Mary Beth Franklin

Retirement 2.0blog

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

Aug 22, 2016, 3:59 PM EST

Social Security and dying too soon

By Mary Beth Franklin

Almost every day I read another new study about the impact of increased longevity on financial planning. But last week I experienced a stark reminder about the perils of dying too soon.One of my dear friends died Aug. 15 at age 61, two months after she was diagnosed with lung cancer. It was a shock to our close-knit circle of friends whom I wrote about last year. It turns out that my friend will never have to worry about outliving her savings nor will she ever have the chance to collect her first Social Security check. And because she was a widow, there is no one to claim her survivor's benefit.Based on recent emails from InvestmentNews readers, it seems that sudden deaths among clients are not all that rare. They raised some interesting questions about Social Security survivor benefits.Craig Steinhauer, a financial adviser with NWF Advisory Group in Los Angeles, wrote to me about his client, a 58-year-old widow. Her husband died two... Read full post

Aug 19, 2016, 3:02 PM EST

Gray divorce on the rise with longevity trend

By Mary Beth Franklin

By now, financial planners are well acquainted with the challenges that increasing lifespans pose to retirement income plans. Longer lives means figuring out how to convert retirement savings into income that must last for decades.Now chalk up another victim of the longevity trend: marriage. The prospect of living unhappily ever after in a retirement that can last 20 or 30 years or more is one of the reasons behind the growing incidence of divorce among spouses age 50 and older. Throw in the possibility of an adult child living at home, and you have a recipe for a gray divorce, said Andrew Samalin, principal of Samalin Investment Counsel and former president of the Association of Divorce Financial Planners.“In the past, people would get divorced in their late 40s or early 50s when the kids left the house,” said Mr. Samalin. “Now kids are leaving the house later, people are living longer and couples are getting... Read full post

Aug 15, 2016, 5:19 PM EST

Social Security drops cell phone mandate

By Mary Beth Franklin

Well, that didn't last long. On July 30, 2016, the Social Security Administration 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 on online security. Two-weeks later, the agency reversed itself.The SSA's stepped-up security measure caught online account holders and senior advocacy groups by surprise and encountered technical problems from the start.“Our aggressive implementation inconvenienced or restricted access to some of our account holders,” Social Security press office spokesperson Dorothy Clark said via email. “We are listening to the public's concerns and are responding by temporarily rolling back this mandate,” Ms. Clark wrote. “We regret any inconvenience individuals may have experienced.”It's ironic that the recall occurred the day after the agency's 81st anniversary. It just goes to show how... Read full post

Aug 9, 2016, 2:50 PM EST

Careful planning can help public employees avoid Social Security reductions

By Mary Beth Franklin

Nothing angers public employees more than rules that reduce the Social Security benefits they have earned by working in the private sector when they are also eligible for a government pension based on work where they did not pay FICA taxes. Just mention “windfall elimination provision” (WEP) or “government pension offset” (GPO) and watch the sparks fly.Normally, public employees can't avoid these reductions. But one savvy adviser was able to help his client dodge the offsets completely by carefully timing when and how she claimed her Social Security benefits and her pension.First, let me review how these two rules work.The WEP reduces the earned Social Security benefits of an individual who also receives a pension from employment not covered by Social Security, such as a state or local government or federal employees covered by the old Civil Service Retirement System. The WEP reduces the individual's Social... Read full post

Aug 2, 2016, 3:00 PM EST

Social Security Administration steps up privacy protections

By Mary Beth Franklin

The Social Security Administration had added a new security step for users to access their benefit information online. Starting this month, all users will need a text-enabled cell phone number to log into their accounts at now on, accessing estimated benefits information online will require a two-step authentication process. First, you will enter your username and password. Next, you must enter the one-time security code texted to your cell phone. The code will be valid for 10 minutes.But on Day One, the process encountered technical difficulties. Verizon Wireless customers were unable to access their personal information on Monday. The agency said it was working to fix the problem.This multifactor authentication (MFA) procedure has been an optional service available to online users since the agency launched My Social Security in 2012. Now it is mandatory as a result of an executive order that requires all... Read full post

