Social Security at 62 - where to deposit funds?

YodaRulesOctober 10, 2012

Gonna be 62 in 2013 and I've decided to begin my Social Security income at that time. Have recently heard it is best to have your S.S. income deposited into an account separate from your regular checking account then transfer money as needed. I'm curious to learn if anyone on this board feels the same way and if so.... why?

Thanks,

Patsy

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sushipup1

Some people are paranoid about direct deposit, because not only can the depositor put money into your account, they can remove it as well, in the case of errors. That rarely happens, tho.

But the vast majority of people have no problem using their regular checking accounts for SS direct deposits. And you won't the hassle and expense of maintaining a second bank account.

If you do not need the income for daily living expenses, then why not have the money put into a savings account so it won't tempt you to spend it?

    Bookmark   October 11, 2012 at 8:01AM
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YodaRules

Thanks Susipup.... I was puzzled by the comment to have the money deposited into a separate account. It was made at a retirement seminar by one of the presenters -- no hard reason why. Part of the discussion was keeping all taxable income in one account and non-taxable in another. I thought this a little weird but, wanted to get some other points of view.

    Bookmark   October 12, 2012 at 10:34AM
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sushipup1

Maybe if you are very high income? Curious, I have not heard that either, except that it wouldn't apply to me. ;-)

I'm going to a seminar in a couple of weeks, so I'll be paying attention. Altho the presenter has an investment business, the seminar is presented by one of the local adult schools, so seems credible. I am very very very critical of sales pitches masquerading as 'educational seminars' and will be the first one to walk out and complain to the school if this isn't at least 80% on the non-sales side. For $35, it had better be mostly straight info. I'm not against learning what the salesmen's latest pitches are (annuities, etc), but I sure as heck am not going to pay for it!

    Bookmark   October 12, 2012 at 12:03PM
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azzalea

I'll tell you what happened to me about 2 years ago.

I was Daunt's POA, then after her death, her executrix. She had 4 pensions that were direct deposited. The day after her death, I called each of them (2 were from the same insurance company) and told them of her death. An idiot clerk wrote down the wrong date (year, actually) on the paperwork. Imagine my surprise, about 3 weeks later when I got her bank statement and found her account over $8000 less than it should have been!!! The insurance company just helped themselves to a year's worth of her pensions--not a word, call or letter to me. They were WRONG!!! She died a year later than the idiot noted on the papers. It took me several months to get the money back and was a HUGE hassle.

Bottom line is that when you give someone the authority to put money into your account, you are also giving them the authority to take money out. If a mistake is made, they can have your money before you even know it's gone. I was a wreck, in the case above, because I was afraid the check to the funeral home was going to bounce (DA died with very little money left after 2 years in a nursing home).

I know it doesn't happen often, but from where I'm sitting, the fact that it happened in my household once already is just a little to precarious for my liking. DH and I opened a checking account for $1000 in a separate bank from where we have our savings and regular checking accounts. We ONLY use that account for our direct deposits. And as soon as the money comes in, we move it to the other bank where we actuallly keep our money. So if anyone wants to stick their hands in our account, the most they're going to be able to get is only going to be that $1000 we keep there to keep the account open.

Now, I've discovered a side benefit to keeping a separate account for our dd's. Between us, we have: 2 SS checks (his, mine), his pension, my annuity, my paycheck. With all that money coming and going at different times of the month, it's really a lot simpler to be using a separate account for it. I'm one of those rare people who likes their checkbook balanced to the penny at all times. If I had those direct deposits bouncing around with checks going out to the cable company, phone company, etc, it would be a whole lot harder to keep track of everything. this way, a deposit comes in, we write a check for the exact same amount, and then decide where it's going to go.

Look, I know I'm being paranoid about this whole subject but I figure with a bank on pretty much every corner, it's simple enough to use two of them, just to give us a little more protection. A YEAR'S worth of pension payments? I cannot imagine what I'd do if someone lifted that much money from me without asking. And I already know how much red tape was involved in finding and fixing that mistake. Don't want to ever go through it again.

