Results for "On Retirement"

May 8, 2019, 6:01 PM EST

Future retirees often overestimate Social Security benefits

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By Mary Beth Franklin

Chalk it up to wishful thinking, or merely misinformation, but many future retirees overestimate how much they are likely to receive from Social Security, according to an annual survey released Wednesday by the Nationwide Retirement Institute. Clients who work with financial advisers are less likely to claim benefits early and tend to receive larger benefits as a result, the sixth annual survey found."Social Security is a complex source of retirement income, often causing a disconnect between what consumers think their benefit will be compared to reality," said Tina Ambrozy, president of sales and distribution at Nationwide. "Preparing for retirement holistically by working with advisers and taking advantage of online tools can help older adults maximize benefits and achieve personal goals."The online survey of more than 1,300 older adults who are retired or who plan to retire in the next 10 years, found that nearly half — 44%... Read full post

May 6, 2019, 3:40 PM EST

Hints about Social Security COLA and Medicare premiums in 2020

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By Mary Beth Franklin

Buried in the recent Social Security and Medicare Trustees' Report were some hints about next year's projected cost-of-living adjustments for Social Security benefits and likely increases in Medicare premiums for 2020.The fact that the Medicare Part A hospital insurance trust fund is expected to be depleted in 2026 unless Congress acts before then stole the headlines. But the report also revealed that the basic Medicare Part B premium, which helps pay for doctors' fees and outpatient services, is expected to increase by $8.80 to $144.30 a month in 2020. And more people are likely to pay high-income surcharges, officially known as income-related monthly adjustment amounts, or IRMAA, next year.In 2018, approximately 3.7 million high-income Medicare beneficiaries, defined as individuals with modified adjusted gross income above $85,000 and married copies with combined MAGI over $170,000, paid IRMAA surcharges. Many of those people are... Read full post

May 1, 2019, 7:49 AM EST

Widows, widowers and Social Security

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By Mary Beth Franklin

I've seen an uptick in questions from financial advisers about their widowed clients and what happens to their Social Security survivor benefits if they remarry. The good news is that surviving spouses have more claiming options than other types of Social Security beneficiaries, regardless of when they were born. But timing is crucial. The increase in questions on this topic is likely to challenge financial advisers for years to come as millions of widowed and divorced baby boomers find love after loss and look for guidance on how to update their financial plan to suit their new romantic status. There are now about 50 million Americans age 65 and older. Older women outnumber older men 27.5 million to 21.8 million, and about a third of those older women are widowed. Anthony Capristo, a financial adviser and retirement income specialist with Forthright Wealth Planning in eastern Pennsylvania, asked about his client, Jon, who is 59. Jon... Read full post

Apr 18, 2019, 12:26 PM EST

Grown children may be hazardous to your wealth

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By Mary Beth Franklin

Baby boomers redefined parenthood over the past few decades, often serving as friend and confidant — as well as banker — to their now adult children. Many continue to subsidize their offspring's living expenses well into early adulthood, even at the expense of their own retirement savings, according to a new study released this week.I remember reading scary statistics about the cost of raising children when I was a young mother in the '80s. The costs have continued to grow exponentially since then. By 2015, American parents spent $233,610, on average, from birth to age 17, according to a 2017 report from the U.S. Department of Agriculture. That cost estimate includes everything from housing, food and transportation to health care, child care, clothing and education — but not college.​ When it comes to finances, the lines between childhood and early adulthood have blurred. As a result of mounting debt,... Read full post

Apr 15, 2019, 10:01 AM EST

The cost of putting off enrolling in a Medicare drug plan

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By Mary Beth Franklin

I heard from a financial adviser in Florida recently who asked if there was anything her clients, a married couple ages 69 and 70, could do to avoid paying a delayed enrollment penalty for their new Medicare Part D prescription drug plan."They never carried any drug coverage before now since they didn't feel that they needed it," the adviser wrote. "But now that they signed up for Medicare Part D, they got hit with a late-enrollment penalty."Medicare Part D drug coverage is optional, and other sources of coverage, such as a current or former employer or union, Tricare, the Department of Veterans Affairs or other health insurance, are appropriate substitutes. But forgoing Medicare D coverage initially and signing up at a later date without having creditable coverage in the interim can be a costly mistake.The couple wasn't aware that there is a permanent delayed enrollment penalty of 1% per month — for a total of 12% per year... Read full post

