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.

Feb 10, 2014, 3:31 PM EST

Don't get greedy with Social Security strategies

By Mary Beth Franklin

A lot of readers are excited about the prospect of using the file-and-suspend strategy as an insurance policy in case they later decide to request a lump sum payout of benefits.To refresh your memory, I recently discovered that if you wait until your full retirement age to file and suspend your Social Security benefits with the intention of collecting a larger benefit later, you can change your mind at any time prior to receiving monthly benefits and request a lump sum payout beginning with the date of your suspension. That could come in handy if you suddenly encounter health or financial problems.Normally, lump sum payouts are restricted to a maximum of six months of retroactive benefits, but that is not the case when you file and suspend. Technically, you have already filed for benefits and merely suspended them. By asking the Social Security Administration to lift the voluntary suspension, you can request that they pay you a lump... Read full post

Feb 5, 2014, 3:12 PM EST

Social Security benefits subject to a family maximum limit

By Mary Beth Franklin

Given the high rate of divorce and remarriage, it's not unusual for a retirement-age father to have minor dependent children in his second family. And when dad becomes eligible for Social Security retirement benefits, his wife and children may be entitled to benefits, too.An eligible child can be a biological child, adopted child, stepchild or under certain circumstances, a dependent grandchild.These auxiliary payments do not decrease the worker's retirement benefit. In fact, the value of the benefits a family may receive, added to the worker's benefit amount, may help determine if claiming benefits sooner rather than later may be more advantageous, the Social Security Administration states on its website.For example, children are eligible to receive benefits worth up to half of the parent's amount until they are 18, or up to age 19 if they are still in high school. And a spouse of any age may be entitled to benefits, too, if he or she ... Read full post

Jan 31, 2014, 2:13 PM EST

The most commonly asked Social Security question

By Mary Beth Franklin

I want to congratulate one of my Investment News readers for succinctly stating the Social Security-claiming strategy question that is on the minds of almost every financial adviser.“Is it possible for both spouses to file and suspend their benefits and collect spousal benefits on each other?” Malcolm Greenough, an investment adviser in Rochelle Park, N.J., asked in an e-mail. “Then at 70, could they each collect their maximum benefits?”The short answer is no.If you are at least full retirement age, you can apply for retirement benefits and then request to have payments suspended. That way, your spouse can receive a spousal benefit and you can continue to earn delayed retirement credits until 70.But only one member of a couple can file and suspend so his or her current spouse can collect benefits, the Social Security Administration states on the retirement benefits planner section of its website.The SSA's online ... Read full post

Jan 29, 2014, 3:34 PM EST

Delayed retirement credits accrue, but are not compounded

By Mary Beth Franklin

I guess it's true that great minds think alike. Over the past few weeks, I have received similar questions from several financial advisers asking if the delayed retirement credits that retirees accrue when they postpone collecting Social Security benefits beyond their full retirement age are compounded.The short answer is no.Workers who reach full retirement age in 2009 or later earn delayed retirement credits worth 2/3 of 1% per month for each month they postpone collecting Social Security benefits up to 70.And in today's low-interest rate environment, the ability to earn a guaranteed, risk-free return of 8% per year is a huge advantage for retirees.The delayed retirement credit wasn't always so generous. Prior to 1982, it was a mere 1% per year. Since then, it has gradually increased from 3% beginning in 1982 and then in 0.5% increments every two years starting in 1990 until reaching the statutory cap of 8% in 2009.Consequently, you... Read full post

Jan 23, 2014, 5:30 PM EST

Another reason to file and suspend Social Security benefits

By Mary Beth Franklin

Thank goodness for Investment News readers who come up with such intriguing questions. By pushing the envelope on what I know about Social Security claiming rules, their queries sometimes send me scurrying to the Social Security Administration for answers and we all learn a little bit more as a result. Just before Christmas, a reader wrote to me asking what would happen if he filed and suspended his Social Security benefits at his full retirement age of 66 and later decided he would like a partial lump-sum payout? Could he request one?As regular readers of this column now know, it is possible to lift a voluntary suspension of retirement benefits and request a lump-sum payment of benefits back to the date of suspension. This recently discovered use of the file and suspend strategy makes particular sense for single people who, unlike married couples, don't have to worry how their claiming decision might affect spousal or survivor... Read full post

