Mary Beth Franklin

Retirement 2.0blog

Mary Beth Franklin - also known as the 'client whisperer' - on what your clients really want when they talk about retirement.

Sep 4, 2014, 12:01 PM EST

How a gloomy health prognosis affects Social Security claiming strategy

By Mary Beth Franklin

I received a sad phone call from a friend the other day, asking for Social Security claiming advice for his sister and her husband. The husband had just received a diagnosis of lung cancer, and his prognosis is not good.Normally, I urge married couples to coordinate their Social Security claiming strategies and to focus on maximizing the retirement benefit of the higher-earning spouse as a way to ensure the largest survivor benefit for whichever spouse remains. Maximizing retirement benefits usually means delaying benefits until age 70, and that assumes the higher-earning spouse will live at least that long.But my friend's sister and husband are facing a much different situation, so I altered my advice accordingly.I suggested that the husband, who turns 62 this month, claim his Social Security retirement benefits as soon as possible, even though the benefits would be permanently reduced by 25%. Claiming his benefit early also means... Read full post

Sep 2, 2014, 11:04 AM EST

Inflation, markets affect Social Security claiming decision

By Mary Beth Franklin

Deciding when and how to claim Social Security benefits is not just a simple matter of collecting smaller checks earlier or bigger checks later. Current and future economic conditions can have a big impact on the net present value of benefits over a retiree's lifetime.A new white paper on optimizing Social Security produced by New York Life found that “for reasonable rates of return and inflation assumptions, delaying Social Security results in a higher present value dollar amount and considerably higher cumulative balance of Social Security payments than claiming Social Security early.”(Related: Everyone's talking about postponing Social Security benefits)The full retirement age is currently 66 for anyone born from 1943 through 1954. An individual is able to claim Social Security retirement benefits as early as 62, but they will be permanently reduced by 25% for the rest of the person's life compared with claiming full... Read full post

Aug 28, 2014, 3:19 PM EST

Social Security offset rules can cut or eliminate benefits

By Mary Beth Franklin

As a financial adviser, it is critical to know whether your clients who have worked for city, state or federal government — or in some cases, public school systems — may be affected by rules that can reduce or eliminate their Social Security benefits. That is the case if they worked in jobs where they didn't pay Social Security taxes and earned a pension from such non-covered work. Problems can arise if clients also worked in other private-sector jobs during their career where they accrued enough quarters to be eligible for Social Security benefits, in addition to their public-sector pensions.Social Security offset rules can also affect public sector workers who attempt to collect spousal or survivor benefits on mates who worked in the private sector.Unfortunately, your clients may not realize their Social Security benefits will be reduced or, in some cases, completely wiped out because their Social Security estimated... Read full post

Aug 25, 2014, 2:56 PM EST

Everyone's talking about postponing Social Security benefits

By Mary Beth Franklin

Do you ever wonder why so many people are talking about the value of delaying Social Security benefits? It's pretty simple to understand the appeal of earning a guaranteed 8% per year for every year you postpone collecting Social Security beyond your full retirement age up to age 70. If your full retirement age is 66, delaying Social Security until 70 translates into a 32% bump in retirement benefits, which will create a larger base amount for future annual cost-of-living adjustments. If you were born in 1960 or later, your full retirement age is 67. Consequently, you can earn only three years of delayed retirement credits, boosting your benefits to 124% of your full retirement age amount.But why does everyone seem to be talking about it now? It's because the delayed retirement credits weren't always so rich. And the current 8%-per-year delayed retirement credit kicked in about the same time the stock market hit its lowest point in... Read full post

Aug 21, 2014, 3:22 PM EST

For (almost) every rule there are exceptions

By Mary Beth Franklin

There are more than 2,700 rules listed in the Social Security Program Operations Manual System that govern benefits for retired and disabled workers, as well as their spouses, dependents and survivors. Although I haven't counted them up, sometimes I think half of those rules are exceptions to the regular rules.For example, loyal InvestmentNews readers know the general rules that allow a divorced spouse to collect Social Security benefits on his or her ex-spouse's earnings record. The marriage must have lasted at least 10 years, both spouses must be at least 62 years old and, to collect benefits as a divorced spouse, one must remain unmarried. Assuming your clients meet the length-of-marriage, age and single-status test, they can collect Social Security benefits as if they were still married. The maximum benefit as a divorced spouse is equal to one-half of the ex-spouse's full retirement age benefit, also known as his primary insurance... Read full post

