Mary Beth Franklin

Retirement 2.0blog

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

May 24, 2017, 6:24 PM EST

Rectifying Social Security's flawed advice


By Mary Beth Franklin

Forgive me if you are tired of reading about the bad advice being dispensed by Social Security representatives. But this story has a happy ending and offers some helpful, step-by-step guidance of how to help clients caught in a bureaucratic maze.Several months ago, Jana Davis, a financial adviser in Los Angeles, wrote to me asking for help with one of her clients, a divorced woman trying to claim spousal benefits on her ex-husband's earnings record. "I have a client who fits all of the divorced spouse criteria for receiving a spousal benefit from her ex-husband," Ms. Davis wrote. "She was married more than 10 years, has been divorced more than two years and never remarried," she wrote. "We know that half of her ex's benefit will be more than her full retirement age benefit," she added. "She is age 68 and her ex-husband has just reached his full retirement age of 66."Ms. Davis instructed her client to apply for her Social Security... Read full post

May 15, 2017, 1:52 PM EST

Social Security Administration steps up online security


By Mary Beth Franklin

Here we go again. The Social Security Administration announced that, beginning June 10, users of the agency's online services will need a one-time code to log into My Social Security accounts, which provide access to personal benefit estimates and lifelong earnings records.The agency's previous attempt to institute enhanced online security last year was short lived.On July 30, 2016, the Social Security Administration (SSA) began requiring new and current Social Security account holders to sign into their account using a one-time code text message as an extra measure of online security. Two weeks later, the agency reversed itself in response to public outcry from senior advocacy groups and some members of Congress who noted that many seniors do not have cell phones or live in rural areas without reliable cell phone service."Online security is vital, but we feel alternate options should be offered," said Mary Johnson, a policy consultant ... Read full post

May 9, 2017, 6:02 PM EST

Social Security blocks clients' claiming strategies


By Mary Beth Franklin

I am detecting a pattern. Time after time, a financial adviser recommends how a client should claim their Social Security benefits in a way that will maximize their lifetime income, only to be thwarted by a well-meaning Social Security representative who talks the client out of their intended strategy by offering a bigger immediate benefit.During my recent appearance at the InvestmentNews Retirement Income Summit in Chicago, I talked to numerous advisers who shared their frustration over this situation."We recommended that my client, who was 67 at the time, take her spousal benefit in February 2016," said Kelly Cartier, a financial adviser with Cartier Financial in Clearwater, Fla. "But when she went to Social Security office in March 2016, they suggested she take her full retirement age benefit instead and get a lump sum payment going back to full retirement age rather than taking the spousal benefit and letting her benefit grow to... Read full post

May 1, 2017, 2:46 PM EST

How Social Security treats remarriage


By Mary Beth Franklin

Young love is often blind and impulsive. Mature love, on the other hand, is pragmatic and wears bifocals. At least that is my interpretation based on recent questions from InvestmentNews readers asking what happens to Social Security benefits for divorced spouses and widows if they remarry. To claim benefits as a divorced spouse, one must have been married at least 10 years, divorced and currently single. An eligible divorced spouse loses the right to collect benefits on an ex if they remarry. But widows and widowers retain the right to claim survivor benefits if they wait until 60 or later to remarry. So, a divorced spouse who remarries loses the right to collect benefits on a living ex, but can still collect survivor benefits on a deceased ex if the divorced spouse waits until 60 to take that second trip down the aisle. (More: 5 financial mistakes divorcing men make)This was not always the case. Social Security rules on remarriage... Read full post

Apr 26, 2017, 2:33 PM EST

Social Security: Later is better


By Mary Beth Franklin

Americans are finally getting the message: Waiting to claim Social Security until full retirement age or later results in bigger monthly benefits for life and can also boost survivor benefits for a remaining spouse.Today's pre-retirees (ages 55 to 61) are far less inclined to begin taking Social Security benefits as soon as possible, according to the latest Fidelity Investments "Social Security IQ Survey." This year, only 28% of those aged 61 said they are planning to claim benefits at 62, a marked contrast from the last time the survey was conducted nine years ago. In 2008, 45% of those surveyed said they planned to start collecting benefits immediately.While the decrease in 61-year-olds planning to claim Social Security early is the most dramatic shift from the 2008 survey, many pre-retirees say they intend to wait longer before collecting. In 2008, 27% of 55- to 61-year-olds indicated they would collect Social Security as soon as... Read full post