Jan 16, 2014, 11:57 AM EST

Hurried trip down the aisle nixes widow’s survivor benefits

By Mary Beth Franklin

Patience is indeed a virtue. That’s the platitude that came to mind when Caroline Emswiler, a financial adviser with Wealth Financial Consultants in Eden Prairie, Minn., wrote to me to ask about a widow who remarried last summer a few weeks shy of her 60th birthday.“My assistant’s father died two years ago, and her mother just remarried two weeks before she turned age 60,” Ms. Emswiler. “She was married to her first husband for 30 years, and I told her she should have waited to marry until after 60 so she could collect Social Security widow’s benefits.”Ms. Emswiler is correct. As it states on the Social Security website, “If you remarry before you reach age 60 (or age 50 if disabled), you cannot receive benefits as a surviving spouse while you are married. [However], if you remarry after you reach age 60 (age 50 if disabled), you will continue to qualify for benefits on your deceased... Read full post

Jan 14, 2014, 2:13 PM EST

Three great reasons to file and suspend Social Security benefits

By Mary Beth Franklin

Jay, a financial adviser from Seattle, wrote to me with questions about Social Security benefits for his two minor children. Jay wanted to verify information he received during a phone call with the Social Security Administration that he thought might be too good to be true. The adviser, who turns 66 this month, said he has two children, 12 and 14, and a wife who is 51 and does not work outside the home.“Social Security advised me to start taking benefits when I turn 66 and then immediately suspend them,” he wrote in an e-mail. “My children would get monthly payments until they get out of high school.”Based on a family history of longevity, Jay said he had planned to wait until age 70 to collect his retirement benefits to take advantage of delayed retirement credits worth 8% per year for each year he postpones collecting beyond full retirement age, up to 70.“I don't want to take benefits for my children... Read full post

Jan 10, 2014, 12:49 PM EST

Age matters in Social Security-claiming strategies

By Mary Beth Franklin

Academic discussions of optimal Social Security-claiming strategies for married couples may make these important decisions seem clean and easy when both spouses are the same age. But real life is often messy.J.J. Green, president and chief executive of Primark Insurance Agency, asked me what would happen if one spouse is a few years younger than the other spouse, who decides to file and suspend benefits.As a refresher, an individual must be at least full retirement age — 66 — when first claiming Social Security in order to file and suspend the retirement benefit. Essentially that means an individual tells Social Security that he or she wants to trigger benefits for a spouse while delaying collecting his or her own benefits until they are worth more later. In addition, the spouse must be at least 62 to collect retirement benefits.For each year an individual postpones collecting Social Security beyond full retirement age, he... Read full post

Jan 8, 2014, 1:07 PM EST

Married couples can split Social Security-claiming strategies

By Mary Beth Franklin

The New Year is a great time to review some basic Social Security-claiming rules. And based on the many questions I have received from financial advisers over the past few weeks, it seems there is some confusion about what married couples can and can't do.Several readers noted that while it makes sense for the larger-earning husband to file and suspend his Social Security benefits as a way of triggering spousal benefits for his lower-earning wife, why wouldn't the husband also claim spousal benefits based on his wife's earnings record?Because he can't.He either can file and suspend in order to allow his own benefits to grow until they are worth more later or file a restricted claim for spousal benefits only, but not both. The Social Security Administration addresses this question on its website. “If your current spouse is full retirement age, he or she can apply for retirement benefits and then request to have payments suspended,... Read full post

Jan 6, 2014, 5:20 PM EST

FICA takes bigger bite out of high earners' paychecks in 2014

By Mary Beth Franklin

If you're among the estimated 10 million Americans who earn more than $100,000 per year, you'll fork over a bigger slice of your paycheck to Social Security and Medicare taxes in 2014.The maximum amount of a worker's pay subject to Social Security taxes — the so-called “wage base” — increased 2.9% this year to $117,000, from $113,700 in 2013.The Social Security tax rate of 12.4%, split evenly between employers and employees, remains the same. That means top earners will pay $7,254 in Social Security taxes in 2014, up about $200 from 2013's $7,049.40. Self-employed individuals pay both the employer and employee tax for a maximum Social Security tax of $14,508, but they can deduct half of their FICA taxes on their federal income tax return.But the tax hike doesn't stop there. Employees and employers also each pay a 1.45% Medicare tax on all wages with no cap. The self-employed pay a combined Medicare tax of 2.9%.... Read full post

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  @IN Wire

Mar 17 08:21AM
What positions in the advice industry, if any, should be paid overtime? It remains a point of debate:
Mar 17 08:10AM
SEC's Norm Champ stresses agency's concern about the shift of clients from brokerage accounts to advisory accounts to boost fees. #mfimc

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