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.

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

Jul 24, 2014, 3:04 PM EST

Advisers can answer divorced clients' Social Security questions, except one

By Mary Beth Franklin

I've been getting a lot of questions from financial advisers lately, asking how they can estimate potential Social Security benefits for divorced clients to plug into their retirement income calculations.That's a tough one. Advisers can't contact Social Security on their clients' behalf. Instead, they should direct their clients to contact the Social Security Administration about their potential benefits as a divorced spouse, assuming they would be eligible for benefits on their ex-spouse's earnings.In order to collect Social Security benefits as a divorced spouse, the marriage must have lasted at least 10 years and the client must be at least 62 and unmarried. In addition, the ex-spouse must also be at least 62.Assuming your client meets 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 amount ... Read full post

Jul 22, 2014, 1:04 PM EST

How to calculate Social Security's maximum family benefit

By Mary Beth Franklin

The Social Security Administration estimates that 4.4 million children receive about $2.5 billion each month because one or both of their parents are disabled, retired or deceased.I often argue about the value of delaying Social Security benefits until full retirement age or later, but when a young family is involved, claiming benefits early can make sense.One reader asked me to weigh in on the wisdom of collecting Social Security as soon as possible at age 62. His situation: He is 61 and has a 43-year-old wife and two young children, ages 7 and 4.If he waited until his full retirement age of 66 to claim Social Security benefits, he would collect about $2,500 per month. At 62, it is closer to $1,850 per month. But claiming early means his family could also collect benefits four years early.(Don't miss Mary Beth on 3 smart Social Security strategies for married couples)Each of his two children could receive a monthly payment of up to... Read full post

Jul 16, 2014, 3:51 PM EST

Widower asks why he didn't get survivor benefits

By Mary Beth Franklin

I received an e-mail from a widowed dad who asked why he didn't receive Social Security survivor benefits when his wife died eight years ago.“When my wife died in 2006, we had children who were 14 and 16 years old,” he wrote. “The children received survivor benefits until they were out of high school.”The reader asked the Social Security Administration why he, too, didn't receive survivor benefits. He was told he was not eligible at the time, but he could begin collecting them once he turned 60.“In this age of political correctness, why is it a wife can collect survivor benefits but a husband cannot?” he asked me.I assured the reader that he was not the victim of a sexist plot.Social Security benefits are gender neutral. Surviving spouses of either sex are eligible for survivor benefits of their deceased mate as early as age 60 and, in some cases, at younger ages if they are caring for the deceased... Read full post

Jul 15, 2014, 2:48 PM EST

Retirement: From theory to practice

By Mary Beth Franklin

After decades of writing about retirement planning, I finally get to eat my own cooking — at least the appetizer course. My husband, Mike, retired June 30 after more than 20 years as a federal government employee. On July 1, we began a new phase of married life — one where we share our home 24/7. It's not unusual for one spouse to retire while the other continues to work. But as I work from home, I am curious how our newfound togetherness will evolve and wonder if our big house is big enough for both of us.Mike assures me that he is merely retiring from his government job, not from work in general. He says he just wants to take a break to recharge his batteries before he figures out what he wants to do next. He might revive the one-man public relations shop that he successfully ran for 10 years. Thanks to his exceptional promotional skills, he propelled me from an obscure newspaper columnist working in my basement office to ... Read full post

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