A. A small consulting business needs cash because it needs to support accounts receivable— the inevitable 30 to 60 day delay between billing and payment for services. So you and your husband can expect to have a need for liquid assets as you build this business and pay your personal expenses.
You also don’t want to be managing a single rental property from a distance. While you aren’t exposed to the danger of needing to make a mortgage payment on the property, the operating costs on a large house aren’t minor, even if no one is living there. So I suggest selling the house in Tucson and getting on with your life. If you netted $245,000 from the sale you could use some of the cash to fund the business, and some to buy a smaller house.
If you sell the house in Austin, you might be able to buy a smaller, bank-mortgaged house if you put up a large down payment. And giving up on a bank mortgage doesn’t mean giving up on getting a home mortgage. Owner financing is a real alternative. Many sellers with other assets might be very interested in providing a mortgage at 5 percent, now that their other savings are earning far less.
Q. I just read your column about the problems with using the current formulas to continue to fund social security. I was planning to wait until I turn 70 in February, 2012 to begin collecting social security. I am working and decided that by waiting until 2012 will increase my benefit and also my wife's future benefit. Do you recommend that I apply now or wait, as I planned, until 2012 for my benefits?
Also, I recently found out that I am paying an increased Medicare premium because I'm not having it deducted from my Social Security (which I'm not getting yet). Isn't that something?
I would appreciate your recommendation. —M.P., by email.
A. Research indicates that a couple optimizes benefits if the husband delays taking benefits until age 68 or 69, so you have probably optimized the amount of benefits you will receive as a couple already. Waiting longer will increase your benefits but it may not maximize the total dollars collected, depending on how long you and your wife live.
You can always visit the local Social Security office and arrange to have your Medicare part B premium deducted from your Social Security payment— once you start to receive the benefit. They prefer deduction from your benefit because it makes things quick and easy.
I doubt that you are paying extra because of your payment method. You may be paying more because your premium is higher if your adjusted gross income is over $170,000 for a couple.