Mary Beth Franklin

Retirement 2.0blog

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

Nov 15, 2016, 12:44 PM EST

New Social Security rules and divorce

By Mary Beth Franklin

Social Security benefits for divorced spouses remains one of the few fertile areas where strategic claiming strategies can make a big difference in retirement income planning — depending on the ex-spouses' ages. I encountered many questions on this important topic when I addressed the Association of Divorce Financial Planners' annual conference in Las Vegas in October.As a result of the Bipartisan Budget Act of 2015, there are now two sets of rules that apply to claiming strategies for divorced spouses. But before I dive into what is new, let me review the basic rules of how a divorced spouse qualifies for Social Security benefits.(More: Advisers still baffled by key rule changes to Social Security claiming strategies)As long as an individual was married at least 10 years, was divorced and is currently single, he or she can collect Social Security benefits on an ex-spouse's earning record as if they were still married —... Read full post

Nov 2, 2016, 6:27 PM EST

Advisers still baffled by key rule changes to Social Security claiming strategies

By Mary Beth Franklin

One year after the Bipartisan Budget Act of 2015 was signed into law on Nov. 2, financial advisers continue to be baffled by how to help their clients maximize their Social Security benefits under the new claiming rules.I get it. The new rules are confusing. But it might help to keep the following three key points in mind.One, although the “file and suspend” strategy is now history, anyone who was at least 66 years old and who filed and suspended their benefits by April 29, 2016, is grandfathered under the old rules. That means eligible family members can collect spousal or dependent benefits during the suspension — even if they claim benefits after the deadline — while the worker's own retirement benefits continue to earn delayed retirement credits of 8% per year up to age 70.(More: These retirees lost most when Congress changed Social Security benefits)Under the new rules, you can still voluntarily suspend... Read full post

Oct 24, 2016, 2:46 PM EST

Big gap between Social Security cost-of-living adjustment and retiree inflation

By Mary Beth Franklin

One of the great values of Social Security benefits is that they are supposed to increase each year to keep pace with inflation and protect seniors' buying power. Unfortunately, that's not the way it has worked out in recent years.The rising cost of living is a major concern for most Americans and news of Social Security's paltry 0.3% cost-of-living adjustment for 2017 — amounting to about $5 per month for the average retiree — won't do much to calm their nerves.(More: Social Security cost-of-living adjustment to get 0.3% increase in 2017)Nearly half of Americans (47%) report being either “very concerned” (36%) or “terrified” (11%) that the rising cost of living will affect their retirement plans, according to a 2016 study from Allianz Life Insurance Co. The Allianz online inflation survey of more than 1,000 adults was conducted in March.“As consumers move into retirement, they will not only... Read full post

Oct 17, 2016, 2:30 PM EST

Coordinating Social Security disability and retirement benefits

By Mary Beth Franklin

Financial advisers are often well-versed in optimal Social Security claiming strategies for married couples when it comes to deciding when and how each should claim retirement benefits. But adding disability benefits into the mix seems to wreak havoc with their recommended strategies as most software programs do not handle disability benefits.I have received several questions from advisers recently asking if one spouse can claim spousal benefits on a worker who is collecting Social Security disability benefits. The short answer is yes.But first let me review how Social Security disability benefits work.Social Security pays disability benefits to people who can't work because they have a medical condition that's expected to last at least one year or result in death. In general, to get disability benefits, you must meet two different earnings tests: a recent work test, based on your age at the time you became disabled, and a duration of... Read full post

Oct 11, 2016, 5:36 PM EST

Social Security cost-of-living adjustment expected to be lowest ever

By Mary Beth Franklin

Advisers, get your aspirin ready. When the Social Security cost-of-living-adjustment for 2017 is officially announced next week, it is expected to be 0.3% — the lowest annual increase on record. After no annual cost of living adjustment this year, Social Security benefits are expected to increase by 0.3% in 2017, according to a new forecast by The Senior Citizens League (TSCL). “And there's a chance that lower gas prices will drag the COLA down even further, to 0.2%,” said Mary Johnson, a Social Security policy analyst and researcher for TSCL. Either way, the 2017 COLA is expected to raise Social Security benefits by only a few dollars, and any increase will be completely offset by stiff increases in the Medicare Part B premium for most people 65 and over.(More: My client's Medicare coverage has been canceled, now what?)But wait. It gets worse.Because of the convoluted “hold harmless” rule that protects... Read full post

