Reader Question: The recent $600 million lottery set off a big buzz around the country. Is buying lottery tickets a good idea? S.R.
Answer: Buying lottery tickets is just plain stupid. Over 150 million people spent a record $1.5 billion on lottery tickets so that three people could split just over $460 million. These odds define a loser’s game. Lotteries attract players who can least afford it, the lower income and poor; the so-called 99%. It’s an interesting dichotomy that the Occupy Wallstreeter’s who protest against the rich are the main players of lotto roulette…hoping to become one of those they protest against. In my experience, people who show little respect for money tend to have very little of it. So take your lotto dollars and use them towards something constructive such as a systematic debt reduction plan. That’ll make you a guaranteed winner!
Reader Question: You recently wrote about financial institutions refusing to accept a valid Power of Attorney. I have a Durable Power of Attorney with my son as the agent for my benefit. My question is, “Must the document specify that he can take a Required Minimum Distribution on my behalf?” K.S.
Answer: Last year we had a case where a nationally known financial institution refused to accept a Durable Power of Attorney where the husband was agent for his wife who had advanced Alzheimer’s disease and he needed to make a mandatory Required Minimum Distribution from her IRA. The reason they gave was that the POA did not specifically authorize RMD distributions. Failure to take the RMD would result in a 50% federal penalty so the stakes could be very high. This is why it’s important that everyone speak with their attorney about having new Power of Attorney document drawn based on a new law that passed the Alabama Legislature in January of this year. This new law requires that the financial institution accept the POA or face potential financial penalties.
Reader Question: I’m 65 and began collecting Social Security Benefits at age 62 based on my work records. My husband is 67 and began collecting his Social Security Benefits at his full retirement age 66. I read in a Social Security pamphlet that I could collect additional benefits based on his work records. When I called the Social Security Administration to apply for additional benefits, the first agent said I qualified. The agent who registered me said I didn’t qualify because of something called PIA. I cannot find this ‘PIA’ on their website or in their pamphlets. Can you shed some light on what PIA is and how it affects this situation?
Answer: I believe the second agent is correct in stating that you do not qualify for additional benefits. PIA stands for Primary Insurance Amount which is the Social Security benefit you’re eligible for if you start benefits at your normal retirement age. A spouse who files for benefits before normal retirement age for either his or her own retirement benefits or for spousal benefits is deemed to have filed for ‘both’ benefits and is eligible only for the higher of the two amounts actuarially reduced for starting the benefits early. You have, in effect, locked yourself in to limited choices. Had you waited until your normal retirement age, you could have chosen to file under one benefit but change to another later. Clearly, the message here for all our readers is that it’s very important to discuss your options with a professional before electing to begin Social Security benefits.