Mary Beth Franklin

Retirement 2.0blog

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

Dec 8, 2016, 3:04 PM EST

Time for a new Social Security Commission

By Mary Beth Franklin

Based on the recent presidential campaign that was virtually devoid of public policy discussions, you would never know that the nation's bedrock retirement program — Social Security — will become insolvent in about 18 years when today's 49-year-olds reach full retirement age.Now that the election is over, it is time to get serious about the fate of this crucial program. The longer we wait to fix it, the harder it will be to solve the problems that are exacerbated by the demographics of a growing retiree population.The Social Security Trustees project that the program's trust funds, which hold surplus payroll tax revenues earmarked to pay benefits, will be exhausted in 2034. Currently, those trust fund assets are being used to supplement payroll tax collections to pay current beneficiaries. If Congress does nothing before 2034, all retirees, regardless of income, will see their benefits cut by 21%.(More: Seniors see Social... Read full post

Nov 30, 2016, 2:24 PM EST

Older investors use both financial advisers and online advice

By Mary Beth Franklin

Affluent older investors have increased their use of both online resources and paid financial professionals in the past year because they don't believe a single source can resolve all their questions, new research reveals. As more sources of information and advice become easier to use, consumers are asking questions and becoming choosier about which services they are willing to pay for.“Older investors have a growing appetite for both digital and live advice,” said Laura Varas, founder and CEO of Hearts & Wallets, a source for retail investor data and insights. “Blending behavior spikes for emotionally charged, high-impact decisions like optimizing Social Security when no one source provides confidence,” Ms. Varas said in releasing the latest insights gleaned from the firm's study “Explore Pre/Post-Retirees 2016: Digital Habits Revealed.”The study focuses on affluent consumers ages 53 to 74 with... Read full post

Nov 28, 2016, 4:44 PM EST

Many current retirees reluctant to tap savings

By Mary Beth Franklin

Despite all the warnings about the coming retirement crisis in America, current retirees seemed to be doing quite well in terms of financial assets and expenses. But the secret to their success — heavy reliance on traditional pensions — suggests that retiring boomers will need more help from financial advisers to achieve a similar level of retirement security.Pensions provided at least half of total income for the more than 40% of retirees who participated in an online survey conducted for the Insured Retirement Institute (IRI) last summer. In contrast, only 24% of private industry workers are covered by a defined benefit plan today.The IRI survey included more than 800 Americans between the ages of 65 and 80. Most had annual household incomes in excess of $50,000. All participants had investible assets of at least $50,000 and about half of them had investible assets between $100,000 and $500,000.The vast majority of these... Read full post

Nov 23, 2016, 12:41 PM EST

Seniors see Social Security changes as benefit cuts

By Mary Beth Franklin

Lawmakers who voted last year to do away with two key Social Security claiming strategies labeled their legislative action a “closure of unintended loopholes.” But a majority of senior voters disagree with that description.In a new poll conducted for The Senior Citizens League, 70% of respondents said the Social Security changes were “unnecessary benefit cuts.”A year ago, Congress passed the Bipartisan Budget Act of 2015 that authorized changes to Social Security rules. The law eliminated the ability of a worker to file and suspend benefits at full retirement age in order to trigger auxiliary benefits for a spouse while the worker's own retirement benefit continued to grow.(More: Advisers still baffled by key rule changes to Social Security claiming strategies)Under new rules that took effect on April 30, 2016, a worker of full retirement age or older can still suspend Social Security benefits in order to earn... Read full post

Nov 21, 2016, 4:37 PM EST

Why Social Security is crucial to women

By Mary Beth Franklin

Financial advisers looking to expand their roster of female clients would be wise to brush up on Social Security claiming rules. With women's longer life expectancies and the fact that they are more likely to live alone in old age due to widowhood or divorce, women represent more than half of all Social Security beneficiaries age 62 and older and two-thirds of all beneficiaries over the age of 85.In September, I shared critical Social Security claiming strategies with advisers attending the Financial Planning Association's annual conference in Baltimore and was honored by the Women's Institute for a Secure Retirement with one of its 2016 WISER Hero Awards for my ongoing work explaining Social Security rules to consumers and financial advisers. WISER is an organization based in Washington that helps women take financial control of their lives.It seems like a good time to remind my InvestmentNews readers about how careful claiming of... Read full post

