 years and not have made a claim within those 10 years. Any claims thereafter would be deducted from your heir’s payout.

Again, Maurer suggests asking, “What are you really after?” In this case, it’s money for heirs. Buying a permanent life insurance policy likely will offer a better and more certain payout compared to an ROP rider, he said.

Apply the 80/20 rule to long term care insurance. If you’ve ever had a loved one in a nursing home, you know how shockingly expensive custodial care can be. Those who buy long term care insurance often opt for the daily payout amount that will cover either a private or a semi-private room in their area.

Maurer points out, though, that nursing home costs include expenses the patients would be incurring whether or not they were there—expenses like meals and laundry, for example, that typically account for 20% of the total.

So, one way to reduce premiums is to insure for 80% of the costs. Instead of the $255 a day that the average Florida nursing home costs, he suggests, shoot for something like $200 a day…which typically lowers your premium by, guess what, 20%.

Lifetime benefits on disability insurance aren’t a slam dunk. If you have to be disabled, wouldn’t you rather get checks for life rather than having them stop at age 65, when most DI policies cut off?

Well, of course! But like the riders mentioned above, adding lifetime benefits may not give you all the coverage you think you’re getting.

A typical policy will continue 100% of your benefit only if you’re disabled by age 45 and continue to be disabled until age 65, Maurer said. Those disabled after 45 get a smaller benefit, based on a sliding scale that gives you less the older you are when you become disabled. Someone who’s disabled at 58, for example, might get only 35% of his monthly benefit after age 65.

Is that worth premiums that might be 33% higher? Only you can answer that question, but Maurer, who has two disability policies, has decided against adding lifetime benefits to either.

“I didn’t think it was worth the additional premium,” he said.

 

Friday’s need-to-know money news

Old windmill in the town of Gorinchem. NetherlandsHow to save big bucks when traveling, preparing for back to school shopping, and what mistakes to avoid when managing your 401(k).

5 Coolest Travel Share Websites
Why pay for an overpriced hotel room when you can have the literal run of the house?

9 Money Management Tips for Newly Employed Millennials
Finally making real money is exciting. But finding ways to save it is vital.

Help with Managing Finances for People with Disabilities
Things to take into consideration when taking care of a disabled person’s finances.

2013 Sales Tax Holidays for Back-to-School Shopping
Find out when your state’s holiday is and what purchases will be tax-free.

The Experts: The Biggest 401(k) Mistakes to Avoid
Important tips on how to properly manage your 401(k).