Apr 2, 2019, 3:07 PM EST

Top reasons to file a tax extension

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By Mary Beth Franklin

With less than two weeks to go before the annual April 15 tax-filing deadline, many people are still gathering the necessary financial records or scrambling to come up with the cash needed to pay their tax bill. But neither excuse is a sufficient reason to miss the crucial filing deadline.Procrastination is understandable given that the new tax law changed some essential rules for individual taxpayers, including capping the annual deduction for state and local taxes at $10,000; adding a new 20% deduction on taxable income for some small businesses that pay taxes as individuals rather than at corporate rates; and adjusting withholding tables during the year, resulting in smaller refunds or more taxes owed for some taxpayers compared to previous years.The Internal Revenue Service allows taxpayers to file for a six-month extension for any reason as long as they submit the proper form in time. Just file Form 4868 either electronically or... Read full post

Mar 26, 2019, 4:34 PM EST

Update on Social Security reform

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By Mary Beth Franklin

Well, it's a start. A House panel held hearings in mid-March on a bill that would expand Social Security benefits and stabilize the long-term finances of the nation's premier retirement system. But don't get too excited. The Social Security 2100 Act, first introduced in 2014 and reintroduced in 2017, now has more than 200 Democratic co-sponsors but zero Republican support. This is the first time the legislation has been the subject of a congressional hearing. Why now? After years of Republican control, Rep. John Larson, D-Conn., the bill's sponsor, is chairman of the Ways and Means subcommittee on Social Security. But even if the legislation eventually works its way to the House floor and is approved by the Democratic-controlled House, it would be dead on arrival in the Republican-controlled Senate.If Congress does nothing, the Social Security trust fund is expected to run dry in 2034. If that happens, there would only be enough... Read full post

Mar 19, 2019, 9:39 AM EST

Choosing between a retroactive lump sum and a bigger monthly Social Security benefit

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By Mary Beth Franklin

Jim Perry, a financial adviser with Edward Jones in Coral Gables, Fla., was surprised to learn that retirees who claim Social Security benefits after their full retirement age are eligible for up to six months of retroactive benefits paid in a lump sum."I had a discussion with a 69-year-old client yesterday who will be taking Social Security when he turns 70 in July," Mr. Perry wrote to me in an email. "He told me about his friend who received a $25,000 lump sum payment from Social Security when he turned 70 a few months ago in exchange for a lower benefit. Is this an option for my client?""Yes, the Social Security Administration will pay up to six months of retroactive benefits in a lump sum for benefits claimed after full retirement age," I responded. "But there are tradeoffs."For every month that an individual postpones claiming Social Security benefits beyond full retirement age up to age 70, they earn an additional 0.66% per month ... Read full post

Feb 26, 2019, 5:28 PM EST

Medicare and the high cost of prescription drugs

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By Mary Beth Franklin

Howard Sorkin, a financial adviser in Chicago, is on a mission to educate clients and other advisers about the high cost of prescription drugs for some Medicare beneficiaries. People requiring specialty drugs for cancer, multiple sclerosis, hepatitis and other serious illnesses may be on the hook for thousands of dollars a year. "Even though, as an adviser, I discussed these topics with clients, I never fully understood the true costs of medications under Part D until I was confronted with it myself," Mr. Sorkin wrote to me in an email.Mr. Sorkin was diagnosed with stage 4 nonsmokers lung cancer, including a brain tumor, in November 2016, when he was 68. Fortunately, he has had few symptoms and qualified for a new targeted drug therapy in lieu of chemotherapy. Unfortunately, the drug is very expensive. It retails for about $18,000 per month, although he is able to buy it at a discounted price of about $15,000 per month through his... Read full post

Feb 20, 2019, 2:11 PM EST

2019 is a key year for Social Security

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By Mary Beth Franklin

I'd like to try to clear up some confusion about Social Security claiming strategies that was triggered by one of my recent columns.​ In last week's column, I wrote that people who reach their full retirement age of 66 in 2019 are the last group of people eligible to file a restricted claim for spousal benefits, which allows their own retirement benefits to continue to grow by 8% per year up to age 70. This strategy is available to married couples and to eligible divorced spouses who were married at least 10 years, divorced and are currently single.One reader posted in the online comments sections that he was "confused and bothered" by my article. "I'm turning 66 in 2019 and plan to claim spousal benefits when my spouse turns 66 in 2020," the reader wrote. "I was born before the cutoff and she was born after the cutoff," he explained. "Can anyone clarify?"I apologize for the confusion. I did not mean to suggest that 2019 is... Read full post

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