Jul 26, 2016, 3:11 PM EST

Solving the mystery of unexpectedly reduced Social Security benefits

By Mary Beth Franklin

Who doesn't like a good mystery while lounging by the pool or on the beach on a hot summer day? While I can't compete with James Patterson's or Sandra Brown's pulp fiction page turners, I was able to help one financial adviser get to the bottom of a nagging question about why her client's Social Security benefit was so much smaller than expected.Sharon Egan, a financial adviser with North Star Investment Management Corp. in Chicago, contacted me recently about one of her clients who had decided to delay claiming his Social Security benefits until age 70 when they would be worth the maximum amount. For every year he postponed collecting benefits beyond his full retirement age of 66, he earned an extra 8% per year in delayed retirement credits up until age 70. As a result, he increased his monthly benefits by 32%.Holding out for the maximum retirement benefit also means that any future cost-of-living adjustments would be worth more... Read full post

Jul 20, 2016, 2:44 PM EST

Social Security reform awaits next president

By Mary Beth Franklin

All is quiet in Washington this week as Republicans descend on Cleveland for their national convention and Democrats prepare to invade Philadelphia next week to anoint their presumptive nominee. The lull gave me time to review the numerous Social Security reform bills that have been introduced during the 114th Congress. None of the bills have advanced beyond the committee stage over the past two years.But depending on the outcome of the November election, some of the measures could serve as inspiration for the next president if he or she decides to tackle Social Security reform. In general, Democrats oppose benefit cuts and Republicans object to tax hikes, but both sides are going to have to compromise to find a workable solution before it is too late. The most recent Social Security and Medicare trustees report issued in June reiterated earlier forecasts that the program's trust fund reserves would run dry in 2034 unless Congress... Read full post

Jul 12, 2016, 6:08 PM EST

Market volatility raises the bar for retirement income savers

By Mary Beth Franklin

In the wake of the United Kingdom's decision to exit the European Union, global market volatility has not only sent investment portfolios on a roller coaster ride, it has also raised the prospective cost of income for near-retirees.Pre-retirees now need nearly 10% more in retirement savings than before the Brexit vote in order to generate the same level of income, according to BlackRock, a provider of investment and advisory services for institutional and retail clients.Since the historic vote on June 23, BlackRock's CoRI Retirement Indexes have spiked nearly 10%. The indexes help investors estimate how much annual retirement income their current savings will generate for life starting at age 65. When interest rates fall, the cost of buying an immediate annuity to generate future income rises.A 55-year-old would need $17.64 saved today to generate each dollar of annual retirement income starting at age 65, according to the CoRI tool.... Read full post

Jul 6, 2016, 2:50 PM EST

How to correct Social Security earnings records

By Mary Beth Franklin

What's the most important reason to review your Social Security statement? Most people would say that it is to get an estimate of their future retirement, disability and survivor benefits.Although those estimated benefits are critical elements needed create a retirement income plan, the most crucial reason to review your Social Security statement at least once a year is to verify your earnings.The amount of the Social Security benefits you or your family can receive depends on the amount of earnings shown on your record. Benefits are based on your top 35 years of indexed earnings. If you have fewer than 35 years of earnings, Social Security still divides by 35 to estimate your annual earnings. Consequently, several years of zero earnings will result in lower benefits. During a recent presentation on Social Security claiming strategies, I was astounded when two different participants told me that they had discovered several years of... Read full post

Jul 5, 2016, 5:10 PM EST

Social Security out of step with many modern families

By Mary Beth Franklin

For more than 80 years, Social Security has provided seniors with freedom from poverty after a lifetime of work — an important accomplishment to celebrate as America marks its 240th birthday this week. But much has changed since the Social Security program was created in the 1930s, when the standard family consisted of a married couple where the husband was the breadwinner and the wife was a homemaker. Since then, the family unit has changed dramatically. The rise in the employment of married women has diminished the importance of spousal and survivor benefits, according to a new report from the Center for Retirement Research at Boston College. That has led to a significant decline in family benefits as a source of retirement income, Steven Sass, a researcher at the Center for Retirement Research, wrote in his brief “How Work and Marriage Trends Affect Social Security's Family Benefits.”Social Security spousal and... Read full post

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