MONEY Ask the Expert

How to Control How Heirs Spend Your Money

Ask the Expert - Family Finance illustration
Robert A. Di Ieso, Jr.

Q: I’m 71 and my estate will be divided between my daughter and son; there are no grandchildren. My son and I differ radically on some political views. Is there any way to stipulate that none of my money will go to his causes? — Janet S.

A: The only way you can influence how heirs spend your assets from beyond the grave is with a trust, says CPA and financial planner Dina Lee, managing director of the Colony Group’s New York offices. This document goes beyond a will in that it not only outlines who will receive your property (and how much of it), but also helps guarantee your legacy and your intentions.

You can control the trust while you’re alive by drafting a living will with an estate planning attorney, but you will need to carefully appoint someone — be it a friend, family member, or third party like a bank — to manage the assets and distribute funds to beneficiaries after your death, following your instructions.

Beyond determining who inherits how much, a trust lets you include additional instructions to create hoops for heirs to jump through. An incentive trust, for instance, might force an heir to meet certain requirements — earning a degree, say, or passing a drug test — to receive funds. Staggered trust distributions allow your estate to pay out money incrementally over a certain timespan; such instructions are often aimed at allowing more money to be disbursed as heirs mature.

In theory, you can make the trust as restrictive as you like as long as those restrictions don’t break any laws — forbidding an heir from entering an interracial marriage, for instance.

But this is where your specific restriction may run into trouble. While you can specify that you don’t want heirs to give any of their trust funds to a specific political party, or certain political causes, your son could challenge that restriction in court — and the court could overturn it by finding it to be a violation of freedom of expression.

Alternate Strategy

A wiser tactic, suggests Washington estate planning attorney Bill Sanderson, would be to “only permit that which you want to permit.” Rather than trying to exclude certain activity, simply spell out which expenses you feel comfortable supporting, he suggests; the list could include such items as mortgage payments and rent, healthcare bills, insurance, and education costs.

This strategy is easier on the trustee, adds Sanderson, because he or she can simply ask beneficiaries to show proof of an expense and then issue a reimbursement — without having to play detective.

Understand, however, that such restrictive arrangements can cause resentment from heirs.

And there’s another issue. Lee points out that even if you craft the trust in a way that limits its use for political donations, simply giving your son money will increase his wealth, and thus free up more funds that he can give to those causes you disagree with.

Says Lee: “Indirectly, you are still enabling him to support his political beliefs — and accepting that the trust can’t change his behavior is part of letting go.”

MONEY Social Security

How Social Security Spousal Benefits Can Boost Your Tax Bill

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: If my wife takes the “spousal benefit” on my Social Security, which I have suspended until age 70, do we have pay taxes on that income? – Ron

A: Yep, you do. Social Security benefits are taxable if they exceed certain levels, and this applies to spousal and other benefits as well as your own retirement benefits. The rules can be a bit tricky. If you file a joint tax return, and your “combined” income is less than $32,000, you will owe no federal income tax on your Social Security benefits. If it’s between $32,000 and $44,000 a year, you will owe taxes on 50% of your benefits. Above $44,000, you would owe taxes on 85% of your benefits. Under current rules, you will never owe federal taxes on more than 85% of your benefits. These income brackets are not adjusted for inflation each year, so over time more and more people will owe taxes on their Social Security benefits. To determine your combined income as defined by Social Security, take your adjusted gross income (AGI) from your tax return, add any nontaxable interest you receive (from, say, a municipal bond), and then add half of your household’s combined Social Security benefits.

Q: After reading your article in Money, I thought the Start-Stop-Start strategy might work for me. I have called Social Security and they have never heard of this. Can you tell me the part of their regs which allows this method of claiming benefits? Thanks. —Phil

A: Start-Stop-Start is not an official name but a short-hand reference to a way of using Social Security’s rules for Suspending Retirement Benefits. If you have begun receiving benefits (the first Start), these rules permit you to suspend them (the Stop part) when you’ve reached your Full Retirement Age. Then, they will increase due to Delayed Retirement Credits until you resume them (the second Start part). Your suspended benefits will reach their maximum amount at age 70.

