Mary Beth Franklin

Retirement 2.0blog

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

Apr 19, 2018, 4:40 PM EST

The $1 million gender wealth gap


By Mary Beth Franklin

It is well-documented that most women earn less than men, averaging 84 cents to every $1 paid to a man. What is less obvious is the lifetime impact of that wage gap when combined with career interruptions.Many women experience lasting financial consequences when they take time off to provide care for young children or aging parents. About one-third of them return to the workforce in less demanding jobs with lower pay, according to a new Merrill Lynch study conducted in partnership with Age Wave.The cumulative effect is a gender wealth gap — the difference between men and women's financial resources across their lifetimes, including earnings, investments, retirement savings and additional assets. As a result, when a woman reaches retirement age, she may have accumulated as much as $1 million less than a man who was continuously in the workforce, according to the study, "Women and Financial Wellness: Beyond the Bottom Line."The... Read full post

Apr 13, 2018, 10:53 AM EST

Retirement outlook for millennials


By Mary Beth Franklin

And now for something different. Although I spend most of my time writing and speaking about retirement income issues, sometimes I get the chance to address young workers at the beginning of their careers, as I did recently as part of National Retirement Planning week."If you're in your twenties or thirties, every financial action you take — from racking up debt to saving for retirement — compounds over time," I told a gathering of Capitol Hill staffers during a lunch-and-learn session sponsored by the American Council of Life Insurers. "By taking a few simple steps now, it could add up to big bucks later."These young workers are lucky. The federal Thrift Savings Plan is known for its menu of extremely low-cost proprietary index and target-date funds, and automatic enrollment starting at 3% of salary. "That's a good start but frankly, if you save only 3% of your salary throughout your career, your retirement may look a... Read full post

Apr 9, 2018, 1:55 PM EST

Guaranteed income tops boomers' retirement wish list


By Mary Beth Franklin

Monthly guaranteed income is the most important single trait that aging baby boomers look for in a retirement investment, ranked No. 1 or No. 2 by 41% of participants in the latest annual survey of retirement expectations and preparedness conducted by the Insured Retirement Institute.The eighth annual update of boomers' retirement expectations showed some marked improvement in key retirement readiness factors, such as increasing account balances due to market gains and aggressive saving by some of those who are still employed. About 40% of the more than 800 respondents classified themselves as fully retired.Among the 58% of boomers with retirement savings — a slight improvement from last year — 43% have $250,000 or more saved, compared to only 32% who reported that level of savings in 2017.But overall retirement confidence is still very low. Only 25% of boomers believe they will have enough money in retirement. And many... Read full post

Apr 2, 2018, 2:23 PM EST

New rules for a 21st century retirement


By Mary Beth Franklin

A 21st century retirement needs a new set of rules to provide financial and emotional security for a post-career period that can last 30 years or more. "Rewirement: Rewiring the Way Your Think About Retirement," a new book by professor Jamie Hopkins of the American College of Financial Services, does just that. "Retirees naturally rely on the kind of financial knowledge they know worked for them [while] saving for retirement," Mr. Hopkins wrote in the preface of the book. "Once they enter the retirement phase and find that the need to spend is more important than the need to save, they find that many of those practical concepts just do not apply anymore." A recognized retirement income expert, Mr. Hopkins has been instrumental in developing the American College's retirement income certified professional designation program for financial advisers, which boasts more than 5,000 graduates and 11,000 current enrollees.The college's 2017... Read full post

Mar 16, 2018, 12:57 PM EST

Graying of America will put pressure on Social Security reform


By Mary Beth Franklin

Investment News readers and audiences who attend my Social Security seminars around the country frequently ask me when I think Congress will tackle Social Security reform. I joke that my crystal ball looks more like a blurry snow globe when it comes to predicting exactly when Congress will act, but I am sure it will happen before the Social Security trust funds are expected to run dry in 2034.The Old Age, Survivors and Disability trust funds were established as part of the Social Security reform legislation of 1983 as an accounting mechanism to keep track of surplus payroll tax revenues, the earnings on those assets and the interest that the federal government pays for money it borrows from the trust funds.The government first tapped the trust funds in 2010 to help pay for Social Security benefits when payroll tax revenue alone was not sufficient. It has been drawing down those surplus funds ever since. If Congress does not act before... Read full post

