Mary Beth Franklin

Retirement 2.0blog

Mary Beth Franklin on what your clients really want when they talk about retirement.

Jun 19, 2018, 5:48 PM EST

Divorce reduces retirement readiness


By Mary Beth Franklin

It's no secret that divorce creates enormous emotional and financial challenges in the short run. But now a new report from the Center for Retirement Research at Boston College quantifies how divorce affects longer-term finances in the form of retirement readiness.In 2006, the CRR developed the National Retirement Risk Index to measure the percentage of working-age households at risk of being unable to maintain their preretirement standard of living after they stopped working. Today, the index shows that half of American households are at risk of being unable to maintain their standard of living in retirement. The risk is worse — 7 percentage points higher — for households that have been through a divorce.While people benefit from economies of scale when they're married by sharing fundamental expenses such as housing and utilities, they typically face higher living costs per person after they divorce. Those higher living... Read full post

Jun 4, 2018, 5:03 PM EST

2019 Social Security cost-of-living adjustment could top 3 percent


By Mary Beth Franklin

The annual Social Security cost-of-living adjustment for 2019 could top 3% in 2019, which would be the largest increase in seven years, according to a new estimate released by The Senior Citizens League, a nonpartisan advocacy group representing more than 1 million retirees.A 3% increase would boost the average Social Security benefit of $1,404 per month in 2018 by $42 per month next year and increase the maximum benefit of $2,788 per month for someone retiring at full retirement age in 2018 by about $85 per month in 2019. The average and maximum Social Security benefits do not include delayed retirement credits. Social Security recipients who delay claiming benefits beyond full retirement age earn an additional 8% per year for every year they postpone benefits up to age 70.A 3% COLA in 2019 would be the biggest annual hike since 2012, when Social Security benefits grew by 3.6%. This year the COLA was 2%, following a meager 0.3%... Read full post

May 22, 2018, 2:53 PM EST

Roth conversions can boost Medicare premiums


By Mary Beth Franklin

The Tax Cut and Jobs Act of 2017 created generally lower tax rates for 2018 through 2025, presenting an enticing opportunity to convert traditional retirement savings to Roth accounts at today's lower rates. Under current law, individual income tax rates will revert to the higher 2017 levels, plus inflation adjustments, in 2026.The prospect of creating future tax-free income through aggressive Roth conversions is undoubtedly attractive. But depending on a client's age and income, this year's Roth conversions could trigger higher Medicare premiums in 2020. (Medicare premiums are based on the latest available tax returns, generally two calendar years in arrears.) Still, a temporary boost in health care costs may be a viable trade-off to reduce future annual required minimum distributions, trim income taxes and lower Medicare premiums over the long term.... Read full post

May 17, 2018, 4:09 PM EST

The gig economy as a backup retirement plan


By Mary Beth Franklin

Today, more than one in three U.S. workers are freelancers in the "gig economy," relying on do-it-yourself employment either as their main source of income or as a side job. Freelancers are expected to grow to make up 40% of the American workforce by 2020.As the shift in the traditional employer-employee relationship continues to expand, the gig economy is changing the way Americans earn, spend and save for retirement.But few in this emerging freelance class are seeking the advice of traditional financial planners, according to a new report from Betterment, a leading online investing platform. Only 20% of freelancers who invest on a regular basis said they use an in-person wealth manager, compared to 28% who use a robo-adviser and 36% who invest on their own.Betterment's report examines the financial profiles of two distinct categories of gig economy workers: full-time giggers, who rely on independent work or temporary contracts as... Read full post

May 15, 2018, 8:00 AM EST

Almost half of near-retirees fail basic Social Security quiz


By Mary Beth Franklin

Near-retirees still have a lot to learn about Social Security retirement benefits and may be leaving money on the table, according to a new consumer poll released Tuesday by Massachusetts Mutual Life Insurance Co.Nearly half (47%) of Americans age 50 and older failed a basic five-question true-false quiz on Social Security retirement benefits. Three years ago, when MassMutual surveyed the nation with a broader 10 question true-false quiz, 62% of respondents age 50-plus failed. This year's survey was conducted in March via an online survey among 1,007 Americans 50 and older. The previous survey, also online, was conducted in February and March 2015 among 1,513 American adults. A failing score is 60% or lower."There's improvement, but the scores are still alarming," said Mike Fanning, head of MassMutual U.S. "For many, thousands of dollars could be left on the table at a time when it really counts." Another recent survey by the... Read full post

