Making donation dollars go further

Dear Liz: I want to support about 10 charities and nonprofits but have a limited budget of $1,000. I’ve been dividing it among those charities, but would I have a bigger impact contributing the full amount to just one?

Answer: Absolutely, for a number of reasons.

Each charity spends a certain amount to process your donation. The smaller the donation, the more of it is eaten up by these costs. If it costs $5 to process a donation, for example, the costs represent 5% of each $100 donation. If $1,000 went to one charity, just one fee would be incurred and it would represent just 0.5% of the total.

Any donation you give can trigger more appeals from the charity, so you’re potentially incurring 10 times the junk mail.

Wise donors also research charities using services such as GuideStar or Charity Navigator to make sure the bulk of their contributions go to the cause, rather than to executive salaries, fundraising and overhead. Monitoring 10 charities is a lot more work than keeping track of one or two.

You might also consider making monthly contributions, rather than waiting until the end of the year, since that helps charities budget. A direct debit from your checking account is often the best way to set this up, because using a credit card incurs transaction fees that reduce your contribution.

Getting bum info from Social Security

Dear Liz: After taking Social Security early at 62, I have called, written and visited in person asking to have my benefit suspended so it can earn delayed retirement credits. Nothing has worked. Social Security representatives say I cannot change anything after the first 12 months.

I turn 66 this month and wanted to get this done.

Answer: The employees you’re talking to are confusing benefit suspension with application withdrawal.

As you know, Social Security benefits grow by 5% to 8% each year you delay between 62 and 70. Starting early can be an expensive mistake that permanently reduces the amount you receive over your lifetime.

There are two potential ways to fix the mistake. One is a withdrawal, where you rescind your application and pay back the money you’ve received. Withdrawals are a “do over” that resets the clock on your benefit so that it’s as if you never applied. Withdrawals are allowed only in the first 12 months after your application.

A suspension, on the other hand, is when you ask Social Security to halt your benefit so that it can earn delayed retirement credits. You don’t have to pay money back, but you also don’t get to reset the clock.

Instead, the benefit you’re currently receiving is allowed to earn delayed retirement credits. You can suspend your benefit only once you’ve reached full retirement age. If you were born between 1943 and 1954, your full retirement age is 66.

Social Security explains how suspension works online in the retirement section. You might want to print that out and take it with you to the Social Security office. If someone again tries to tell you that suspension isn’t allowed, ask to speak to a manager. This is your right, and it could make a big difference in providing you a more comfortable retirement.

How a couple would be insured by FDIC

Dear Liz: My parents, who are in their 80s, just moved and are about to sell their former home. Their net gain from the sale will be approximately $400,000. I am advocating they put this money in a high-yield savings account, as capital preservation is key.

I know an individual account is insured by the Federal Deposit Insurance Corp. for up to $250,000. But if we set it up so they are joint account holders, would the FDIC insurance limit on that one account rise to $500,000?

Answer: Yes. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs, revocable trust accounts and irrevocable trust accounts, among others. Each depositor in a joint savings account is covered up to $250,000, so a couple would have $500,000 of coverage.

Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.