Mar 12, 2018, 5:02 PM EST

Social Security budget cuts lead to declining customer service


By Mary Beth Franklin

A month before my husband Mike turned 66, he received a letter from the Social Security Administration reminding him that he could start receiving unreduced retirement benefits at his full retirement age, even if he continued to work, or he could earn an extra 8% per year by postponing his benefits up to age 70."The easiest way to apply is by going online at, our secure website," the letter said. "You may apply for retirement benefits up to three months before the month you want your benefit to start."There is a reason Social Security is encouraging people to apply for benefits on line. The agency's budget has been cut by about 11% on an inflation-adjusted basis since 2010, leading to long waits on the phone and in field offices just as demand for service is reaching record highs as aging baby boomers retire.Since the end of fiscal year 2016, SSA lost over 1,000 field office staff, bringing the total ... Read full post

Mar 7, 2018, 11:37 AM EST

Social Security and divorce: Mary Beth Franklin answers your questions


By Mary Beth Franklin

During a recent webinar on how to maximize Social Security benefits, I received a question from an attendee that perfectly summarizes the type of challenge that many financial advisers face when trying to help divorced clients create a secure retirement income plan.The adviser said her client is divorced and will turn 64 in July. She began collecting her reduced Social Security benefits more than a year ago when she turned 62. Her ex-husband is 71 and collecting Social Security."Can she suspend her current Social Security benefits and file for spousal benefit until she turns 70?" the adviser asked. No. Although divorced spouses who were married at least 10 years and who are currently single can claim Social Security benefits as if they were still married, other basic Social Security rules apply. In this case, the ex-wife cannot suspend her Social Security benefits and switch to spousal benefits while allowing her own benefits to... Read full post

Feb 26, 2018, 3:49 PM EST

Even the strongest retirement plans can be derailed by health care costs


By Mary Beth Franklin

Rising health care costs have long been the bane of working Americans, but most people don't give enough thought to how escalating health care costs in retirement can derail even the most solid financial plan."While the exact cost varies for each individual, most people should expect health care to be their second-highest expense in retirement, trailing only housing," said Angie O'Leary, head of wealth planning at Minneapolis-based RBC Wealth Management-U.S. "Even a healthy 65-year-old couple today can expect to spend more than $400,000 on health care in retirement."To help investors and advisers plan ahead, RBC Wealth Management created "Taking Control of Health Care in Retirement," a new guide to understanding and managing the many components of care for aging Americans. It includes information and tools to help investors and advisers estimate how much individuals can expect to pay for health care once they retire based on their... Read full post

Feb 21, 2018, 3:01 PM EST

Future retirees more vulnerable to income shocks


By Mary Beth Franklin

The two major shocks that hit the elderly today are a spike in medical expenses and a sharp drop in income upon becoming a widow. While some of today's retirees are financially fragile, most appear able to absorb shocks without incurring hardship, according to a new issue brief from the Center for Retirement Research at Boston College.But future retirees may not be so lucky. Going forward, retirees will get less of their income from Social Security and traditional pensions and more from financial savings in 401(k) plans. Having these savings gives them greater flexibility to respond to shocks, the report noted. But tapping the nest egg comes at the cost of having less to cover ongoing expenses."Future retirees are more likely to experience financial fragility unless they reduce their fixed expenses or draw increased income from their assets," the report concluded.Nearly 80% of the spending of a typical elderly household goes to secure... Read full post

Feb 16, 2018, 10:42 AM EST

Social Security underpaid 82% of dually entitled widows and widowers


By Mary Beth Franklin

I read a lot of audit reports from the Social Security Administration's Office of Inspector General, but I don't think I have ever read one as damning as the one issued on Valentine's Day.The purpose of the internal audit was to determine whether the Social Security Administration has adequate controls to inform widows and widowers of their option to claim survivor benefits initially and delay applying for their own retirement benefits until age 70, when those benefits would be worth more than their survivor benefits.The short answer is no. But it gets worse. Based on a random sample, the inspector general found that 82% of current beneficiaries who are dually entitled to survivor benefits and their own retirement benefits would have received a higher monthly benefit amount if SSA had informed them of the option to delay their retirement application until age 70.Normally, when someone claims Social Security benefits, the application... Read full post

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