Mary Beth Franklin

Retirement 2.0blog

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

Feb 13, 2018, 2:35 PM EST

Tough tax season for victims of Social Security hack


By Mary Beth Franklin

As if discovering that someone fraudulently claimed Social Security benefits on your account wasn't bad enough, victims of recent identity theft now have to contend with another bureaucratic headache: 1099 forms documenting reportable income they never received.Several InvestmentNews readers wrote to me with their harrowing tales of ID thieves applying for benefits in their name, usually collecting the maximum allowable lump-sum payment of six months of retroactive benefits in the process.Although the victims reported the thefts to the Social Security Administration, they now have to contend with the messy aftermath: contesting the tax forms they received reporting Social Security benefits that were paid out on their earnings record. Up to 85% of Social Security benefits can be taxed at ordinary income rates. Taxable Social Security benefits can increase the amount of interest and dividend payments that are subject to capital gains... Read full post

Feb 7, 2018, 2:14 PM EST

New tax law offers opportunities for advisers and retirees

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By Mary Beth Franklin

The most sweeping tax reform in a generation may have begun under the guise of simplification, but the application of the new tax rules will be anything but simple for financial advisers and their retired clients. The Tax Cuts and Jobs Act that President Trump signed into law on Dec. 22 presents numerous tax planning opportunities and pitfalls. But it means some advisers will have to go beyond their comfort zone when it comes to discussing the tax implications of various withdrawal strategies. "Clients expect their advisers to know and understand the benefits and potential landmines of their financial strategy," said Joe Elsasser, president of Covisum, a technology and training service that offers Social Security Timing and Tax Clarity software programs. "Advisers will no longer be able to hide behind disclosures stating that they do not provide tax advice."In releasing a newly updated white paper explaining the intricate interaction... Read full post

Jan 29, 2018, 5:17 PM EST

Timing is crucial for Social Security and Medicare

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By Mary Beth Franklin

Sometimes the most important advice I can give readers is, "Don't do it!"For example, one reader wrote to me recently asking if she should collect benefits on her ex-husband's earnings record now, at age 65, and later switch to her own larger benefit.My response was swift and emphatic. "Stop! Don't claim Social Security now at age 65 or you will be forced to claim your own benefit," I wrote.Any time someone files for benefits before their full retirement age and they are entitled to both their own Social Security retirement benefit and a benefit as a spouse or ex-spouse, they are "deemed" to file for all available benefits. Social Security will pay the higher of the two amounts, starting with their own benefit and layering any excess spousal amount on top of it if it's larger than their own. In addition, benefits claimed before full retirement are permanently reduced for early claiming.Plus, individuals who claim any type of Social... Read full post

Jan 8, 2018, 2:58 PM EST

Social Security rules for new retirees


By Mary Beth Franklin

I've received several questions from financial advisers recently asking what will happen to their clients who claim Social Security this year after they have already earned more than the annual earnings limit. Will their benefits be reduced or even eliminated?No, their Social Security benefits will not be affected if they stop working once they claim benefits, no matter how much they earned this year prior to retirement. But if your clients continue to earn income —whether full-time, part-time or on a consulting basis — after they retire, their benefits could be reduced or temporarily wiped out depending on their age.Under a special first-year-in-retirement rule, beneficiaries can get a full Social Security check for any whole month they are retired, regardless of their yearly earnings. In 2018, a person younger than full retirement age for the entire year is considered retired if monthly earnings are $1,420 or less.For... Read full post

Dec 22, 2017, 2:10 PM EST

New Social Security rules trip up widow's adviser


By Mary Beth Franklin

Whenever I conduct Social Security seminars for consumers and financial advisers around the country, I tell audiences that retirement benefits and survivor benefits represent two separate pots of money. Generally, if you are entitled to both, you can choose to collect one type of benefit first and switch to the other later if it would ultimately result in a larger amount. But that is not always the case. The new Social Security claiming rules that were authorized by the Bipartisan Budget Act of 2015 can sometimes play havoc with that general advice.During a recent seminar, a financial adviser asked me if his newly widowed client, who began collecting her own retirement benefits early, could suspend her benefits at 66 and collect survivor benefits on her late husband's earnings record. The adviser reasoned that the widow could earn delayed retirement credits of 8% per year between her full retirement age of 66 and age 70 while she... Read full post