Apr 21, 2017, 3:03 PM EST

Retirees embrace the gig economy


By Mary Beth Franklin

It turns out that the three-legged stool of retirement income may not be not be dead after all. But for a growing number of retirees, the components of retirement income are shifting.Several new surveys suggest that retirees are becoming more dependent on Social Security as pensions fade to black. And while personal savings may be inadequate when based on traditional retirement readiness measures, there is hope that Americans can still create a secure retirement when a broader measure of household wealth, including home equity and continued employment, is considered.(More: Reverse mortgages have an image problem)Meanwhile, many retirees are finding inventive ways to replace that traditional third leg of the retirement income stool by participating in the gig economy by driving for Uber or Lyft or swapping free time to run paid errands for companies such as Task Rabbit. And increasingly, older homeowners are renting out their spare... Read full post

Apr 10, 2017, 4:02 PM EST

Social Security update for same-sex couples


By Mary Beth Franklin

When is a marriage a marriage? In the case of same-sex couples, it can be complicated, particularly if their union pre-dates the nationwide recognition of gay marriage.On June 26, 2015, the U.S. Supreme Court issued a decision in Obergefell v. Hodges, holding that same-sex couples have a constitutional right to marry in all states and have their marriage recognized by other states. This decision made it possible for same-sex couples and their families to take advantage of a variety of Social Security benefits.But to claim Social Security benefits as a spouse, surviving spouse or ex-spouse, there are minimum length of marriage requirements that apply to both heterosexual and same-sex couples. Each type of benefit has a different timeline. To claim benefits on a spouse's earnings record, the couple must be married at least 12 months and both spouses must be at least 62 years old. However, a spouse of any age who is caring for worker's... Read full post

Mar 27, 2017, 3:07 PM EST

Hiring freeze and budget cuts impact Social Security claims

Social Security-Main

By Mary Beth Franklin

Last week, 50 members of Congress sent a letter to President Donald J. Trump asking him to exempt the Social Security Administration from the federal hiring freeze "to ensure that the American people receive the first-class service they have already earned through a lifetime of hard work."Don't hold your breath waiting for a reply.To start, all 50 of the letter signers are House Democrats with little sway over Mr. Trump's public policy agenda. In addition, the president had his hands full trying to rally members of his own Republican party to vote to repeal the Affordable Care Act and replace it with a controversial health care plan of his own. "Social Security is efficiently administered, spending less than a penny of every dollar on administration all while the American population is rapidly aging with 10,000 people, on average, turning 65 every day," the Democratic lawmakers noted in their letter to Mr. Trump.The agency, already... Read full post

Mar 8, 2017, 6:22 PM EST

Study finds most retirees want guaranteed lifetime income


By Mary Beth Franklin

Most Americans are comfortable with the idea of working towards a savings goal as they approach retirement, but few know how to create an income strategy once they get there. The greatest financial challenge facing retirees is determining how to make their money last as long as they do. That challenge is exacerbated by the disappearance of traditional pensions and the current low interest rate environment which produces relatively little income from the safe types of investments that many retirees favor."Our new survey finds that 61% of Americans age 55-75 place a high value on having guaranteed lifetime income to supplement their Social Security income," said Doug Kincaid, director of the "Third Annual Guaranteed Lifetime Income Study" released Wednesday. "Retirees can adjust their discretionary spending in retirement if they need to, but it's clearly comforting to know that essential expenses are covered by a source of income that... Read full post

Feb 28, 2017, 4:04 PM EST

Strict timeline governs health savings accounts and Medicare


By Mary Beth Franklin

Many clients have chosen to enroll in health savings accounts (HSAs) because they like the triple tax savings that HSAs offer when paired with a high-deductible health insurance plan. But things can get very complicated when clients approach Medicare-eligibility age. The rules are complex and the penalties are steep.HSAs offer a triple tax-break. Contributions are tax-deductible. Assets grow tax-free. And distributions are tax-free if used for qualified medical expenses. Non-qualified distributions are subject to ordinary income taxes and a 20% penalty if withdrawn before age 65. Once you turn 65, you can use HSA funds for any purpose penalty-free, but if distributions are used for non-medical expenses, they are subject to income tax.Because health care expenses often represent a significant portion of a retiree's budget, there is no shortage of ways to spend HSA dollars tax-free in retirement. Most medical and dental procedures count... Read full post

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