Q: My wife and I are both high earners. I am 68 now and am not taking Social Security benefits. My wife will be 66 in June 2017. Can I file for benefits and suspend and if I do, can she then receive half of my benefits now, even though she is not yet 66? What effect will this have on her own benefits, which she would like to defer until age 70? — Rao

A: If your wife files for a spousal benefit before she reaches 66 (which is defined as Full Retirement Age) she will not be able to file just for her spousal benefit. Under Social Security’s “deeming” rules, she will not be able to suspend her own benefits but will be required to file for them and her spousal benefit at the same time. She will not get both benefits but an amount that is roughly equal to the greater of the two. Also, because she is filing before her FRA, her benefits will be hit with Early Claiming Reductions, meaning that she will get an amount that is roughly equal to the greater of two reduced benefits! Unless you are in dire financial straits or facing a health or other family emergency, she should wait to file for a spousal benefit until she is 66. At that time, and assuming you have filed for and suspended your own benefit, she can file what’s called a restricted application for just her own spousal benefit. She will receive the full value of this benefit, which will equal half of your benefit as of your FRA. And she will be able to let her own retirement benefits increase by 8 percent a year until up to age 70.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at or @PhilMoeller on Twitter.

Read next: How to Time Medicare and Social Security Claims for 2016

MONEY Workplace

Have I Been Demoted?

Gary Houlder—Getty Images

Q: Have I been demoted? I think I got demoted yesterday. I’m not sure exactly if that’s it, because nobody told me directly. Instead, there was a group meeting with me and the two temps I hired a few months ago. Our office manager extended their contracts in one breath and said “You all report to me; it’s a flat hierarchy from now on.” They’ve been assigned new tasks and a lot of the work that was solely on my shoulders is now parcelled out.

Am I being elbowed out gracelessly? Insultingly? Is she just incompetent? Am I part of an office war? What’s the proactive thing to do?

A: Go talk to your boss and ask. I’d say this: “Can you tell me what made you decide to switch Jane and Fergus over to reporting to you and assign them X, Y, and Z rather than have me continue to do that work?” Pause there and listen. It might be that she has an explanation that has nothing to do with you (like that she’s gearing up to have you focus on some other big project), who knows. But if you feel like you’re still left unsure, say this: “I have to admit, it makes me worry that you had concerns about how I was managing them or how well I was doing with XYZ. If that’s the case, I’d be grateful to know so that I can improve.”

Q: Should I feel guilty for having nothing to do? I’m a salaried, exempt employee making $30,000 per year at my first professional job. I get all of my work done in a timely fashion and there have been no complaints about what I produce. But during slow periods, I literally run out of tasks unless I make them for myself, which I’m not really authorized to do.

I’ve suggested initiatives to my boss — upgrading the website, for example — and he’s been really slow to authorize me to work on those types of things, because he’s out of town all the time and his default response to anything speculative is “we’ll talk about it when I get back next week” ad infinitum. I ask my main colleague if I can help him with anything and he almost never says yes.

How much time can I spend reading stuff online before I need to feel guilty? Am I making enough of an effort to stay busy in service of the company? Is this an issue I need to raise with my manager, or is it okay to take advantage of the slow periods while staying at the office to keep up appearances? I don’t want to be a shirker.

A: You don’t need to feel guilty at all. You’ve asked for more work, you’ve looked for new projects yourself, you’ve asked a colleague if you can help him. There’s no cause for guilt here.

That said, I’d draw up a list of projects that you’d like to work on, and the next time you’re able to grab your manager for any significant type of conversation, get the list in front of him and ask if he’ll okay you working on any of them. If he says you’ll talk next week, follow up with him next week. And meanwhile, it’s perfectly appropriate to use the slow periods to do things like work on developing a skill, or reading industry news, or anything else that’s nominally work-related.

These questions are adapted from ones that originally appeared on Ask a Manager. Some have been edited for length.

More From Ask a Manager:


MONEY Ask the Expert

Do Shareholders Still Get Perks from Companies?

Investing illustration
Robert A. Di Ieso, Jr.

Q: Are there still stocks that give shareholders perks — for instance, discounts to Disney World for Walt Disney stock owners? — Melissa, San Antonio

A: There are, “but they are fewer and far between these days,” says Mariann Montagne, a chartered financial analyst with Gradient Investments in Arden Hills, Minn. “I remember a time when the annual report for McDonald’s MCDONALD'S CORP. MCD -0.24% or Starbucks STARBUCKS CORPORATION SBUX -0.57% contained a gift card,” she says. “But those days are gone.”

Many companies, she says, concluded that it was too costly and cumbersome to handle these requests, especially now that so many shareholders own their stock through brokerage accounts. “It’s different than it was when people had actual stock certificates,” she says.