Oct 10, 2016, 4:57 PM EST

Financial advisers need to prepare for the coming age wave

By Mary Beth Franklin

While InvestmentNews readers are accustomed to my columns that focus on the nuances of claiming Social Security, paying for Medicare or withdrawing retirement savings in the most tax-efficient way, sometimes I like to step back and take a look at the bigger picture.How's this for a panoramic view? The first wave of baby boomers turned 70 this year and as this massive generation ages, it will put an unprecedented strain on public programs, such as Social Security and Medicare, and increase demand for private services involving financial management, senior housing, transportation, health care and personal care.By 2030, the 65-and-older population is projected to be about 74 million people — more than 50% larger than today — and will represent about 20% of the American population, according to the U.S. Census Bureau.(More: Advisers face big challenges in helping clients prepare for health-care costs in retirement)Just as this... Read full post

Oct 6, 2016, 3:28 PM EST

Most women claim Social Security early

By Mary Beth Franklin

Women tend to live longer than men, which means they spend more time in retirement and often do so with less savings. As a result, women retirees, on average, could spend 70% of their Social Security benefits on health care costs.Women count on Social Security to pay for more than half of all their expenses in retirement. But claiming benefits early, which 80% of retired women currently collecting Social Security did, can be a costly mistake that locks in a lifetime of lower income, according to a newly released Harris Poll. The online survey included 465 women over age 50 who are retired or who plan to retire in the next 10 years. Only 5% of those currently collecting Social Security waited until age 70 to claim the maximum benefit.“Too many women retirees have no retirement income outside of Social Security,” said Roberta Eckert, vice president of the Nationwide Retirement Institute, which commissioned the survey.... Read full post

Sep 26, 2016, 12:32 PM EST

Social Security timing can affect Medicare premiums

By Mary Beth Franklin

Social Security benefits are expected to increase slightly next year, and most retirees who have their Medicare premiums deducted directly from their Social Security benefits will be protected from a net decline in monthly benefits.However, clients who are enrolled in Medicare but not yet collecting Social Security could see a big increase in their monthly Medicare premiums in 2017. So could clients whose income tops $85,000 if they are single or $170,000 if they are married.That's because the Social Security Act includes a “hold harmless” provision that prevents a person's Social Security benefits from declining from one year to the next due to an increase in Medicare premiums. For most beneficiaries, that means Medicare Part B premiums, which pay for doctors' visits and outpatient services, cannot increase by more than the monthly increase in Social Security benefits next year. The 0.2% COLA projected by the Social... Read full post

Sep 20, 2016, 4:16 PM EST

GAO study documents mistakes by Social Security Administration staff

By Mary Beth Franklin

This should come as no surprise to InvestmentNews readers, but a new study shows government representatives often dole out incorrect or misleading information when people visit their local Social Security Administration (SSA) office in person to apply for benefits. Those who apply for benefits online tend to have better outcomes.In a new report, the Government Accountability Office (GAO) found that “certain key information is not provided or explained during the claims process” and “some claimants do not receive all the information that is critical to making informed claiming decisions.”The report, which was requested by the Senate Select Committee on Aging last year, examines the extent to which people understand Social Security rules affecting their retirement benefits and what information SSA provides to individuals to enable them to make informed claiming decisions. In addition to conducting a comprehensive... Read full post

Sep 12, 2016, 3:29 PM EST

Small Social Security cost-of-living adjustment likely for 2017

By Mary Beth Franklin

Although we are still a month away from an official announcement about the size of the annual cost-of-living adjustment (COLA) for Social Security benefits in 2017, the latest Social Security Trustees report projects a 0.2% increase in benefits next year.That would boost the average Social Security retirement benefit of $1,341 per month by about $2.70 and increase the maximum benefit of $2,663 per month in 2016 by about $5.30 next year. While that would be an improvement over this year when there was no inflation adjustment over 2015 benefit levels, a small COLA will do little to shield seniors' budgets from the specific type of inflation that they tend to experience compared to the general population.The Social Security Act provides for an automatic increase in benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners (CPI-W). The COLA for 2017 would be based on the increase in the... Read full post

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