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Social Security

Q&A: Surviving on Social Security Disability

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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.

3 new, must-read money books

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College SavingsThree recently-published books are well worth your time and money, thanks to talented authors who offer new takes on some familiar financial topics: Social Security, raising money-smart kids and investor manias.

The first is “Get What’s Yours: The Secrets to Maxing Out Your Social Security” by economist Laurence J. Kotlikoff and journalists Philip Moeller and Paul Solman. This book is a deep dive into Social Security claiming strategies, which may not sound sexy until you learn that people are costing themselves hundreds of thousands of dollars by making bad decisions about when and how to get their benefits. Larry is one of my go-to sources for Social Security questions, and his grasp of the intricacies of this complex system is amazing. Even more amazing is how readable this book is given those complexities.

“The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money” by New York Times personal finance columnist Ron Lieber is one of the best books I’ve read about children and money. Ron aims his book at more affluent families–those with incomes over $50,000–but most of what he writes pertains to any American family that can buy its children everything they need and at least some of what they want. The chapters on what to tell your kids about how much you make and how to handle allowances are particularly thought-provoking.

“The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute” by best-selling author and all-around wunderkind Zac Bissonnette. You don’t even have to be old enough to remember the Beanie Baby craze to enjoy this gossipy (but deeply researched) account of how so many people lost their minds–and not infrequently their savings–in a frenzy to corner the market on mass-produced stuffed animals. It’s not just collectors who should read this book. Any investor who wants to avoid being taken in by an unsustainable mania should take note. In fact, this book should be required reading for every high school personal finance course, although some of Beanie creator Ty Warner’s weirder proclivities might have to be edited out.

 

 

Q&A: Spousal benefits and Social Security

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Dear Liz: I am divorced. If I apply for Social Security spousal benefits at age 62, based on my former spouse’s work record, can I continue to collect it if I get remarried? I understand that I cannot switch from spousal to my own benefit if I start early. But if I remarry, do I continue to collect spousal benefits or do I get nothing?

Answer: Spousal benefits based on an ex’s work record end when you remarry. (Some people think they can continue spousal benefits if they marry after they reach age 60, but that’s not true. Only survivor benefits for widows and widowers continue when a recipient remarries after age 60.)

When you file for spousal benefits before your own full retirement age, you are deemed to be applying for both your own benefit and your spousal benefit, and essentially given the bigger of the two, said economist Laurence Kotlikoff, founder of MaximizeMySocialSecurity.com. If the spousal benefit was larger and you remarry, the Social Security Administration looks at your benefit compared to your spousal benefit based on your new spouse and again gives you the larger of the two.

Understand that your benefit will be deemed to have started when you first applied for benefits. So rather than growing almost 7% each year between age 62 and your full retirement age, which it would have had you put off filing, it will effectively grow only at the rate of inflation.

That’s why it’s usually a better course to wait to file until your own full retirement age. Then you have the option of filing a restricted application just for spousal benefits, leaving your own benefit alone to grow (at 8% annually between full retirement age and age 70). You can switch to your own benefit when it maxes out at age 70.

Want to protect yourself from tax return theft? You can’t.

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Zemanta Related Posts ThumbnailA surge of bogus tax return filings has highlighted a grim truth: We can’t protect ourselves from this rising threat.

An underfunded, understaffed IRS manages to thwart many attempts, but still sent more than $5 billion in refunds to identity thieves in the 2013 tax year. Most state tax agencies aren’t nearly as sophisticated in detecting fraud, which is why the bad guys seem to be targeting them this year.

The core problem is that the key to your tax refund–as well as to your credit and your health records–is your Social Security number, which was never intended as an all-purpose identifier.

Even if you’re vigilant in protecting your  number, you’re still at risk, because a lot of companies aren’t so vigilant.

Court Ventures, now a subsidiary off Experian, sold an unknown number of records including Social Security numbers to identity thieves from a database of 200 million files. Anthem’s breach exposed 80 million people’s records. And they’re hardly the only ones. The US Postal Service, University of California Berkeley, the Oregon Employment Department, dozens of hospitals and medical centers–the list of places Social Security numbers have been stolen goes on and on and on. (Check out the Privacy Rights Clearinghouse chronology of breaches, showing more than 1 trillion records have been compromised.)

You may be able to beat the thieves to your tax refund by filing early–but that boat has already sailed for many victims.

Read more in my Reuters column, “Why identity thieves are targeting your tax return.”

Q&A: Social Security disability insurance and survivor benefits

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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.

Q&A: Social Security survival and spousal benefits

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Dear Liz: If my spouse takes spousal benefits from Social Security before his full retirement age, does that ultimately affect the survivor benefits he could receive?

Answer: As covered in previous columns, applying for spousal benefits before his full retirement age of 66 or 67 will lock him into a diminished check and preclude him from switching to his own benefit later. It does not, however, affect what he would receive as a survivor. His survivor benefit would be equal to what you were receiving at your death. To protect him (and yourself, should you be the survivor), you probably should delay starting benefits as long as possible to make sure you’re receiving the maximum benefit.