Walt Disney WALT DISNEY COMPANY DIS 0.3% no longer gives shareholders discounts to its U.S. theme parks, and earlier this year Euro Disney suspended issuing new memberships to its Shareholders Club. Existing members are still privy to discounts on passes, dining, merchandise and more at Disneyland Paris.

While there are still some holdovers, perks typically don’t kick in unless you own at least 100 shares, and shareholders need to provide proof of ownership to claim their perks.

The major cruise lines, including Carnival Corporation CARNIVAL PLC CCL -0.48% , Norwegian Cruise Line Holdings NORWEGIAN CRUISE LINE HOLDINGS NCLH -0.03% , and Royal Caribbean ROYAL CARIBBEAN CRUISES RCL -0.95% all offer on-board certificates to qualified shareholders.

For all three companies, the perk is worth $50 on short cruises and $250 for two-week cruises. At today’s valuations, says Montagne, best to pass on the stock, even with the freebie. “Cruise lines have been riding high because of low fuel prices, but they are looking fairly valued,” she says. “We would not be buyers.”

Berkshire Hathaway BERKSHIRE HATHAWAY INC. BRK.B -0.36% shareholders who attend the company’s famous shareholder meeting in Omaha each year can pick up giveaway and discounts on products from Berkshire-owned companies.

But Berkshire shareholders typically aren’t in it for the breaks on Geico insurance or samples of See’s Candies, says Montagne. The biggest perk may be going to the meeting and “breathing the same air as Warren Buffett,” she quips.

Investors who have owned at least 100 shares in Ford Motor Co. FORD MOTOR COMPANY F 1.33% for a minimum of six months can participate in the company’s X-Plan, which they can use to buy Ford autos at discounted prices. Caveat: “It excludes some of the more popular cars and trucks,” says Montagne.

But if you’re in the market for a Ford, she says, the deal could yield several hundred dollars in savings. “We also like Ford as an investment,” she says.

Even so, investors shouldn’t let the promise of a deal drive their investment decisions. Ever.

MONEY early retirement

Do This If You Want to Retire Early

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: I’m married, and we are in our early to mid-50s with just under $700,000 in savings. My husband makes around $55,000 a year, and I make $135,000 a year. We would really like to retire before 65 (our full retirement age for Social Security is 67). I have a pension that will pay out $1,132 a month with a 50% survivor’s benefit for my husband. But we’re not sure whether we can pull it off. I max out my 401(k) but never seem to have any extra money to put into savings. How we can get to where we want to be? – Elizabeth, Lisle, Illinois

A: Achieving your dream of early retirement may be doable. But you’ll need to step up your savings and control your expenses, says Ray Lucas, senior vice president of planning at of Integrated Financial Partners. “It all comes down to the lifestyle you want to lead,” says Lucas.

First, let’s take a look at where you are now. If you are saving the max amount of $18,000 annually in your 401(k)—not including catch-up contributions, which we’ll get to in a moment—that’s 13% of your salary or 10% of your combined incomes. If you continue saving at that rate and get a 6% annual rate of return, you’d have about $1.1 million in five years at age 60.

That sounds like a tidy sum, but it may not go as far as you think over a long retirement. Let’s assume you want to replace 75% of your pre-retirement income, which would come to $140,000. It helps that you have a pension that will give you $13,000 a year. And there’s also Social Security—the average annual benefit for a couple who claim at full retirement age is $25,000 a year. But to provide an additional $100,000 in annual income, you will need to save at least $3 million. Assuming a 3.5% withdrawal rate, that portfolio would likely last you until age 95, or 35 years.

Even if you wait till 65 to retire, you are on track to amass “only” $1.6 million. So you will need to dramatically boost your savings rate to meet those goals, says Lucas. That may be tough since you say you are already have trouble putting away more.

But even if you can’t reach those savings targets, you may be able to enjoy a comfortable lifestyle on less than a six-figure income—most people do. In which case an early retirement is still very possible.

The first step is to analyze your retirement spending needs. Start by completing an expenses worksheet such as this one, which covers everything from your mortgage and property taxes to eating out and buying groceries. Be sure to factor in health care costs too. You can’t enroll in Medicare till you’re 65, so if you retire earlier, you will need to buy private health insurance for a few years. Also take into account whether you will be helping anyone else out financially, such as children or an elderly parent.