You have to make your own decision, based on how comfortable you are with your direct deposits, who's sending them, your bank, the convenience of using one or more banks or accounts. I'm finding it nice to have options--not only do we have the protection, and a simpler task balancing that account, but the banks I chose--while both are close--are in different directions, so it's nice that we can one whichever way we turn at the end of our block.

Don't forget--if you're married or were married--to inquire about marital SS benefits. My check went up by about $150 when DH started collecting his (I started a month or two before him).

    Bookmark   October 13, 2012 at 9:30PM
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YodaRules

Azzalea,

I have no idea of the stress you must have been under while trying to straighten out the correct date of death. I like your thoughts on why you have different accounts. Although, I suppose the chances of having an institution taking back money is slim for me. However, I certainly believe in in the "ounce of prevention worth a pound of cure".

I have always used 3 checking accounts (2 are with credit unions) as I have residences in NC and FL (one is a home business account). The only problem I see..... what would happen if something happened (like an accident) to prevent you from transferring your funds in time for checks to hit?

    Bookmark   October 13, 2012 at 9:59PM
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azzalea

Even if I were unable to write the check(s) to take the DD money out of that bank, there would still be a limited amount of money in that bank, not our whole life savings. So I figure even if something unforseen would happen, we'd still be in better shape. And we don't actually have to go to the direct deposit bank. Generally, I just write a check, and take it to the bank we really use to cash or deposit. And in a pinch, we COULD use the direct deposit account to write checks to pay bills, etc, if the money was in there. I'm just attempting to keep a minimal 'inventory' of $$$ in the bank where the DD's show up, if that makes sense.

And again--I totally realize that MOST people have absolutely no problems with direct deposit. I'm just a little over-cautious. And having that sort of thing hit when you're burying a loved relative, planning their memorial service, trying to handle all the 'stuff' that comes with losing someone--the financial issue probably did make more of a negative impression on me because of my emotional state.

I just offer the experience and our solution as one option to consider. It's really up to you what you want to do with yours. I will say, so far (I turned 62 in May) filing and collecting SS has been SO easy. Don't forget--you can file a few months before you turn 62, so your payments won't be held up. You don't have to wait until your birthday. And I'd strongly recommend going into the SS office in your area. They were SO nice and so very helpful for both me and my husband when we were filing. Made it very quick and easy.

    Bookmark   October 13, 2012 at 10:17PM
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vnw232

I keep my nest egg and checking accounts in separate banks. The main reason is hacking. Three of the US's largest banks were recently hacked. Linking all your accounts or having all your money in one place could mean a hacker could wipe you out in one fell swoop.

    Bookmark   October 16, 2012 at 6:04AM
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sushipup1

Azzalea, thanks for adding your excellent real-life advice. You are always helpful!

    Bookmark   October 16, 2012 at 11:56AM
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emma

I was afraid of direct deposit at first, but have had it for years now and love the convenience of it. It is safer than the mail box at your home. I have it and my pension check deposited in my regular checking account because I live on it.

    Bookmark   November 1, 2012 at 7:26PM
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colorcrazy

My paycheck goes into direct deposit - that is required for Federal employees. Never had any trouble. But will turn 65 in January, so I need to sign up for Medicare. Know nothing about it. I'm not eligible for SS payments, as I don't have enough quarters.

After hearing about Aazalea's experience, when I do retire, I think I will set up a second bank account. What a nightmare!

    Bookmark   November 19, 2012 at 11:22PM
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sushipup1

Colorcrazy, Medicare is based on the same 10-quarters of work. Will you be eligible? If you are still working for the government, you will be covered by your regular insurance, altho you'll also be covered by Medicare Part A.

Contact your local Area Agency on Aging office, whatever it is called in your area, it should be a part of the local county government structure, and ask for a referral for SHIP counseling.