Dec 6, 2017, 4:08 PM EST

Older boomers embrace retirement, study finds


By Mary Beth Franklin

A funny thing happened on the way to retirement. For many boomers, fear of the unknown gave way to contentment once they got to the other side.Six out of 10 retired boomers feel better than expected about their retirement, according to a new survey conducted by Capital Group, home of American Funds. The research analyzed the dynamics for boomer investors (age 53 to 71) as they transition into retirement.In contrast, Americans who are still working—including younger boomers, Gen-Xers (ages 38-52) and Millennials (ages 21 to 37)—are twice as worried about having enough money for retirement as retired boomers. Six out of 10 Americans (59%) currently in the workforce say that not having enough money for retirement is one of their top financial concerns compared to 28% of retirees.WORKING BOOMERSIn fact, the people who are most concerned about their ability to retire comfortably are boomers who are still working. Among boomers... Read full post

Dec 1, 2017, 2:50 PM EST

Last chance for clients to save on drug costs


By Mary Beth Franklin

There are only a few shopping days left—and I'm not talking about storming the local mall or clicking your way through to fulfill your loved ones' holiday wish list.I'm referring to something that can save older Americans significant money next year: re-shopping their Medicare Part D prescription drug plan. But time is running out. Medicare's open enrollment season ends Dec. 7.You might want to send out an e-mail reminder to older clients reminding them of this annual money-saving opportunity before the window closes. But don't be surprised if the only response is deafening silence.Part D is Medicare's insurance program for prescription drugs that originated in 2006. Older Americans enrolled in original Medicare Part A (hospitalization) and Part B (outpatient services and doctors' visits) can enroll in Part D when they first become eligible for Medicare at age 65 and can switch prescription drug plans each year during... Read full post

Nov 21, 2017, 4:54 PM EST

Medicare premiums and Social Security COLAs: Here's why retirees will pay up in 2018


By Mary Beth Franklin

Here's a riddle: How can Medicare premiums remain the same in 2017 and 2018 yet result in a 23% increase for millions of retirees?That's the quandary that many financial advisers will face next year when they try to explain to some retired clients why their Social Security check, after deducting for Medicare premiums, will be smaller in 2018 compared to this year.Blame it on the "hold harmless" provision designed to protect most retirees from a net decline in Social Security benefits from year to year. The provision prohibits annual increases in Medicare Part B premiums, which pay for doctor's visits and outpatient services, from exceeding the dollar amount of annual Social Security cost-of-living adjustments (COLA). The hold harmless provision applies to about 70% of retirees who have their Medicare Part B premiums deducted directly from their monthly Social Security payments. The remaining 30% are not protected because they do not... Read full post

Nov 6, 2017, 4:11 PM EST

Someone tried to hack my Social Security account


By Mary Beth Franklin

Several InvestmentNews readers have asked me to weigh in on whether the recent Equifax data breach, which affected an estimated 143 million Americans, could compromise online Social Security accounts.Equifax, one of the three major credit bureaus, announced in September that it had experienced a major data breach last summer involving Social Security numbers, birth dates, addresses and in some cases driver's licenses and credit card numbers, for about half of all American adults.The pilfered information is the perfect recipe for committing identity fraud. In theory, hackers could use this sensitive personal information to set up an online Social Security account in your name, file for those benefits when you became eligible and direct the payments to a new address and bank account without your knowledge.The bigger question is, can they use that same information to gain access to the millions of existing My Social Security accounts and... Read full post

Oct 23, 2017, 12:28 PM EST

How to take the Medi-scare out of retiree healthcare costs


By Mary Beth Franklin

I don't think it's a coincidence that Halloween and Medicare open enrollment season occur at about the same time each year. Although some people like to celebrate Halloween by dressing up as ghosts and zombies, for seniors, no costumes are needed to trigger goosebumps. Health care costs — especially paying for prescription drugs — is one of the scariest parts of retirement.A majority of Americans cite healthcare costs as the leading obstacle to financial security in retirement, according to new data from Northwestern Mutual's 2017 Planning & Progress Study. The number of Americans citing healthcare costs as their chief concern spiked dramatically this year from 45% in 2016 to 58% is 2017, according to Northwestern Mutual's annual survey of more than 2,700 American adults.Separately, four out of five seniors say they would have trouble paying for their drugs without the Medicare prescription drug plan known as Medicare... Read full post

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