Next, make a full assessment of all your sources of income. Use a retirement calculator to see how much income your savings and pension will provide based on the year you want to retire. And be sure to consider the best possible claiming strategies for Social Security—married couples often have more options for taking Social Security, such as file-and-suspend, which can boost their income. The Social Security calculator available online at Financial Engines will run thousands of scenarios to help you identify the best choices.

And even though you may find it difficult, look at ways to increase your savings. In your 50s, you can make catch-up contributions to your 401(k), which can raise your total savings to $24,000 a year. Be sure to jump on opportunities to do bursts of savings—socking away big chunks of money when large expenses fall away, such as paying for college for your kids. And practice now for retirement by living on a smaller budget, which will enable you to sock away more.

If none of this gets you closer to your goals, consider working another year or two or taking on a part-time job after you retire. Another smart move may be to downsize to a smaller home or relocate to a lower-cost area, which will enable you to build your portfolio—plus, the lifestyle will be easier on your budget after you stop working.

“Retiring early often means making trade-offs, now and later,” says Lucas. “But with smart planning and disciplined saving, you can make it a reality.”

Want to fast-track your retirement savings? Check out MONEY’s Ultimate Retirement Guide

MONEY Workplace

Can I Opt Out of My Office’s Team-Building Activities?

Robert A. Di Ieso, Jr.

Q: My office team-building activities are getting ridiculous. Can I opt out? I’ve been in my office for about 10 months. When I initially joined, we had a weekly event called Friday Fitness, where each week a different person would lead a quick 15-minute workout. Everyone in our office thoroughly enjoys Friday Fitness because it breaks up the monotony of our office desk jobs and is a great team-building activity.

Unfortunately, the success of this event has prompted my manager to start initiating new team activities. Today at our staff meeting, our department head mentioned that she would like us to think of team activities that we can do on a weekly or monthly basis. One idea was a weekly Show and Tell where one person would bring in an item that was very important to them and would explain its meaning. Another manager suggested that once a month, we each bring in two photos from our childhood and then our office coordinator would put together a slideshow that we would watch while eating popcorn.

When these ideas were being floated around, I almost fell out of my seat! All of my childhood photos are in a different state and even if they were easily accessible, I don’t think I’d want to show them to my coworkers. Only one other coworker and I raised objections. I said this was beginning to feel a bit like summer camp and all of these team activities were becoming burdensome. In response, I got very pointed stares from all of the managers in my department.

Are these events a bit weird? Or is this just something I should get used to since it’s the office culture? Since I am one of the only people objecting, I’m pegged as not being a team player, and I don’t want that to affect my manager’s perception of me.

A: It’s weird and it might be something you have to get used to if it’s part of their culture.

Lots and lots of people would find this stuff off-putting, a little invasive, and a waste of time. You aren’t weird in feeling that way.

And I’d bet that your manager would be hard pressed to explain exactly why she thinks these activities will be helpful, and/or that she’d have vague language about building camaraderie that she wouldn’t be able to back up with anything more specific.

To be clear, there are people who enjoy this kind of thing. The issue is that there are also plenty of people who don’t and who find they do the opposite of building team spirit … and there are just so many more effective ways of team-building that it makes no sense to invest in thinly justified activities that are likely to feel inappropriately invasive to at least some people on any given team.

Good managers build strong teams by having people work together on projects with clear goals, clear roles, and appropriate feedback and recognition; creating opportunities for people to get a deeper understanding of each other’s work; and giving people the chance for meaningful input into the direction of the team.

It is (usually) helpful to create ways for your team members to get to know each other better, but you do this through stuff that’s voluntary and low-key and which (a) doesn’t take huge amounts of time away from what people are actually there to do, (b) doesn’t violate anyone’s privacy, and (c) recognizes that what’s fun for some people is misery for others (public performances, athletic events).

It doesn’t require delving into anyone’s childhood, and it definitely doesn’t involve pointed stares at people who raise questions about doing it at all.

However, if this is the culture there, then this is the culture. Especially as a relative newcomer, there might not be a lot you can do about it, at least not without really jeopardizing your relationship and standing with your manager.

But if you’re sucked into participating in this stuff, you can often covertly change the assignment to be something more palatable to you. For example, if you’re told to bring in childhood photos, just don’t — explain that they’re all with your parents (or wherever) and so you’ve instead brought in this photo of your dog/camping trip/niece/whatever you are willing to share. If you’re asked to bring in an “item that’s important to you,” you can bring in something relatively impersonal — the pistachios you’re addicted to, or your Twilight DVD, or whatever else you’re willing to spend two minutes talking about.

