Ask Our Experts
By: Compiled by Carole Fleck; Source: AARP Bulletin Date Posted: 2006-12-13 12:53:00-05:00
The AARP Bulletin 's Ask Our Experts column provides answers to important questions affecting older Americans. Read below for this month's column, or review our archive of previously published questions and answers sorted by topic. (Note: Recent news or changes to regulations may affect the guidance offered in this previously published column.)
Submit your own question to the Ask Our Experts column via our easy-to-use online form.
Q. My husband died in 2004, and I thought I'd be entitled to 100 percent of his Social Security benefit, since I was over 65 at the time of his death. But I'm getting only 80 percent, which is the amount he received at age 62. Can you help?
A. Because your husband elected to claim his benefit early, at age 62, he was entitled to receive only 80 percent of the amount he would have received had he waited till age 65 to collect. And his choosing to take an early benefit also reduced the survivor benefit that you receive. If your husband had waited until he was 65 to claim a benefit, he (and you) would have received his full benefit amount. However, if your own benefit based on your work history is higher than his, you can contact Social Security to switch and collect your own. — Expertise provided by John Turner
Q. My mom is considering a reverse mortgage, but I'm concerned. What happens if the reverse mortgage leaves her with little equity in her home and she has to go into a nursing home? Who will pay for the nursing home expenses? Her only income is Social Security.
A. If your mother needs to move into a nursing home, the loan from the reverse mortgage will become due. She'll probably need to sell her home to pay off the loan. If this uses up most of her money, she will be able to apply for Medicaid assistance. Generally, she'd be eligible if her assets are below $2,000—check with your state for details.
Once she's on Medicaid, her Social Security income goes to the nursing home—except for a small monthly allowance. Medicaid picks up the balance between what she can pay and the cost of her care. For more information on reverse mortgages, go to www.aarp.org/money/revmort. For Medicaid, go to the Centers for Medicare & Medicaid Services online. — Expertise provided by Sally Hurme
Q. I am eight years older than my husband, who is 54. If he dies before he reaches age 59½, would I be able to cash out his 401(k) plan without penalty?
A. Yes. If your husband dies before age 59½, you could receive the money in his 401(k) plan without having to pay the early-payment penalty (though you would have to pay taxes).
In general, early payouts from 401(k)s are subject to a 10 percent penalty. However, the death of a plan participant is an exception to that rule. — Expertise provided by John Turner
Q. Are there statistics on how long the trust funds for Social Security will last?
A. The 2006 Social Security trustees' report (which comes out around May 1 every year) says that trust fund assets along with accrued interest will be enough to pay Social Security benefits in full and on time until 2040. Without any change to current law, the assets will be able to pay about 74 percent of benefits for decades thereafter. — Expertise provided by Laurel Beedon
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