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How to 'restart' Social Security benefits
Dear Liz: A few years ago I read that people who took Social Security payments early -- before their full retirement age -- could later opt to pay back their benefits and qualify for a higher payment based on their current age. I called Social Security and the person who answered the phone laughed, saying he had never heard of anyone paying back Social Security. Yet I saw this mentioned again on a financial show. Can you really start over with Social Security?
Answer: Indeed you can, and you might want to consider "restarting" your Social Security if:
* You started payments before age 65
* You're now in your late 60s or early 70s
* You have the cash or investments on hand to pay back the benefits.
When you apply for Social Security before full retirement age, your benefit amount is reduced. If you applied at age 62 when your full retirement age was supposed to be 66, for example, your check would be 75% of what it could have been had you waited.
If you delay your application for Social Security beyond full retirement age, though, your future benefit increases year by year until age 70. In fact, Dallas Morning News columnist Scott Burns estimated that "restarting" your Social Security benefits could increase your checks by as much as 76% if you applied at 62 and are now 70.
Such a boost could represent a very good return on the money you'd have to "invest" or pay back to the Social Security Administration.
But whether this makes sense for you depends on your individual circumstances, so run this plan past a fee-only financial planner before deciding to go ahead.
If you do want to restart your benefits, begin by filling out SSA Form 521, "Request for Withdrawal of Application." You'll need to write the Social Security Administration a check for the full amount of the benefits you've already received.
(Fortunately, Social Security doesn't charge interest, but you still could be coughing up quite a sum. Someone who's received an $1,800 monthly check for five years would owe $108,000.)
Card balances and credit scores
Dear Liz: I continue to read advice about not keeping a high balance on one's credit card and using only one-third of your available credit limit. What if you pay off the total amount every month and have done so your entire credit card history? Having one card helps with accumulating miles.
Answer: Your credit scores don't know or care whether you pay your balances in full. The balances that are used in credit score calculations are the ones reported by your credit card issuers, and those are typically the balances from your last statement.
If you regularly use more than 30% of your credit limit, you should ask your issuer for a higher limit.
Was caller really a bill collector?
Dear Liz: You recently answered a question from a person who was getting calls about a doctor bill she had already paid. The caller demanded the reader call back with her credit card number so the bill could be paid immediately. I think you missed the obvious answer: that the caller wasn't a collection agency at all but a fake who was trying to get people to hand over their credit card numbers.
Perhaps that was the reason the caller wouldn't send the reader a copy of her bill -- because the caller didn't have it! Although contacting the Federal Trade Commission is a good idea, she should probably contact the authorities in her state.
Answer: Several readers raised the possibility that the so-called collector could in fact have just been a criminal trolling for credit card numbers. In this case, however, the caller gave out a phone number that belonged to a legitimate collection agency, and the reader confirmed that the doctor's office used this particular agency for its collections. The collector even had the correct amount of the bill that was originally owed.
Still, people should be extremely cautious and skeptical when dealing with anyone who claims to be from a collection agency.
For more details, visit the FTC website at www.ftc.gov and click on "Debt Collection" under Quick Finder.
Liz Pulliam Weston is the author of "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston. com. Distributed by No More Red Inc.
Answer: Indeed you can, and you might want to consider "restarting" your Social Security if:
* You're now in your late 60s or early 70s
* You have the cash or investments on hand to pay back the benefits.
When you apply for Social Security before full retirement age, your benefit amount is reduced. If you applied at age 62 when your full retirement age was supposed to be 66, for example, your check would be 75% of what it could have been had you waited.
If you delay your application for Social Security beyond full retirement age, though, your future benefit increases year by year until age 70. In fact, Dallas Morning News columnist Scott Burns estimated that "restarting" your Social Security benefits could increase your checks by as much as 76% if you applied at 62 and are now 70.
Such a boost could represent a very good return on the money you'd have to "invest" or pay back to the Social Security Administration.
But whether this makes sense for you depends on your individual circumstances, so run this plan past a fee-only financial planner before deciding to go ahead.
If you do want to restart your benefits, begin by filling out SSA Form 521, "Request for Withdrawal of Application." You'll need to write the Social Security Administration a check for the full amount of the benefits you've already received.
(Fortunately, Social Security doesn't charge interest, but you still could be coughing up quite a sum. Someone who's received an $1,800 monthly check for five years would owe $108,000.)
Card balances and credit scores
Dear Liz: I continue to read advice about not keeping a high balance on one's credit card and using only one-third of your available credit limit. What if you pay off the total amount every month and have done so your entire credit card history? Having one card helps with accumulating miles.
Answer: Your credit scores don't know or care whether you pay your balances in full. The balances that are used in credit score calculations are the ones reported by your credit card issuers, and those are typically the balances from your last statement.
If you regularly use more than 30% of your credit limit, you should ask your issuer for a higher limit.
Was caller really a bill collector?
Dear Liz: You recently answered a question from a person who was getting calls about a doctor bill she had already paid. The caller demanded the reader call back with her credit card number so the bill could be paid immediately. I think you missed the obvious answer: that the caller wasn't a collection agency at all but a fake who was trying to get people to hand over their credit card numbers.
Perhaps that was the reason the caller wouldn't send the reader a copy of her bill -- because the caller didn't have it! Although contacting the Federal Trade Commission is a good idea, she should probably contact the authorities in her state.
Answer: Several readers raised the possibility that the so-called collector could in fact have just been a criminal trolling for credit card numbers. In this case, however, the caller gave out a phone number that belonged to a legitimate collection agency, and the reader confirmed that the doctor's office used this particular agency for its collections. The collector even had the correct amount of the bill that was originally owed.
Still, people should be extremely cautious and skeptical when dealing with anyone who claims to be from a collection agency.
For more details, visit the FTC website at www.ftc.gov and click on "Debt Collection" under Quick Finder.
Liz Pulliam Weston is the author of "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston. com. Distributed by No More Red Inc.
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