But yes, know that you’re not alone in being annoyed by this.

(Also, I really hope those Friday Fitness activities are voluntary and no one is shamed for not participating. Some of us prefer to start our Slothful Saturdays early.)

Q: How do I announce a firing to the rest of my staff? Can you please provide me with an email script to inform my employees that someone has been dismissed?

A: “Unfortunately, Jane’s last day with us was today. We wish her the best of luck, and we’ll be moving quickly to hire a replacement. Until her replacement is hired, please see Fergus with questions about teapot research and Lucinda for any other questions.”

Your staff will generally understand that you’re not going to share every detail with them in cases like this. The real key, though, is to ensure that your staff understands how performance problems are handled. After all, you may know that you had multiple conversations with Jane before letting her go, and gave her warnings and opportunities to improve, but since her coworkers probably weren’t privy to that, you don’t want them worrying that people get fired out of the blue. That means that it’s important to be transparent with people about how you handle performance problems in general, so that they understand there’s a fair process in place and know that they’d be warned if they were in danger of losing their job.

These questions are adapted from ones that originally appeared on Ask a Manager. Some have been edited for length.

More From Ask a Manager:

MONEY Medicare

How to Time Medicare and Social Security Claims for 2016

Q: I read your informative article on the increased Medicare Part B premium hike that may occur next year, but for only certain groups of Medicare enrollees, mainly those not paying the cost out of Social Security. Of course it seems inherently unfair to charge an individual like myself who has decided to delay Social Security for a higher benefit at age 70 and pay my Medicare out of pocket till then.

My question is can I avoid this increase by taking my Social Security this year and have my Medicare deducted from my benefit, and then next year suspend or withdraw my retirement and start again paying Medicare out of my pocket? When I suspend or withdraw my retirement will I continue to pay the same Medicare benefit as I paid while receiving Social Security, or will my Medicare premium increase because I again would be paying out of pocket?

My birthday is in November and I’ll turn 67 so I would just take the Social Security benefit till early 2016. Your help in answering this question will assist me in deciding to apply for benefits before November. Thanks. –Mike

A: Mike asked the most intriguing question I received on that article, but lots of readers chimed in following the recent disclosure that Medicare Part B premiums are projected to rise for some people by more than 50% next year. The projections were contained in the Medicare trustees’ recent annual report.

And, as it turns out, Mike’s questions involve detailed Social Security rules that can have broader implications for many filers.

The “Hold-Harmless” Rule

First, though, let’s recap the news about next year’s Part B premiums, which cover doctors, outpatient expenses and other services. The rules say that these premiums must be deducted from Social Security payments if someone is receiving Social Security and Medicare. Since those costs are expected to rise more next year than they have in recent years, Medicare must boost premiums that it will begin collecting next January.

However, overall inflation this year is expected to be low. Current levels of inflation determine whether Social Security beneficiaries will receive a cost of living adjustment (COLA) in 2016. The way it looks now, the trustees said, there likely will be no COLA at all.

When this happens, Social Security’s “hold harmless” provision kicks in. This rule says that no existing Social Security beneficiary paying the basic Part B premium ($104.90 this year) can be forced to receive a smaller Social Security benefit in one year than they did the previous year. These folks, roughly 70% of beneficiaries, would therefore continue paying $104.90 a month next year in Part B premiums.

Yet Medicare must raise about 25% of total Part B expenses from its recipients. So the program will have no choice but to collect all of this required revenue from the remaining beneficiaries, who will not be held harmless.

This group includes new Social Security beneficiaries, existing beneficiaries who have modified adjusted gross incomes above $85,000 ($170,000 if filing joint tax returns), and those who pay their Part B premiums directly to Medicare instead of having them withheld from their monthly Social Security payments. This last group represents people on Medicare such as Mike who have not yet begun receiving Social Security.

Medicare officials have said they will work to reduce the projected 52% hikes in Part B premiums faced by these three groups. But if the Social Security COLA does come in at zero when it is announced in October, the hold-harmless provision will trigger a big increase in Part B premiums for this sizable minority of Medicare recipients.

