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...

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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...

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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...

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Saving Money When You’re Young? You Can Start Small

When you’re young and juggling lots of financial responsibilities, from repaying student loans to saving up for a down payment on a home, you may have only a few dollars left over each month to put away for retirement. The problem is, you generally need a lot more than just pocket change to invest in the mutual funds that will help grow your savings. Today, the average minimum investment for a U.S. stock fund — a core holding in any...

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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...

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