Mary Beth Franklin

Retirement 2.0blog

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

Feb 15, 2017, 3:32 PM EST

Small and large course corrections can add up to big savings for retirement

By Mary Beth Franklin

American retirement is a huge riddle. How do you save for something when you don't know what it will cost or how long it will last? That's the challenge faced by millions of Americans, so it may not be surprising that most are coming up short.While most people realize retirement will be the biggest purchase of their lifetimes, averaging about $700,000 or about 2.5 times the cost of an average home, 81% say they do not know how much money they will need to fund retirement, according to a new study from Bank of America Merrill Lynch.This lack of preparedness extends even to the wealthy. Of those with at least $1 million in investable assets, only 60% say they feel prepared for a 30-year retirement. Among those with $500,000 to $1 million in investable assets, the confidence level drops to 37%.The study, conducted in partnership with Age Wave, a research and consulting firm, offers some insights into how key trends of U.S. demographics,... Read full post

Feb 13, 2017, 3:00 PM EST

Social Security Administration continues to give bad advice on claiming rules

By Mary Beth Franklin

I don't know who is more frustrated about the rash of bad advice being doled out by Social Security Administration staffers recently — financial advisers, their clients or me.More than a year after Congress approved changes to Social Security claiming rules as part of the Bipartisan Budget Act of 2015, agency representatives continue to deny legitimate claims for spousal benefits by applicants who are clearly grandfathered under prior rules and tell other applicants they can take advantage of claiming rules that no longer exist.Mark Beaver, a financial adviser with Benedict Financial in Atlanta, wrote to me about a recent client situation. The wife, age 67, claimed her Social Security benefit of about $1,100 per month when she reached her full retirement age in 2015. When the husband retired last year, Mr. Beaver recommended that he wait until he turned 66 to file a restricted claim for spousal benefits. That would entitle the... Read full post

Feb 6, 2017, 5:35 PM EST

Two ways to boost Social Security benefits

By Mary Beth Franklin

Now that Congress has eliminated some of the more lucrative Social Security claiming strategies, financial advisers are always looking for ways to help their clients maximize their retirement benefits.Scott Willingham, a financial adviser with LPL Financial, wrote to me recently with a question about one of his clients who will turn 66 this summer.“I am aware that [my client's] yearly Social Security payout will increase by 8% for every year he postpones claiming benefits beyond his full retirement age,” Mr. Willingham said in an email. “My question is will the higher payout after age 66 increase even more because he had higher income in recent years that will replace earlier low-income years?”“Yes, your client will receive delayed retirement credits of 8% per year for every year he postpones collecting benefits beyond his full retirement age,” I confirmed. “And if his current earnings are... Read full post

Jan 27, 2017, 6:07 PM EST

When claiming Social Security early makes sense

By Mary Beth Franklin

A question from an InvestmentNews reader warmed my heart because it perfectly demonstrates how financial advisers can continue to help their clients maximize their Social Security benefits even after the recent changes to the claiming strategy rules are fully phased in.This strategy, which applies to surviving spouses and surviving ex-spouses, is not going away.The question involves a widow, age 62, who is still working. She earns about $45,000 per year and plans to continue working through her full retirement age of 66.(More: 2016 tax returns determine 2018 Medicare premiums)Her survivor benefit would be worth $2,057 per month if the widow waited until 66 to collect, or about $1,666 per month if she claimed now at age 62. But because she is still working, her benefit would be subject to earnings restrictions. In 2017, someone who is under full retirement age for the entire year would forfeit $1 in benefits for every $2 earned over $16,... Read full post

Jan 19, 2017, 12:36 PM EST

Some compensation is exempt from Social Security earnings test

By Mary Beth Franklin

Talk about double whammy! One adviser asked me for guidance on a Social Security claiming strategy for a newly widowed client. Not only did she lose her husband recently, but at the end of last year, she also lost her job.The adviser, Dewey Engelsma with D.A.E. Capital Advisors near Grand Rapids, Mich., wanted to help his client through a rough patch and to create stable cash flow for her as she grapples with her new status as an unemployed widow.The client is 60. Her full retirement age benefit at 66 and 4 months is $2,300 per month. Her late husband died at age 59 before claiming Social Security. His full retirement age benefit would have been $2,100 per month. Although reduced survivor benefits are available as early as age 60, there is a complicating factor. The client will receive a severance package this year equal to one year's salary. Mr. Engelsma asked if the severance package, which would significantly exceed the 2017 Social... Read full post

