May 21, 2012, 4:03 PM EST

Mary Beth Franklin: Will 401(k) fee disclosure boost index funds?

By Mary Beth Franklin

There has been a sudden interest in index fund offerings as part of investment line-ups for retirement plans, says Rich Rausser, Senior Vice President of Client Services at Pentegra Retirement Services, a provider of retirement products and services to financial institutions and organizationsUpcoming Department of Labor fee disclosure rules will compel plan fiduciaries to look more closely at fees associated with their retirement plans and that may prompt many to consider lower cost options, Rausser said. Many providers who previously focused on actively-managed funds are now adding new product offerings with lower-cost index funds.“Indexing has always made sense,” said Rausser. “It keeps costs low, simplifies the investment choice for plan sponsors and participants, offers broad diversification, and delivers consistently superior performance over time - - all important attributes for the long-term focus necessary... Read full post

May 15, 2012, 11:33 AM EST

Star adviser Evensky on board with retirement specialist designation

By Mary Beth Franklin

Harold Evensky, renowned financial planning authority and founder and president of Evensky & Katz, has joined the Board of Governance for the Retirement Management Analyst Designation (RMA) ProgramThe RMA program is a rigorous retirement income planning curriculum and examination designed to serve the advanced education needs of advisers and professionals across the financial services industry. Individuals earning the RMA designation are uniquely prepared to deliver retirement income solutions and services to clients wanting secure income streams and ongoing professional retirement income management.As a member of the RMA Governance Board, Evensky will oversee development and enhancement of the RMA Code of Ethics and complaint adjudication processs. He also will serve as the primary interface with regulators and the compliance community in connection with theRetirement Income Industry Association. “Harold is a strong supporter of ... Read full post

May 14, 2012, 9:58 AM EST

Translating Medicare-ese for financial advisers

By Mary Beth Franklin

In my previous blog, I posed the question: Is Medicare the next frontier for financial advice? Several readers responded with a resounding yes. The question was triggered by a recent online survey by Nationwide Financial that revealed that nearly half of high-net-worth Americans who are close to retirement age are “terrified” of what health care costs may do to their retirement plans. But 38% of those surveyed said that they haven't discussed retirement health care costs with a financial adviser, in part because they are unsure as to whether their adviser is knowledgeable about the issue. Expertise in retiree health and Medicare can help advisers retain and attract pre-retiree clients.In a follow-up column for the May 13, 2012, print edition, I listed several resources that financial advisers can use to estimate their client's potential health care costs. The list included Nationwide's free Personal Health Assessment... Read full post

May 7, 2012, 7:45 AM EST

Is Medicare the next frontier for financial advice?

By Mary Beth Franklin

Here's the latest riddle in retirement planning: What is one of pre-retirees' biggest fears that they don't discuss with their financial adviser? Answer: health care A new survey by Nationwide Financial released Monday says nearly half of high-net worth Americans who are close to retirement say they are “terrified” of what health care costs may do to their retirement plans, yet 38% say they have not discussed retirement health care costs with a financial. Survey respondents — who were age 55 or older with household assets of $250,000 or more — estimated that Medicare will pay for 68% of their health care costs in retirement. How did they come up with that estimate? Most of them guessed. But what they don't know can hurt them. Medicare actually covers only about 51% of health care costs, according to the Employee Benefits Research Institute. Most survey respondents estimated their per-person cost would be about... Read full post

May 3, 2012, 5:16 PM EST

Social Security makes a statement with virtual benefit estimates

By Mary Beth Franklin

In a budget cutting move last year, the Social Security Administration stopped mailing paper benefit estimates to workers, a move that caused an outcry among individuals and financial planners who rely on the documents as an important tool in the financial planning process. The agency resumed mailing paper statements in February 2012, but only to a select group of workers -- those 60 and older who are not currently receiving benefits. Now, everyone can get access to their Social Security statements and earnings record -- but only online.“Our new online Social Security Statement, available at www.socialsecurity.gov/mystatement, is simple, easy-to-use and provides people with estimates they can use to plan for their retirement,” said Michael J. Astrue, Commissioner of Social Security. In addition to retirement benefit estimates, the online statement also provides estimates for disability and survivors benefits. And, it also... Read full post

April 25, 2012, 3:37 PM EST

Time for a new 401(k) model?