Nov 15, 2016, 9:35 PM EST

New Social Security rules and divorce

By Mary Beth Franklin

Social Security benefits for divorced spouses remains one of the few fertile areas where strategic claiming strategies can make a big difference in retirement income planning — depending on the ex-spouses' ages. I encountered many questions on this important topic when I addressed the Association of Divorce Financial Planners' annual conference in Las Vegas in October.As a result of the Bipartisan Budget Act of 2015, there are now two sets of rules that apply to claiming strategies for divorced spouses. But before I dive into what is new, let me review the basic rules of how a divorced spouse qualifies for Social Security benefits.(More: Advisers still baffled by key rule changes to Social Security claiming strategies)As long as an individual was married at least 10 years, was divorced and is currently single, he or she can collect Social Security benefits on an ex-spouse's earning record as if they were still married —... Read full post

Nov 2, 2016, 6:27 PM EST

Advisers still baffled by key rule changes to Social Security claiming strategies

By Mary Beth Franklin

One year after the Bipartisan Budget Act of 2015 was signed into law on Nov. 2, financial advisers continue to be baffled by how to help their clients maximize their Social Security benefits under the new claiming rules.I get it. The new rules are confusing. But it might help to keep the following three key points in mind.One, although the “file and suspend” strategy is now history, anyone who was at least 66 years old and who filed and suspended their benefits by April 29, 2016, is grandfathered under the old rules. That means eligible family members can collect spousal or dependent benefits during the suspension — even if they claim benefits after the deadline — while the worker's own retirement benefits continue to earn delayed retirement credits of 8% per year up to age 70.(More: These retirees lost most when Congress changed Social Security benefits)Under the new rules, you can still voluntarily suspend... Read full post

Oct 24, 2016, 2:46 PM EST

Big gap between Social Security cost-of-living adjustment and retiree inflation

By Mary Beth Franklin

One of the great values of Social Security benefits is that they are supposed to increase each year to keep pace with inflation and protect seniors' buying power. Unfortunately, that's not the way it has worked out in recent years.The rising cost of living is a major concern for most Americans and news of Social Security's paltry 0.3% cost-of-living adjustment for 2017 — amounting to about $5 per month for the average retiree — won't do much to calm their nerves.(More: Social Security cost-of-living adjustment to get 0.3% increase in 2017)Nearly half of Americans (47%) report being either “very concerned” (36%) or “terrified” (11%) that the rising cost of living will affect their retirement plans, according to a 2016 study from Allianz Life Insurance Co. The Allianz online inflation survey of more than 1,000 adults was conducted in March.“As consumers move into retirement, they will not only... Read full post

Oct 17, 2016, 2:30 PM EST

Coordinating Social Security disability and retirement benefits

By Mary Beth Franklin

Financial advisers are often well-versed in optimal Social Security claiming strategies for married couples when it comes to deciding when and how each should claim retirement benefits. But adding disability benefits into the mix seems to wreak havoc with their recommended strategies as most software programs do not handle disability benefits.I have received several questions from advisers recently asking if one spouse can claim spousal benefits on a worker who is collecting Social Security disability benefits. The short answer is yes.But first let me review how Social Security disability benefits work.Social Security pays disability benefits to people who can't work because they have a medical condition that's expected to last at least one year or result in death. In general, to get disability benefits, you must meet two different earnings tests: a recent work test, based on your age at the time you became disabled, and a duration of... Read full post

Oct 11, 2016, 5:36 PM EST

Social Security cost-of-living adjustment expected to be lowest ever

By Mary Beth Franklin

Advisers, get your aspirin ready. When the Social Security cost-of-living-adjustment for 2017 is officially announced next week, it is expected to be 0.3% — the lowest annual increase on record. After no annual cost of living adjustment this year, Social Security benefits are expected to increase by 0.3% in 2017, according to a new forecast by The Senior Citizens League (TSCL). “And there's a chance that lower gas prices will drag the COLA down even further, to 0.2%,” said Mary Johnson, a Social Security policy analyst and researcher for TSCL. Either way, the 2017 COLA is expected to raise Social Security benefits by only a few dollars, and any increase will be completely offset by stiff increases in the Medicare Part B premium for most people 65 and over.(More: My client's Medicare coverage has been canceled, now what?)But wait. It gets worse.Because of the convoluted “hold harmless” rule that protects... Read full post

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