Jan 10, 2017, 3:07 PM EST

Social Security to stop mailing paper statements — again

By Mary Beth Franklin

The Social Security Administration announced it will stop mailing estimated benefit statements to most American workers in a cost-saving move that is expected to save about $11 million this year. Well, “announced” may be too strong a word. A senior agency official posted a blog Monday alerting the public that paper statements will now be sent only to people who are 60 or older who have not established online My Social Security accounts with the agency and who are not yet receiving Social Security benefits.“We know that our cutbacks will affect many of you, but we have no choice,” Doug Walker, deputy commissioner of communications for the Social Security Administration, wrote in a blog posted on the agency's website.“During the past year, we began a hiring freeze that will reduce our staff to the lowest level since FY 2013,” Mr. Walker wrote. After adjusting for inflation, the agency's budget is now... Read full post

Jan 5, 2017, 3:23 PM EST

Social Security changes coming to beneficiaries and taxpayers in 2017

By Mary Beth Franklin

Social Security benefits for about 60 million retired and disabled workers and their dependents will increase slightly in 2017, but for many beneficiaries, the minuscule 0.3% cost-of-living adjustment will be wiped out by higher Medicare premiums.The 0.3% adjustment is the smallest annual increase since automatic COLAs began in 1975 (although there were three years — 2010, 2011 and 2016 — when there was no COLA). For the average retired worker, it means a $5 increase in monthly benefits in 2017. The maximum Social Security benefit for a high-income earner retiring at 66 this year will increase by $48 to $2,687 per month.Most Medicare enrollees who have their premiums deducted from their monthly Social Security benefits will pay about $109 per month in 2017, up about $4 per month from last year. But new enrollees in Medicare, as well as those who pay their Medicare Part B premiums directly, will pay the standard Part B... Read full post

Dec 28, 2016, 4:01 PM EST

Social Security rules for the twice-widowed client

By Mary Beth Franklin

The majority of American adults marry at least once during their lifetimes, but only about 40% of them stay married, according to the U.S. Census Bureau.Some Americans go on to marry a second time and a small percentage — 4% — marry three times or more. “Age is an important factor relating to remarriage as older individuals have had more time to see a previous marriage conclude and to remarry,” according to the Census Bureau report, Remarriage in the United States. “The proportion of men and women married twice is about 20% or higher for men and women aged 50 to 69,” the report said. That probably explains why I get so many questions about Social Security claiming strategies for serial spouses. This one came from Heather Piskorz, a retirement income specialist with Game Plan Financial, a marketing company that works with insurance professionals.“I'm working with a client who was married for 15 ... Read full post

Dec 27, 2016, 3:40 PM EST

2017 will be year of change for retirement industry

By Mary Beth Franklin

The financial advice industry faced some significant headwinds in 2016 from the rise of competition from robo-advisers to the historic expansion of regulation under the Department of Labor's fiduciary rule. Although the economic and public policy outlook is murky, thanks to the largely unexpected victory of president-elect Donald Trump, 2017 could be the year that holistic retirement planning becomes the norm.Demographics will drive demand for financial advice as baby boomers enter retirement at the rate of 10,000 people a day. The oldest boomers, born in 1946, have already reached the age 70 Ĺ milestone that requires them to start taking required minimum distributions from their retirement accounts. Some 24 million boomers are now 65 and older and 33 million more will join them over the next seven years. “The time has come to help them focus on the income that will support them throughout retirement,” said Cathy... Read full post

Dec 21, 2016, 5:09 PM EST

Calculating the impact of new Social Security rules

By Mary Beth Franklin

Looking back on the Social Security rules changes that took effect in 2016, some financial advisers may think that it is no longer worth their time to focus on claiming strategies to boost their clients' retirement income. But rather than playing the role of the Grinch that Stole Christmas, Congress actually handed financial advisers a gift last year that will keep on giving for years to come.The Bipartisan Budget Act of 2015 eliminated the use of the popular file and suspend strategy starting April 30, 2016, and phases out the ability of married couples and eligible divorced spouses to restrict their claim to spousal benefits depending on their birth date. As a result, figuring out the best Social Security claiming strategy to recommend to clients during the next few years may be even tougher.“Social Security is still complicated and clients are still expecting expert advice from you,” Social Security Solutions, a research ... Read full post

Older »