Aug 15, 2014, 3:51 PM EST

Minimum Social Security benefit protects survivors

By Mary Beth Franklin

Social Security rules are complicated, and occasionally I get them wrong.For example, I had always relied on the Social Security Administration's publications that clearly stated: “If the person who died was receiving reduced benefits, we base your survivor benefit on that amount. The maximum survivor benefit amount is limited to what he or she would have received if they were still alive.”Consequently, when a married worker claimed reduced retirement benefits at 62, I thought the surviving spouse would be limited to that same amount — 75% of the late worker's full retirement age benefit — as a survivor benefit if she were full retirement age or older at the time she collected them.It turns out there is an exception to that rule which I recently discovered in the agency's program operations manual system. I want to thank Andy Landis, author of “Social Security: The Inside Story,” for pointing me in... Read full post

Aug 11, 2014, 4:44 PM EST

Wife's unexpected death draws Social Security questions

By Mary Beth Franklin

Regular readers of InvestmentNews know I often urge married couples to select a Social Security claiming strategy that will result in the largest possible survivor benefit. That is usually accomplished by having the higher-earning spouse delay collecting retirement benefits as long as possible — up to age 70 — to create the biggest retirement benefit.That maximum retirement benefit translates into a survivor benefit after the death of one spouse. Assuming the surviving spouse is at least full retirement age — currently 66 — or older, he or she would be entitled to a survivor benefit worth 100% of the deceased worker's benefit amount including any delayed retirement credits, which can increase a retirement benefit by up to 32%.(More: 10 ways to maximize Social Security benefits)That's what one of Maureen Baxter's clients had done. Ms. Baxter, a financial adviser with Commonwealth Financial Network, said her... Read full post

Aug 8, 2014, 3:33 PM EST

How higher Medicare premiums affect Social Security benefits

By Mary Beth Franklin

I received an interesting question from an individual investor during one of my recent Social Security presentations.The woman, a client who attended a financial planning firm's retirement symposium where I was speaking in McLean, Va., wanted to know why her Social Security benefit had declined this year.Was she younger than her full retirement age and still working? I asked.No, she replied.Hmm. That's odd, I thought. The earnings cap limitation that can reduce Social Security benefits only applies to earnings from a job. Then a light bulb went off.Had she had an increase in income recently?Yes, she said. She had sold her vacation home two years ago.Bingo! I realized that her Social Security benefit hadn't declined, but her Medicare Part B premium, which is deducted from her Social Security benefits, had increased, leaving her with a smaller net amount.Why did her Medicare premium increase? Most retirees pay $104.90 per month for... Read full post

Aug 7, 2014, 11:44 AM EST

Social Security: What professional women need to know

By Mary Beth Franklin

When Social Security was created in 1935, the typical American family had a working husband, a stay-at-home wife and a houseful of kids. Today, 40% of mothers are either the sole or primary source of income for their families — a figure that has nearly tripled since 1960.As women's role in the workforce has changed, so should their strategy for claiming Social Security benefits. Unlike many wives whose sole eligibility for Social Security benefits is based on their husbands' earnings records, professional women are often eligible for multiple Social Security benefits based on their own work records and also as spouses, divorced spouses or widows. Knowing when and how to claim each benefit can substantially increase their lifetime retirement incomes.Even single women who have never married can benefit from creative claiming strategies. Here's a summary of key Social Security claiming rules and how they apply to professional women, ... Read full post

Jul 29, 2014, 11:42 AM EST

Little has changed in health of Social Security system

By Mary Beth Franklin

The looming, long-term deficit of the Social Security system is the perpetual elephant in the room in Washington. Each year, we are reminded of the silent giant's presence with the release of the Social Security Board of Trustees' annual report.The trustees released the 2014 report on Monday, about three months later than its usual April reporting date. It showed the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance trust funds are projected to become depleted in 2033 — unchanged from last year's report. That means without future congressional action to cut benefits, increase taxes or both, the Social Security Administration would be able to pay just 77% of promised retirement and survivor benefits from payroll taxes beginning in 2033.But like the Indian folk tale of the six blind men who perceived the elephant differently depending on whether they grabbed its thin snake-like tail, its... Read full post

« Newer Older »