Dear Liz: I am single with no children. I worked for a private employer for 36 years, retired at age 54, and am now 57 years old. My home is paid off. I receive a $2,400 pension. I have a nearly full-time job that averages $3,800 a month with 8% going to a 401(k) and 4% matching. I’ve seen many workers wait until age 65 to collect Social Security benefits and die a few years later. I also volunteer at the local VFW and listen to people’s complaints about not having money, especially women who are dependent on their husbands who unfortunately have passed away. So, is it bad to start collecting Social Security at age 63?
I am a very healthy person and have a long life in my family.
Answer: Some people die soon after they retire. But most people live well past their “break-even” age, and the small checks they give up by delaying Social Security payments are more than made up for by the larger checks they receive after waiting.
And those who die early…well, they’re dead. They no longer care about Social Security checks. The people who are very concerned about how much they are receiving are the ones who are surviving and using up their savings. Perhaps some VFW women had husbands who started receiving retirement benefits early, which prevented their wives from receiving survivor checks. A few years delay could have made a huge difference to women who have to survive for years or even decades on too little benefits.
That’s why it’s so important for the higher-income member of a married couple to delay starting Social Security for as long as possible, preferably until age 70, when benefits are at their maximum. This is also good advice for single people who have never been married and do not have enough benefits from others to supplement their own.
Additionally, enrolling in Social Security before the full retirement age of 67 means it’s means-tested. This test reduces your check by $1 for every $2 you spend over a certain amount, resulting in $22,320 in 2024.
Your health and the longevity of your family do not guarantee a long life, but they do increase your chances. Making the most of your Social Security benefits is a powerful way to ensure you don’t run out of money in retirement.
Be careful of overseas payment fees when using your credit card overseas
Dear Liz: I have a question about using credit cards for international transactions. Does the card company have to use a specific exchange rate?I used two cards and the one with the fee had a better exchange rate. The total cost including fees was lower than other cards. How can I see the exchange rate being used?
Answer: You can always ask questions. Credit card companies may use different exchange rates. Often using a payment network such as Visa or Mastercard, or one set up by the issuing bank.
Please note that exchange rates are constantly changing. Unless you use the two cards in a relatively short period of time, it’s hard to draw conclusions about which card has a better rate. You’ll also end up with an even worse deal if you agree to “dynamic currency conversion,” which charges your transactions in USD rather than the common currency. When presented with options, select the price in your local currency.
Most travelers prefer to use credit cards that don’t charge foreign transaction fees. These fees are usually just a profit center for the issuing bank.
Additional questions regarding outstanding balances on death accounts
Dear Liz: In my 33 years of working at various broker-dealers, I have never heard of a “payable on death” account. Was the previous column referring to Transfer on Death (TOD)?
Answer: I didn’t.
Payment on Death Account is similar to Account on Death Transfer, in that both allow owners to designate beneficiaries and avoid probate, which is a court process after death. However, the two accounts are for different types of assets. Bank accounts use a pay-on-death designation, and investment accounts use a transfer-on-death designation. Some states provide transfer of death registration for vehicles and transfer of death deed for real property.
Liz Weston is a certified financial planner and personal finance columnist. Questions can be directed to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or by using the “Contact” form at asklizweston.com.