Suspend and Avoid

To return to Mike’s question, there’s some good news. Dorothy Clark, a spokeswoman for Social Security, says it looks like he can, indeed, avoid getting dinged with a big Part B increase by suspending benefits. She said there are four conditions that must be satisfied (the bold words are hers):

The individual is entitled to (i.e., actually receiving) Social Security benefits for the months of November and December,

Medicare Part B premiums for December and January are deducted from those benefits,

The individual receives a cash benefit for November, and

Solely because the increase in the Part B premium is so high compared to the Social Security benefit payable, the Social Security benefit payable would be lower in January than in December.

Mike’s November Social Security payment is lagged a month, meaning he won’t receive it until December. When he does, his Medicare Part B premium for December will be deducted from that initial Social Security payment. By beginning Part B deductions before the end of 2015, Mike will qualify to be held harmless in 2016.

So far, so good. But can Mike then suspend or withdraw his Social Security payment in 2016, and resume paying his Part B premiums to Medicare at the same hold-harmless rate he was paying in 2015?

Short-Term Gain

We have a split decision here. Ms. Clark said he absolutely can suspend his benefits in 2016 and continue to be held harmless. However, he cannot withdraw his benefits and receive this treatment. The reason is that suspending benefits maintains a person’s eligibility to receive them, while withdrawing from Social Security ends it. Without that eligibility, there is no basis for the person to be held harmless.

(Not to get too detailed, but if Mike withdrew his benefits, he would need to repay any payments from Social Security, and he would effectively get a do-over, meaning he would be regarded as never having filed for Social Security benefits at all. And when Ms. Clark uses the word “eligibility” she means Mike has currently filed to receive benefits. If he were not receiving benefits but was qualified to file for them, he would be considered “entitled” for benefits.)

To summarize, Mike can file for Social Security in time to receive his November payment in December, qualifying him to be held harmless against any Part B premium increase in 2016. He then can suspend his Social Security early in 2016 and continue to be held harmless in 2016. While his Social Security benefits are suspended, they will qualify for delayed retirement credits, permitting them to rise in value at the rate of 8% a year.

Mike will need to go to a lot of trouble to be held harmless, however, and the savings may be short-term. Even if Part B premiums do rise for the unlucky minority, they are likely to be rolled back once Social Security starts paying COLAs again. Back in 2010 and 2011, there were no COLAs either, and the hold-harmless provision raised the lowest Part B premium from $96.40 a month in 2009 to $110.50 in 2010 and $115.40 in 2011. With the reinstatement of a COLA in 2012, Medicare could spread the financial pain to everyone, and the premium dropped to $99.90 a month.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at or @PhilMoeller on Twitter.

Read next: Why Social Security Is More Crucial Than Ever for Your Retirement

MONEY Ask the Expert

How the Fed Affects Bond Prices and Returns

Investing illustration
Robert A. Di Ieso, Jr.

Q: Could you please explain how Fed interest rate policy influences bond prices and returns? — Dave

A: Interest rates that are set by the Federal Reserve don’t directly impact the prices and returns of the bonds that you own directly or through funds.

That’s because the Fed only sets rates on overnight loans that Federal Reserve member banks receive from the Fed itself or from one another, says Jay Sommariva, vice president and senior fixed income portfolio manager at Fort Pitt Capital Group in Pittsburgh, Penn.

As for the longer-term debt that you own in your portfolio, the state of the economy — or rather, the market’s perception of the economy — is what will ultimately determine their yields and conversely their prices. (Bond yields and prices move in the opposite direction.)

So why then are investors so fixated on the Fed’s every move?

By reducing or raising short-term rates, the Fed incrementally cuts or boosts the cost of capital to lending institutions. And that in turn can either nudge the economy toward faster growth by promoting lending or tap the breaks on economic activity if things are heating up.

In December 2008, for example, the Fed lowered its target for the so-called Federal Funds rate to near zero as one effort to stem a full-blown recession.

Now that the economy has turned a corner, investors expect that the Fed will raise its overnight target as early as next month, albeit ever so slightly.

Exactly how the market will initially react is anyone’s guess.

On the one hand, most investors have already factored such an increase into their models. Then again, “the Fed hasn’t raised rates in over eight years,” says Sommariva. “When they finally do, it could be an event.”

To be sure, just as important as what the Fed does is what the Fed says. Case in point: The “Taper Tantrum” of 2013.

When the Fed indicated that its stimulative campaign would soon be coming to an end, it wreaked temporary havoc on the bond market. Once the dust settled, prices recovered and bond yields fell again.

