Do I still have to withdraw from my 401(k) if I work past age 70 ½?

Robin emailed: [One of your articles said] that 401(k) distributions are required when one reaches 70 ½.  But what if one continues working full time after that? I have read that one does not have to take any distributions, if working full time, until 75. But what if I continue to work and don’t want to take distributions until I stop working, maybe at age 80. What does tax law say?

There is a “still working” exception to the required minimum distribution rule for 401(k) plans. So if you’re still at your job past age 70 ½, you can delay taking distributions from your employer-sponsored retirement plan until April 1 of the year after you actually retire. (Note that this does not apply to IRAs.) You can do this unless your specific plan requires earlier, age-based distributions or you own 5% or more of the company that runs the plan.

Can someone getting a government pension still file for Social Security?

Elizabeth emailed: I plan to retire at age 66 which will be in Oct. 2015. Can I file for my benefits coming up Oct. 2014 and suspend it, so my husband can collect his spouse’s benefit? For your information, my husband is collecting pension with the University of California retirement system and he had not paid any Social Security when he was working.

First off, you must be at full retirement age – 66 – to employ the file and suspend strategy, so you won’t be able to do it this year. Second, your husband’s government pension would reduce any spousal benefit he could get based on your Social Security record. According to the Social Security Administration, if you receive a pension from a government job in which you did not pay Social Security taxes, that’s called a Government Pension Offset, and it will reduce your Social Security spouse’s, widow’s or widower’s benefit by two-thirds of the amount of the pension. (More information here.)

What’s the best Social Security filing strategy for spouses with similar records?


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Steve emailed: My wife and I both have been working for 40+ years. I’m 63 and my wife is 62.  Currently we would both qualify for our maximum payout. So really no person is the “bread winner.” What strategy should we do to get the most benefit from Social Security?

Because your earnings records are similar, you can take advantage of both sides of the filing strategies. Your wife could file for her benefits now at age 62 and receive benefits for the longest possible period, although the amount would be reduced from the “normal” amount available at full retirement age (66), says Jim Blankenship, CFP and founder of Blankenship Financial Planning

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Can non-citizens get Social Security based on their spouse’s record?

Rebecca emailed: My question is whether my mother be eligible to collect my father’s Social Security and what percentage. My mother is British by nationality but has had permanent residence status since she got married to my dad in 1962. They were married until my father passed away about 7 years ago. She is currently collecting an annuity my father set up through his government job. My mom was told she is not eligible for my dad’s Social Security because she is not a citizen.

Citizenship has no bearing on eligibility for Social Security benefits based on a spouse’s record, says Jim Blankenship of Blankenship Financial Planning. As long as the other criteria are met (including length of marriage, age of the non-citizen spouse, Social Security status of the citizen spouse), the non-citizen spouse (i.e., your mother) may be eligible for benefits based on your father’s citizen record.

It’s Monday, folks… and we’ve got answers to your burning Social Security questions! (Check out our Facebook chat from Aug. 20 to see more questions and answers.)

Here are a few to start us off…

David emailed: I am 64 and will turn 65 in November. My wife is 70 and has been drawing Social Security since 66. Can I get the spousal benefit now or do I wait until full retirement age of 66? I will not be working after I reach 65, but would rather not collect at that time, and would like to hold off until at least 66 if not later. What is my best strategy?

You can collect the spousal benefit alone when you reach age 66. This allows you to get a benefit equal to half of your wife’s benefit (because she started at age 66), and then later you could switch to your own benefit as late as age 70 if the amount would be larger by that time, says Jim Blankenship, CFP and founder of Blankenship Financial Planning. Delaying allows your benefit to increase with Delayed Retirement Credits of 8% a year of delay, up to 32%, he says.

Will my boyfriend’s bad credit hurt mine if I add him to my account?

Diana asks: My boyfriend has terrible credit and has been trying to build it back up. I’m doing OK and am considering adding him to my credit card as a joint user. We live together but so far we’ve kept all of our finances separate. Will this help him improve his credit score, or will it just hurt mine instead?

If you’re sure that you and your boyfriend are ready to take that step, then adding him to your credit card account will definitely give his credit a boost. There are two different ways to go about it, both of which carry their own risks.

Add him as a joint account holder: As a joint account holder, your boyfriend will be held equally liable for whatever balance is on the account. If you both manage the card responsibly, both your scores will benefit. If he screws up, however, you could both see your scores drop. Note: you can only add a joint account holder when you take out a new line of credit because you both have to be on the application.

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Can I get Medicare if I’m under 65?

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Patrice emailed: [I] read something stating if you draw Social Security at 62, Medicare benefits can be applied for early. Is that true?

There are three ways you’d be eligible for Medicare coverage if you’re under 65: (1) You have a disability and you’ve been receiving Social Security Disability Insurance (SSDI) for at least 24 months. Your Medicare eligibility would begin when you get your 25th SSDI check. Or you get a disability pension from the Railroad Retirement Board; (2) You have Lou Gehrig’s disease (amyotrophic lateral sclerosis), which makes you automatically qualified for Medicare; and (3) You have End-Stage Renal Disease requiring regular dialysis or a kidney transplant — and you or your spouse has paid Social Security taxes for a certain length of time, depending on your age.

You can use the calculator on Medicare.gov to find out if you’re eligible, or call the Social Security Administration at 1-800-772-1213.

Can I really get a lower credit card rate if I have a balance?

