Mary Beth Franklin

Retirement 2.0blog

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

Jul 23, 2015, 3:02 PM EST

Social Security claiming strategy short-circuited by excess earnings

By Mary Beth Franklin

Financial advisers have their clients' best interests in mind when they try to craft an optimal Social Security claiming strategy to maximize clients' benefits over their lifetimes. But sometimes, it just amounts to wishful thinking.Chris Hughes, a financial adviser with the Del Monte Group in Alamo, Calif., asked me to review a possible claiming strategy for his clients, Carl and Betty. Carl, 62, still works full time. Betty, his 70-year-old wife, is a homemaker.Mr. Hughes asked if it would be possible for Carl to claim Social Security benefits early at 62 in order to trigger a spousal benefit for Betty, who has no Social Security benefits of her own.A spousal benefit is equal to half of the worker's full retirement age amount, assuming the person who collects the spousal benefit is full retirement age or older. Spousal benefits are based on the worker's full retirement age amount even if the worker claims reduced benefits early or... Read full post

Jul 21, 2015, 10:07 PM EST

I took the test, I talked the talk. Now you can call me a CFP!

By Mary Beth Franklin

I didn't think this day would ever come, but on July 15, I received an email from the Certified Financial Planner Board of Standards Inc. that said: “Congratulations! You are now a certified financial planner.”I completed the financial planning certificate program at the University of Virginia in 2013 and passed the CFP comprehensive exam on my first attempt in November 2013.But back in December 2013, when I received notice that I had passed the exam, I wrote a column noting that I probably would never be able to call myself a certified financial planner. Because of the CFP Board's narrow definition of work experience, it seemed that if I wanted to satisfy the requirement, I would have to quit my day job as a financial columnist and work in a financial services firm — something I was not willing to do.A year later, the CFP Board expanded its definition of experience to include "support activities." In a Dec. 30, 2014,... Read full post

Jul 14, 2015, 5:10 PM EST

Social Security as a backup plan for single filers

By Mary Beth Franklin

The key to financial planning is to remain flexible and be able to pivot as necessary if situations change. That's what happened to one reader who wrote to me recently about her decision to claim reduced Social Security benefits early at age 62 after she lost her job.Job loss is an excellent reason to claim Social Security early. If you need the money, take it.But shortly after Sonya Bell began collecting Social Security benefits four years ago, she found another job in her profession as a registered nurse. Although she only worked part time, her earnings significantly exceeded the annual earnings limit. In 2015, anyone who is under full retirement age for the entire year and who continues to work while collecting Social Security benefits forfeits $1 in benefits for every $2 earned over $15,720. Essentially that means if you earn $47,160 ($15,720 x 3) or more in 2015, you would temporarily forfeit all of your benefits. The earnings cap ... Read full post

Jul 8, 2015, 6:51 AM EST

Billy Joel: Poster child for the Viagra college fund?

By Mary Beth Franklin

I was surprised to hear the strains of “Just the Way You Are” on my local all-news radio station this week. It was the song that my husband and I danced to at our wedding nearly four decades ago. The music served as the lead-in for a news item about its composer, singer/songwriter Billy Joel. The Piano Man tied the knot for the fourth time over the Fourth of July weekend in a ceremony at his sprawling estate on Long Island. He married Alexis Roderick, 33, a former Morgan Stanley executive. They are expecting their first child this summer.I have no idea whether Mr. Joel is collecting Social Security benefits. I doubt he needs the money, as his upcoming appearances in Boston and New York City are sold out. But he has reached the magic age of 66, when the earnings cap no longer applies, meaning he can collect Social Security benefits without reduction even as he continues to work. What Mr. Joel may not know is his soon-to-be... Read full post

Jul 2, 2015, 1:24 PM EST

Social Security update for gay couples

By Mary Beth Franklin

Last week's landmark Supreme Court ruling allowing same-sex couples the right to marry in every state opened the door for gay couples nationwide to apply for Social Security spousal, survivor and disability benefits, as well as Medicare coverage, subject to other existing program rules.To qualify for Social Security and disability benefits, a couple must be married at least 12 months before each spouse can apply to become the other's beneficiary. A spousal benefit is worth up to 50% of the worker's full retirement age benefit, also known as the primary insurance amount, or PIA, if the spouse who is collecting the benefit is at least full retirement age — currently 66. A spousal benefit is available as early as age 62, but it is worth just 35% of the worker's PIA.To qualify for Social Security survivor benefits and one-time lump-sum death benefit of $255, a surviving widow or widower must have been married at least nine months... Read full post

