Ask Liz Weston

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Social Security

Monday’s need-to-know money news

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file_161555_0_tax refundToday’s top story: Smart things to do with your tax refund. Also in the news: New options for payday loan borrowers, how to build an emergency fund on a low income, and how to decide when to claim Social Security.

Smart Things To Do With Your Tax Refund
Putting your refund to good use.

A New Option for Payday Loan Borrowers
Borrowers in California and Texas may have better options.

Build Your Emergency Fund On a Low Income With a Simple Bill Tweak
A slight tweak in how you pay your bills could save the day.

3 fast facts that can help you decide when to claim Social Security
Making the best decision for your retirement.

Q&A: Social Security vs. state pension

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Dear Liz: I worked enough in private industry to qualify for Social Security benefits, but then worked for the state and did not contribute to Social Security for another 20 years. So, I will have a state pension at my current salary as well as Social Security representing my former salary, which was about one-third of what I’m making now. My question is, would it be of value to retire early and return to private industry for a few years?

Answer: Your Social Security benefit is likely to be reduced because you’re getting a pension from a job that didn’t pay into Social Security. This is known as the windfall elimination provision, and you can learn more about it on the Social Security website.

You can avoid the provision if you had 30 years or more of “substantial earnings” (which varies by year but was at least $22,050 in 2015) from jobs that paid into Social Security.
It probably wouldn’t make much sense to quit a well-paying job with a presumably generous pension to try to boost a much smaller Social Security payout. But a fee-only financial planner could run the numbers for you and explain your various options.

Q&A: Social Security divorced spousal benefits

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Dear Liz: A friend was told by Social Security that she could not collect spousal benefits on her ex-husband’s work record because she did not have his Social Security number. How can I help her find it?

Answer: Your friend may have run into a new Social Security employee, or at least one who is not well-informed. Social Security says on its website that people who qualify for divorced spousal benefits do not need their exes’ Social Security number as long as they can provide enough identifying information for the agency to locate his record. She does need to have a marriage certificate and divorce decree along with her own birth certificate.

To qualify for divorced spousal benefits, the marriage must have lasted 10 years and your friend must currently be unmarried

Q&A: Taking Social Security at 70

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Dear Liz: My husband will be turning 70 in August. Must he start taking Social Security at 70 or can he wait a little longer? He will still be earning money and if I understand correctly that will lower the amount he will receive. Does he have to do anything like apply for it or do they know he is turning 70?

Answer: He should apply for retirement benefits — online at www.ssa.gov, in person at a local office or by calling 800-772-1213 — three months before he turns 70. Benefits max out at that age, so there’s no reason to delay any longer.

The earnings test you fear only affects people who start benefits before their full retirement ages, which for your husband was 66. When you start benefits early, Social Security deducts $1 for every $2 you earn over a certain amount ($15,720 in 2016). After full retirement age, that penalty disappears.

Monday’s need-to-know money news

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returnToday’s top story: What retirees need to know about the new Social Security deadline. Also in the news: States with no income tax, tax breaks for getting older, and why you need an “Armageddon Fund.”

What Retirees Need to Know About the New Social Security Deadline
Consider your options carefully.

U.S. States With No Income Tax
In case your recent tax fillings have put you in a relocating mood.

​Get tax breaks just for getting older
With age comes wisdom AND tax breaks.

Create an “Armageddon Fund” to Save for a Major Emergency and Still Earn Interest
Your emergency fund just got scarier.

Monday’s need-to-know money news

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invest-emergency-fundToday’s top story: How to build an emergency fund. Also in the news: Social Security mistakes to avoid, the best way to save for a down payment on a home, and what happens when your 401(k) gets too big?

How to Build an Emergency Fund
Creating a financial buffer.

Don’t Make These 3 Social Security Mistakes
Social Security isn’t one size fits all.

The best way to save for a down payment
Where you should keep your money before making a purchase.

Can your 401(k) account be too big?
How to avoid penalties and extra taxes.

Best Leap Day Sales and Deals of 2016
It only happens once every four years!