Clark emailed in response to this article about debt and negotiating your credit card interest rates down: I was a “great customer” to a big bank. I was never late on my payments. I called them to request a rate reduction and was told “No”! They also reduced my unused credit line. They were cold, useless and robotic. Granted, I had a lot of outstanding debt with them on different cards but I was never late on any of them. So, if you have information about how to accomplish [getting interest rate lowered], how can I get this knowledge?

Sadly, these days just because you pay your bills on time, your credit card issuer may not think you’re the perfect customer. You might have been able to get your interest rate lowered with a simple phone call a decade ago, banks aren’t so accommodating now.

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How do I stop getting unsolicited credit card offers?

David emailed: I want a promotional block on my credit so I do not get junk mail and unsolicited charge cards. I know there are many different types of blocks you can put on and do not wish to put the wrong one on. What do I need to ask for and how do I need to ask?

Under the Fair Credit Reporting Act, TransUnion, Equifax, and Experian, the three big credit reporting agencies, are allowed to sell your credit history information to credit lending institutions. Those companies then screen consumers for  certain criteria and send them offers of new credit.

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Will free reports from sites like CreditKarma.com hurt my credit score?

Reader Becky G. read our story about CreditKarma.com’s new free monthly credit report and asked: I know the more you check your credit the more it dings your score [because] it shows that somebody has pulled the report. With this new program that is rolling out, how will that affect it?

Becky is completely right. Any time a lender or a financial institution requests your credit history (for example, when you apply for a new credit card), that counts as a “hard inquiry” on your credit history and can temporarily hurt your score. You can imagine why — applying for a lot of new credit in a short period of time makes it look like you’re having a hard time managing your finances.

But the good news is that when sites like CreditKarma.com (and CreditSesame.com and Credit.com and Quizzle.com) generate your credit reports and scores, they only count as “soft inquiries.” Simply put, they won’t impact your score at all. That’s because they’re pulling your credit history only as a way to help you keep track — not to approve you for new credit like a new mortgage or car loan. We’re big fans of these sites because they make it easier than ever for consumers to stay on top of their credit without having to pay fees to credit bureaus. They foot the bill and you get to know exactly where your credit stands. Not a bad deal, if you ask us.

Is it possible that I owe money on my charged-off debt?

Jennifer writes: A credit card company has charged off my debt but has now turned it into the IRS. The IRS now says I owe them. Anything I can do?

We know this all sounds completely backwards — how can you owe money on a debt when you’ve just been told it’s settled? What a lot of people don’t realize is that the IRS treats forgiven (AKA “cancelled”) debts like a source of income. Just like you pay taxes on your paycheck from work, they will want you to pay taxes on forgiven debts, too.

In order to really get this old debt off your back, your final step is to pay taxes on the debt that’s been forgiven. If you don’t, you could be facing an IRS audit and nobody wants to tango with them.

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Will closing an unused credit card hurt my credit score?

Tim emailed: If I have a credit card and I haven’t used it in over a year, can I cancel this credit card without hurting my credit score? It is paid off and I want to cancel it, but I do not know if it will hurt my credit score.

Closing that credit card might hurt your credit score because it will raise your credit utilization ratio. This ratio basically looks at your total used credit in relation to your total available credit; the higher this ratio is, the more it can negatively affect your score. By closing an old or unused card, you’re cutting your overall available credit limit, and thereby increasing your credit utilization ratio, which makes up about 30% of your credit score. You’d ideally want your utilization ratio to be 10% or lower, according to Credit.com.

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Where does a 50-something start planning for retirement?

Jen emailed: Where does a 54-year-old start for retirement at this point in life?

You’re in a tough spot, but there are a few things you can do to avoid having to eat cat food later. Most importantly, as I’m sure you already know, is to keep working. To maximize cash flow and save as much income as possible, keep bringing in a paycheck and try to hold off on drawing Social Security benefits until age 70, if possible, or at least 66. (Every year you delay taking Social Security, you’ll increase your benefit by 6.5% to 8%, depending on your age.)

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Is it OK to pay off student loans early?

Here’s question from one of our own — Mandi Woodruff, Yahoo Finance’s personal finance reporter: It’s my job to know answers to questions like these every day but trust me — being objective about your own finances isn’t easy. So here’s my issue: I’m $2,500 away from being student debt free (huzzah!). But I’ve repeatedly been told to make the minimum payment each month and focus on building my savings. I’ve saved up about 5 months’ worth of living expenses, consistently contribute to my 401(k), have a great job (Thanks, Yahoo!) and very little credit debt. The credit debt I do have was strategically placed on cards that have 0% interest for at least another 6-12 months. My student loans (both federal) are accruing 6% interest. As of now, they are my most expensive debt.

I want to get this nagging student debt off my shoulders and, most importantly, off my mind! I know what the “right” answer is — keep saving until I’ve got at LEAST six month’s worth of living expenses. But I can’t help but wonder … would it really be so bad to take a chunk out of my savings and pay off the debt early?

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Is there any special student loan help for members of the military?

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Ron emailed: I am in the U.S. Army Reserve as an Officer. When I joined the Army I was in graduate school. Then after my graduation, I decided to go back to a graduate school to take another masters degree. So right now my student loans are about $60,000. Do you know any organization that is military-friendly that can help me pay off this student loan?

As a member of the military, you get a break on the interest rate on your loans (for both graduate and undergraduate). Under the Servicemembers Civil Relief Act, if you took out student loans before entering the military or being called to active duty, the interest rate is capped at 6% during your active duty military service. 

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