May 9, 2018, 11:31 AM EST

Social Security's most confusing rules


By Mary Beth Franklin

I've just returned from the annual InvestmentNews Retirement Income Summit in Chicago. It is one of my favorite conferences of the year, not just because of the excellent content, but because it provides me an opportunity to meet with readers face-to-face. Based on their questions during the two-day summit, I have boiled down Social Security's most confusing rules into this handy tip sheet for financial advisers and their clients.—Purge "file and suspend" from your vocabulary.This claiming strategy is no longer an option. Only people who were at least 66 years old by April 29, 2016, and who exercised this claiming strategy by that deadline are grandfathered under the old rules that allowed them to trigger benefits for eligible family members while their own benefits continued to grow by 8% per year up until age 70. Under the new rules, a worker must collect Social Security benefits before a family member can receive benefits as... Read full post

May 3, 2018, 3:40 PM EST

Countdown to retirement


By Mary Beth Franklin

I celebrated a major milestone with a group of friends recently. We met as newly minted teenagers in 1968 when we were freshmen in high school. Today, with most of us on the cusp of retirement, we took a trip to Charleston to commemorate 50 years of friendship. For years, my girlfriends have listened to me prattle on about Social Security rules and strategies. But now that we are all 64, the information took on new urgency. They literally begged me to review their individual situations and options as they sat around the table with pens and pads in hand.Our trip was a perfect time for a pre-retirement review. As my friend and colleague Dr. Katy Votava, renowned Medicare expert and president of, always says: "64 is a good age to read the meter."It amazes me how our small group of nine women represents a microcosm of aging baby boomers. Two are widows. The other seven are married — although not necessarily for the... Read full post

Apr 30, 2018, 8:40 AM EST

Recent rule changes to boost retiree health costs


By Mary Beth Franklin

Individually, recent updates to Medicare and Social Security rules may not have seemed like a big deal. But when taken together, seven changes to Medicare means testing, Social Security cost-of-living adjustments (COLAs) and Social Security claiming strategies will increase health care costs and reduce the value of benefits for current and future retirees, according to a new analysis."Taken on their own, each of these relatively low-profile changes to Social Security and Medicare have not generally been considered particularly significant or were believed to impact only wealthy Americans," said Ron Mastrogiovanni, founder and CEO of HealthView Services. "In this report, we show their collective financial impact on individual retirees' budgets and why retirees should anticipate the continued reduction in the value of benefits and increases in their costs.""Financial advisers need to be aware of these law changes and how it impacts... Read full post

Apr 25, 2018, 3:47 PM EST

Future retirees expect Social Security to be main source of income


By Mary Beth Franklin

More than half of current or soon-to-be retirees cite Social Security as their primary source of income, well ahead of the 18% of those who identified a pension as their main income source, according to a new survey.But that heavy reliance on Social Security as the main source of income may be misplaced as the fifth annual survey from Nationwide Retirement Institute identified some yawning gaps in the public's knowledge about the program's retirement benefits. The Harris Poll was conducted online earlier this year among more than 1,000 Americans age 50 or older who are retired or who plan to retire in the next 10 years."It's problematic that so many people are planning to rely solely on Social Security for income in retirement," said Tina Ambrozy, president of sales and distributions at Nationwide. "There's a major disconnect between what consumers think Social Security will be — and cover — compared to reality."Three... Read full post

Apr 19, 2018, 4:40 PM EST

The $1 million gender wealth gap


By Mary Beth Franklin

It is well-documented that most women earn less than men, averaging 84 cents to every $1 paid to a man. What is less obvious is the lifetime impact of that wage gap when combined with career interruptions.Many women experience lasting financial consequences when they take time off to provide care for young children or aging parents. About one-third of them return to the workforce in less demanding jobs with lower pay, according to a new Merrill Lynch study conducted in partnership with Age Wave.The cumulative effect is a gender wealth gap — the difference between men and women's financial resources across their lifetimes, including earnings, investments, retirement savings and additional assets. As a result, when a woman reaches retirement age, she may have accumulated as much as $1 million less than a man who was continuously in the workforce, according to the study, "Women and Financial Wellness: Beyond the Bottom Line."The... Read full post

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