Bottom line: A Fed increase could translate to higher short-term interest rates — and that means a potential decline in prices. Longer-term rates, however, tend to hinge on what investors think about inflation and the economy, as well as what else is happening in the world. Sommariva adds that short-term rates could rise even as longer-term rates come down.

Then again, considering that the yield on 10-year Treasuries has, for the most part, been in steady decline for the last three decades, yields don’t have much room to fall.

At some point they will head higher, and when that happens prices could decline.

MONEY Retirement

Why Keeping Your Retirement Funds In One Place Pays Off

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: I am retired with the majority of my assets in IRAs. For a sense of security I have kept my money in several accounts, with Fidelity and Vanguard. They’re far from a Bernie Madoff risk, but I figure why not spread it around just in case? I also worry about a cyber-attack on the holder of all my assets. Am I being too paranoid or could I safely consolidate all my eggs into one basket? — Bob Drahushuk

A: There are plenty of good reasons to consolidate your investments at one firm rather then spreading them over multiple accounts, says Mark Hebner, founder and president of Index Fund Advisors in Irvine, Calif. You’ll find it easy to ensure that you have the right asset allocation, you can save on administrative fees, and some firms reduce transaction costs for larger balances. It means less paperwork, and you have just one firm to deal with when you want to make a transaction. It’s also simpler for your spouse and heirs when you pass away.

But if splitting your investments between two brokerages will give you peace of mind, do it, says Hebner. There’s no harm. You can use an account aggregator such as or Quicken to keep tabs on your overall portfolio, he adds.

As for the risk of losing your money in a Madoff-like Ponzi scheme, keeping your money at large, well-respected brokerages, as you are doing, will mitigate that. You aren’t alone, though, in your concerns about cyber attacks on financial institutions. The Securities and Exchange Commission has beefed up its examination of brokerage cyber security policies. But most large firms, including Fidelity, Vanguard, and Schwab, have policies that guarantee reimbursement against unauthorized activity in your account.

Beyond Ponzi schemes and hackers, Hebner says that since the 2008 market crash, clients worry more about the risk of brokerage firm failing. You have protection there too.

The Securities Investor Protection Corp. (SIPC) steps in if a brokerage goes out of business and will reimburse your account up to $500,000 per account holder and per account (coverage of cash is $250,000). In the Madoff case, customers got money back that they deposited with him but not any of the fictitious profits Madoff claimed, says Steve Harbeck, SIPC president and CEO of SIPC, which is a non-government organization funded by member securities firms. “We protect cash deposited with an institution and any securities bought with that money for member brokerages.”

Brokerage bankruptcies are rare, though—just 328 cases since SIPC was created in 1970 and 625,000 customer claims. The SIPC has reimbursed $2.34 billion in claims and administrative costs, but that number is skewed by Madoff, which accounts for $1.8 billion of the $2.34 billion. Not including the continuing Madoff case, fewer than 400 people haven’t received the full amount of their assets left with a collapsed SIPC-member firm because it was above the limit, according to SIPC. But most major brokerage firms also carry private insurance beyond SIPC limits known as “excess SIP insurance.”

That should give you peace of mind whether or not you consolidate your accounts, says Hebner. But do whatever helps you sleep at night.

“There’s enough to worry about when it comes to the ups and downs of the financial markets. You should feel as comfortable as you can about any possible risks to your account,” says Hebner.

MONEY Workplace

Is It Wrong to Back Out of a Job Offer That I Already Accepted?

Robert A. Di Ieso, Jr.

Q: Is it terrible to accept a job offer and then back out? I have done some reading on this, and a lot of articles suggest it is unethical, will ruin your reputation, and essentially is a nasty thing to do. Yet no one claims it’s “unethical” if the employer does the same thing.

Here’s my situation: I had a bit of a falling out with another manager in my current job. The company really needs me, so they don’t want me going anywhere, but the confrontation was pretty ugly and unacceptable to me, and it isn’t the first time, and nothing is ever done about it. So I started to look around and interview and got an offer.

However, a few things happened since I accepted. First of all, I feel like the offer letter I got was a little pushy. It stated that I would have less than two weeks of notice to give and suggested that if I did not sign the offer and agree to the terms within a day, it would be rescinded. I am really bad at confrontation, so I just signed it. But it has come to bother me that they acted that way about it.

