09/2017 KIPLINGER’S PERSONAL FINANCE 37Social Security bump-up. I’ve read that
every year you delay taking Social Secu-
rity benefits past your full retirement
age, you get a bump of 8% in your benefit
until age 70. Do you have to wait a full
year for the increase, or is the 8% pro-
rated for each month that you delay?
S.J., DenverYou don’t need to wait a full year to get
extra credit. Delayed-retirement cred-
its are calculated for each month you
delay taking benefits beyond your full
retirement age, which is 66 for people
born from 1943 to 1954 and rises by two
months each year until it reaches age 67
for people born in 1960 and later. You’ll
get an extra two-thirds of 1% of your
full retirement benefit for each month
you delay after your birthday month,
adding up to an extra 8% for each full
year you wait until age 70.
The clock starts ticking the month
you reach full retirement age. For
example, if you were born on April 24,
you’d reach your full retirement age
on April 1. If you wait until May to
take benefits, you’ll get 100.7% of your
full retirement benefit. Wait one year
and you’ll get 108% of your benefit.
If your full retirement age is 66, you’ll
receive 132% of your full benefit if you
wait until age 70.Consolidating retirement accounts. I have
a few small 401(k)s and 403(b)s from old jobs, and I’d like
to consolidate them. Can I roll all of them into one IR A?
S.L., Bowie, Md.Yes. You can roll over the old accounts into one IRA. You
could add the money to an IRA you currently have, but
keeping it in a separate rollover IRA could make it easier
to roll that money into a new employer’s 401(k) later.
Before switching, consider that some 401(k) plans offer
funds that charge lower fees than similar funds in an IRA. ■LISE METZGER
KIMBERLY LANKFORD Ask KimWhy Umbrella Insurance Makes Sense
Most people with income, property and
some savings should consider getting
an umbrella policy of at least $1 million,
which can protect your assets and future
earnings from lawsuits. “An umbrella
liability policy is one of the most over-
looked but important ways to limit your
financial risk,” says Mari Adam, a certi-
fied financial planner in Boca Raton, Fla.
The coverage kicks in if you injure
someone or cause property damage and
are sued for more than the liability limits
on your homeowners or car insurance.
A $1 million policy can cost as little
as $150 per year if you have a home, two
cars and no other major risks, says Sarah
Brown, an independent insurance agent
in Shrewsbury, Pa. “The more exposures
you have—more cars, a motorcycle, a
boat, young drivers, etc.—the higher
your premium,” says Brown. Before you
can add an umbrella, you must usually
have at least $500,000 in liability cov-
erage on your home and car insurance,
which will pay out first.
If you have more than $1 million in
assets, consider a larger policy. Doubling
the coverage generally won’t double the
premiums, says Brown.Paying for off-campus housing. My son is starting his
sophomore year in college and is living in an off-campus
apartment. Can we withdraw money tax-free from his 529
college-savings account for the rent?
P.M., PittsburghAs long as your son is at least a half-time student, you can
withdraw the amount he spends on off-campus rent, up to
the room-and-board allowance the college includes in the
cost of attendance for federal financial aid purposes. (Look
on the college’s website, or ask the financial aid office.)
Keep records of the rent paid.A $1 million policy
can cost as little as
$150 per year and
protect you if you’re
sued for more than
the limits on your
car or homeowners
insurance.
GOT A QUESTION? ASK KIM AT [email protected]. KIMBERLY LANKFORD ANSWERS MORE
QUESTIONS EACH WEEK AT KIPLINGER.COM/ASKKIM.WHO SHOULD THINK ABOUT
getting an umbrella liability insurance
policy, and how much does it cost?
J.S., Phoenix