Social Security Q&A: Explaining How Retirement Benefits Are Calculated
Question: How are my retirement benefits calculated? Answer: Your Social Security benefits are based on earnings averaged over your lifetime. Your actual earnings are first adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average monthly indexed earnings during the 35 years in which you earned the most. Social Security applies a formula to...
Money Talk: Gift to Son Not a Charitable Donation
Question: Our son bought a house and lost his job two months after the purchase. We have helped him stay afloat. Thankfully he has a new job. We don’t expect to get the money back — he is still trying to get out from under — but we have given him close to $10,000. Can we claim this as a “gift” to him on our income taxes? Answer: The IRS doesn’t view money given to family members as a charitable donation. In other words, there’s no tax...
Social Security Q&A: Benefits to Kids After Retirement
Question: I have two minor children at home and I plan to retire soon. Will my children be eligible for monthly Social Security benefits after I retire? Answer: Monthly Social Security payments may be made to your children if: ■ They are unmarried and under age 18; ■ Age 18 or 19 and still in high school; or ■ Age 18 or older, became disabled before age 22, and continue to be disabled. Children who may qualify include a biological...
Money Talk: Pay in Full on Time for Best Results
Question: I have little to no information — good or bad — in my credit reports. I am considering obtaining a secured loan from my credit union to establish better credit. Does it make any difference to my credit score if the credit union reports the loan as “secured”? Answer: Credit scores don’t treat installment loans differently based on whether they’re unsecured, with just your promise to repay, or secured, which means backed by an...
Money Talk: Deciding Which Loan to Pay Off
Question: I am going to pay off one of my daughter’s private student loans. One has a balance of $8,500 at 4 percent interest and the other is for $7,500 at 6 percent. Which one should I pay off? Answer: You have a lucky daughter, either way. In addition to balances and rates, the other variable you need to consider is whether the rates are fixed or adjustable. These days, many private student loans have fixed rates, but in the past...