Also, they have been contacting me to send me some reports that they want me to review before I start. I don’t mind that, although I think it is a little cheeky to assign me 200 pages of reading before I have even begun working for them. But I strongly dislike how they end emails with “let me know by the end of the day that you received this,” and if I don’t reply within a couple of hours they begin calling my cell phone. On the whole, I just have a bad feeling about it, about their pushiness and the way they have handled this.

The more I consider my current situation too, the more I realize I am throwing away something I value. Granted, the problem that drove me to this is not insignificant, but the benefits of my current position outweigh the downsides in some ways. I am one of the founders of the company, and the clients are largely my connections, so it is pretty serious that I am going.

Can I change my mind? How do I tell them? I am supposed to start in less than a week.

A: Yes, you can change your mind.

It won’t be welcome news to them, obviously, but it’s better to back out now than to end up in a job you don’t want to be in and that you’re feeling queasy about.

But should you? Well, the stuff that’s setting off alarm bells for you might indeed be harbingers of worse to come once you’re working there. People shouldn’t be pushy with offer letters, they shouldn’t push currently employed candidates to leave their jobs with less than two weeks of notice (unless it’s for a rare good reason and they explain why), they shouldn’t give you 200 pages of reading before you start, and they definitely shouldn’t expect you to answer their emails within a few hours while you’re not yet working for them.

That said, it’s also possible that this stuff doesn’t indicate serious problems there. I’d want to know more about what you observed about them before the offer stage. Did you do due diligence, talk to multiple people there, talk to anyone in your network connected to them, ask good questions, and generally work to understand what they’re like and what you’d be signing up for? If you did and you felt comfortable, I wouldn’t necessarily throw all that out now.

I’d also want to know who it is who’s sending these “respond today” emails and calling your cell if they don’t get a fast answer. Is it your soon-to-be manager, or someone else? If it’s the person who will be managing you, that would worry me a lot — that’s the sign of an unreasonable manager who doesn’t respect boundaries. But if it’s people who will be coworkers? That would worry me less (and for all we know, they’re not clear on what arrangement you have with their company). But that’s something I’d ask the person who will be managing you about.

You could call her up and say something like this: “Between now and when I start, I’m going to be really busy wrapping things up with my old position. I’m not going to have time to read the materials you sent, and I probably won’t be able to respond to emails quickly. Jane and Fergus have sent me emails asking for immediate responses a few times, and called my cell phone when I haven’t responded immediately.” Then stop and listen to the response. Is she surprised that this is happening, understand that you don’t want that, and say she’ll put a stop to it? Or does she sound put out or irked that you’re pushing back?

All in all, though, if you’ve changed your mind and no longer want to take the job, you shouldn’t take it as penance. It’s true that it’s not good to back out of job offers, but no sane employer wants a new hire who doesn’t want to be there. It’ll be a pain in the ass for them, yes, but that’s far better for them than you leaving after four months or being miserable for several years, and it’s far, far better for you than serving time in a job you don’t want, if you have other options. (I’m assuming that you know that it is an option to stay at your old job; if you’re a founder, it probably is, although that wouldn’t always be true for everyone.)

Tell them ASAP if indeed that’s your decision and apologize profusely. Assume you’ve burned that bridge. (But also know that there can be things worse than a burnt bridge.)

And then resolve that in the future you’ll pay attention to your doubts and not be pressured into accepting offers more quickly than you’re comfortable with — and forgive yourself for this one.

Q: Is it legal for my employer to force me to work during breaks? I am a minor in Indiana working at Dairy Queen. Although they let me on break, they force me to work during it. Is this legal?

A: Indiana requires that minors who work six or more hours in a shift be given one or two breaks totaling at least 30 minutes. They have to be real breaks, meaning that you don’t work during them. So no, it’s not legal if your shifts are six hours or longer.

If you were an adult, the answer would be different: Indiana doesn’t require employers to give adult employees meal or rest breaks at all, so the fact that they’re requiring you to work on a break (essentially taking away the break) would be legal — as long as they were paying for all the time you’re working. In other words, they can’t have you clock out for the break and then still do work, unless you clock back in.

It’s possible they don’t realize that the law is different for minors. I’d say this: “I just found out that state law requires minors to have 30 minutes of break time when working six hours or more. I know that’s different from adult employees. Would it be better for me to take my breaks off the premises, so that people don’t forget and ask me to do work during those periods?”

These questions are adapted from ones that originally appeared on Ask a Manager. Some have been edited for length.

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