Jun 24, 2015, 3:02 PM EST

Growing consumer demand for health care and Social Security advice

By Mary Beth Franklin

The financial planning industry is at a turning point in how to address Social Security and Medicare as part of overall retirement planning. Although numerous surveys have shown that more than half of retirees and pre-retirees expect health care and Social Security advice from their financial adviser, the percentage of advisers who are willing and qualified to offer this type of advice remains low.“This presents a major opportunity for advisers and firms that do offer this specialized advice to differentiate themselves and gain market share,” according to a new white paper produced by Senior Market Sales Inc., a national insurance marketing organization. “Those who continue to ignore the role that Medicare and Social Security play in retirement risk losing clients,” the paper concluded.“"The New Foundation of Retirement Planning: Social Security and Medicare" white paper doesn't break new ground. Rather,... Read full post

Jun 22, 2015, 2:48 PM EST

Tackling the challenge of 401(k)s for small businesses

By Mary Beth Franklin

One of the biggest challenges to retirement savings in America is having access to a 401(k) or similar savings plan at work. Workers who have a workplace-based savings plan are four times more likely to have saved for retirement compared to those who don't, according to the Employee Benefits Research Institute's 2015 Retirement Confidence Survey.Many employees who don't have access to a 401(k) work for small businesses that don't have the money or the staff resources to sponsor a retirement savings plan. In fact, only 14% of small businesses provide a 401(k) versus 89% of large companies, meaning about 78 million Americans don't have an employer-sponsored retirement plan, according to EBRI.But thanks to technological advancements and a plan design inspired by the latest behavioral finance research, a 401(k) plan is now within the reach of a local hair salon, small manufacturing firm or start-up tech company. A new company based in San ... Read full post

Jun 12, 2015, 1:16 PM EST

Majority of Americans flunk Social Security quiz

By Mary Beth Franklin

How much do Americans know about their Social Security benefits? Not much, it turns out. And that could have serious implications for their future retirement income.Only 28% of more than 1,500 adults received a passing grade when asked basic questions about Social Security benefits in a true/false quiz developed by Massachusetts Mutual Life Insurance Company. And only one person who participated in the online survey conducted by KRC Research on behalf of MassMutual from Feb. 26 to March 2, answered all 10 questions correctly. (Full disclosure: I have been paid by MassMutual to speak at their events.)"Perhaps the greatest Social Security deficit in this country is the lack of education around the retirement benefits of the program, which presents an opportunity and responsibility to financial professionals," said Michael R. Fanning, executive vice president of the U.S. insurance group at MassMutual. "With millions of Americans nearing... Read full post

Jun 9, 2015, 2:05 PM EST

A Social Security benefit is a terrible thing to waste

By Mary Beth Franklin

As I travel around the country teaching financial advisers and their clients about smarter ways to claim Social Security benefits, my "magic age" strategies often trigger surprise and gratitude among my audiences who are astonished to learn about various ways they can maximize their benefits.But sometimes, there is no clever claiming strategy available to boost lifetime benefits given the difference in ages between two spouses or the relative amount of their Social Security benefits. And that leads to frustration and disappointment.Case in point: A financial adviser, who asked to remain anonymous, wrote to me recently asking for guidance about how to optimize Social Security benefits for her clients. The husband, who turned 66 in April, has not yet claimed his Social Security benefit, which is worth $2,560 per month at his full retirement age. His wife will turn 66 two years from now in July 2017.The adviser said she planned to... Read full post

May 27, 2015, 3:45 PM EST

When both spouses lose some or all of their Social Security benefits

By Mary Beth Franklin

If you collect Social Security benefits before your full retirement age of 66 and you continue to work, you can lose some or all of your benefits if your earnings exceed annual limits.Normally, the earnings cap applies only to the person who is working. But if one spouse is collecting benefits on the other spouse's earnings record, both spouses could temporarily lose some or all of their Social Security benefits.Jon Smith, vice president of wealth planning at Stifel Financial Corp., wrote to me with an interesting question about this scenario.“Let's say I am 64 years old and I have been collecting my Social Security retirement benefits for two years,” Mr. Smith wrote. “My wife, a homemaker, is also 64 and collecting spousal benefits on my earnings record,” he continued. “Then I get a job offer and I am now making $100,000 per year,” he added. “How does the Social Security Administration apply... Read full post

« Newer Older »