Here is a link that might be useful: SHIP

    Bookmark   November 20, 2012 at 10:07AM
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sushipup1

Here's a better link for SHIP

Here is a link that might be useful: find a SHIP

    Bookmark   November 20, 2012 at 11:42AM
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susieq07

We have direct deposit to our reg act. and also auto debit for yrs. and NP's ever!

1 Like    Bookmark   February 7, 2013 at 11:54AM
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susieq07

We have direct deposit of all funds to our reg act. and also auto debit for bills etc. for yrs. and NP's ever!

    Bookmark   February 7, 2013 at 11:56AM
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joyfulguy

Hi Yoda who uses a ruler,

Not being familiar with your system, I can't give any suggestions as to what reasons there may be to have separate bank account for taxable and non-taxable assets.

In Canada we have accounts looking toward retirement where deposits are tax-deductible and the income over the years is, as well ... but every dollar coming out is taxable, and, after about age 70, there are minimum amounts required to be withdrawn annually. They must be in different accounts, of course.

When I borrow for regular living expenses, consumer loans, which I plan almost never to do, I have one line of credit that I use for that.

I was a personal financial consultant for years and recommended to folks that they have 3 - 6 months' worth of income as a financial cushion, available when needed, and in recent volatile times in the economy am more inclined to suggest 9 months' equivalent to a year's worth of income available in case of need, emergency, layoff, or whatever.

I didn't always have such myself, which I told a number of clients, having used much of that fund for investments ... but had a credit card which I rarely used, which could be used in case of emergency, or whatever (I was self-employed, so could usually see an equivalent to a "layoff" coming before it happened).

I had a line of credit, fully secured by stocks/mutual funds, some of them that I'd purchased with the "emergency fund", at the bank or, preferably, credit union, which I could draw on in an emergency.

I would make a loan using that consumer line of credit to pay off the amount owing on the credit card for the emergency, just after the first billing, to avoid paying their high interest rate (about 4 times the rate on the line of credit, or 6 times if it were a store-issued card: I don't have any of them!).

Then I'd make extra savings strenuously for a time to pay off the loan on the line of credit.

I don't like using someone else's money to live on now ... and having to pay it back, later ... with (non-deductible) interest.

Sometimes, after a bad time in the stock market, when things began to improve, I might make a loan to make further investments, and, as the interest paid on most investment loans is deductible, I'd set up a separate line of credit for that use, using the investments that I'd purchased using the "emergency fund" (along with some others, as the financial institution will only loan about half of the value of the security held), so that the interest rate on the loan would be lower.

That's a place where I keep my deductible and non-deductible financial issues separate.

Good wishes as you plan your retirement .. and implement the plan: I hope that you have no/few unpleasant surprises. Which you can usually reduce by careful planning, preferably ahead of time.

ole joyful

    Bookmark   December 7, 2013 at 1:50PM
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Aputernut13

dh is retired 14 yrs. now and we have everything on auto pay/deposit, auto in and auto out, with our bank, never had a prob. We started with this because we traveled the first 10yrs. would never change it works great!

    Bookmark   January 13, 2014 at 5:56PM
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mccall

The reason to have your SS funds completely separate and never mingle any other money with it, is that if you are ever sued or go bankrupt those funds, if separate, cannot be attached!

    Bookmark   March 10, 2014 at 5:32PM
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emma

Stuff like this really interests me......Why would separating the funds make a difference? Separating money doesn't make any difference in a divorce, care home bills, divisions of assets for putting a spouse in a care home or other things I have experienced.

This post was edited by EmmaR on Fri, Mar 14, 14 at 15:17

    Bookmark   March 10, 2014 at 6:04PM
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Mags438

Bump. Hoping to get a response for Emma's ?? I'm wondering too. DH considering starting his month.

    Bookmark   December 4, 2014 at 12:49PM
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SnidelyWhiplash

mags, if this is important for you to know, why not speak to a lawyer or ask the Social Security people?

    Bookmark   December 4, 2014 at 3:48PM
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