By Mary Beth Franklin

Mark Iwry, senior advisor to the Secretary of the Treasury for retirement policy, acknowledges that automatic 401(k) features have gone a long way to improve retirement saving opportunities for American workers. He dubbed the widespread use of automatic enrollment of new employees and default investment options such as target-date or balanced funds or managed accounts "401(k) 2.0". But why stop there? "We could move to a 3.0 model that's more robust -- without additional legislation and without a material increase in cost to employers," he said during a panel discussion of proposed retirement plan innovations sponsored by the U.S. Chamber of Commerce Commerce in Washington this week.Rather than settling for the standard 3% default rate for the initial salary deferral of new employees who are automatically enrolled in their company 401(k) plan, Iwry suggested starting at a higher level, perhaps 5 or 6%. And instead of limiting auto... Read full post

April 10, 2012, 11:28 AM EST

Secrets of social security: Your questions answered

After a recent appearance on Consuelo Mack's WealthTrack (watch here) discussing Social Security, InvestmentNews contributing editor Mary Beth Franklin quickly received more than 100 inquiries from advisers and investors about strategies and techniques for most effectively tapping this cornerstone of retirement income. Below are two recent questions from advisers directly to Mary Beth, who will be using this blog to field and answer more of your questions on this important subject: Mary Beth,I read your article today ('I struck a nerve talking about Social Security!) and I thought you could answer this question easily. I have racked my brain trying to figure out why people would wait as long as possible to begin drawing social security. Since there is no valuable death benefit to social security then you only draw from the system how many checks you receive. Why wait? I know the amount goes up, but unless you know what your longevity... Read full post

April 10, 2012, 4:15 PM EST

Advisers: Let me coach you on Social Security claiming-strategies

By Mary Beth Franklin

You're probably sick of hearing me talk about the importance of Social Security claiming strategies as the bedrock of a solid retirement income strategy. But I'm not alone. Today, Cathy Weatherford, President and CEO of the Insured Retirement Institute (IRI), said, “Deciding when to begin collecting Social Security benefits needs to be considered within the framework of a holistic retirement strategy.” And, she added, boomers expect their financial advisers to guide them in this crucial decision. Are you prepared?Four years ago when I wrote my first article about Secrets of Social Security for Kiplinger's Personal Finance magazine, I felt like a pioneer. Today, after answering hundreds of e-mails, letters and phone calls from consumers and financial advisers, I feel like the reigning champion of a new board game: Trivia Pursuit, Aging Boomer edition, meets the game of Life.“As the retirement paradigm continues to... Read full post

April 9, 2012, 4:02 PM EST

I struck a nerve talking Social Security!

By Mary Beth Franklin

Of all the radio and television programs where I have been a guest over the years, my favorite is the PBS program WealthTrack with host Consuelo Mack. Consuelo is smart, insightful and has been called the "antidote to Jim Cramer" for her long-form interviews of mutual fund managers, financial advisers and other notables in the financial services field.I was delighted when Consuelo asked me to come on her show last month to talk about Social Security claiming strategies. (You can view a portion of March 30, 2012, episode of WealthTrack here) .I discussed ways for married couples, singles, survivors and divorced spouses to maximize their lifetime Social Security benefits by knowing when and how to claim them. I explained that in some cases, Social Security Administration employees may not be familiar withall of these nuances that I have helped to uncover over the past few years. I told viewers to be persistent, polite, and to ask to... Read full post

March 20, 2012, 12:40 PM EST

Social Security meets a brave new world

By Mary Beth Franklin

I read a fascinating article in the Washington Post this morning about Social Security survivor benefits for minor children. Normally, when a parent dies, an unmarried child under age 18 is entitled to Social Security survivor benefits.The Supreme Court is considering a case that involves the rights of twins that were born 18 months after the father, Robert Capato, died. It's the court's first review of “posthumous conception”—something I'm sure President Franklin D. Roosevelt never worried about when he signed the Social Security legislation into law in the 1930s.When Robert was diagnosed with esophageal cancer shortly after he and his wife Karen married in 1999, they were concerned that his treatment might leave him sterile. The Capatos decided to deposit Robert's sperm in a sperm bank. They conceived one child naturally—a son born in 2001. Robert died in in March 2002. After the twins were born in 2003, Karen ... Read full post