Results for "On Retirement"

Aug 20, 2018, 1:51 PM EST

Retroactive Social Security benefits: Everything you need to know


By Mary Beth Franklin

A financial adviser contacted me recently to ask whether a widowed client, who had been eligible to collect Social Security survivor benefits at the earliest at age 60, could file for retroactive benefits now that she was 63.Any type of Social Security benefit claimed before full retirement age, whether as a retiree, spouse or survivor, is permanently reduced and subject to earnings restrictions if a claimant continues to work. But this client was a perfect candidate to claim reduced survivor benefits early since she was no longer working and therefore not subject to the earnings cap. She planned to delay collecting her own retirement benefits until 70 when they would be worth the maximum amount.Her financial adviser had recommended that she claim her survivor benefits at 60. Even though her survivor benefit would be worth just 71.5% of her late husband's primary insurance amount, compared to 100% if she waited until her full... Read full post

Aug 16, 2018, 2:43 PM EST

8 ways to boost Social Security benefits


By Mary Beth Franklin

President Franklin D. Roosevelt signed the Social Security Act into law 83 years ago, on Aug. 14, 1935, creating the first nationwide safety net for American retirees.During a recent summer road trip, I visited Roosevelt's bucolic Hyde Park retreat in New York's Hudson River Valley and was awed to stand in the footsteps of history. It was the home where the 32nd president welcomed King George VI at the controversial "hot dog summit" in 1939, prior to America's entry into World War II. It was also where FDR signed a pact with British Prime Minister Winston Churchill to build an atomic bomb that would end the war. As pensions disappear and longevity increaseas, retirees are even more dependent on Social Security today than they were 25 years ago, according to a new study from the University of Pennsylvania's Wharton School of Business.In honor of Social Security's more than eight decades of helping Americans create a secure retirement,... Read full post

Aug 9, 2018, 4:18 PM EST

Social Security finances worsen as reliance on the program increases


By Mary Beth Franklin

You've heard of good news/bad news stories. This one is a bad news/worse news version. Two new reports from the University of Pennsylvania's Wharton School of Business document an increase in American retirees' reliance on Social Security income over the past 25 years as the program's long-term finances deteriorate at a faster pace than officially projected by the Social Security Administration. The reports are based on simulations generated by the Penn Wharton Budget Model, a nonpartisan research initiative that provides economic analysis of the fiscal impact of public policies. First, the bad news.The Social Security program was introduced in the 1930s during the throes of the Great Depression to protect those who could no longer work due to old age from slipping into poverty. Over the past 80-plus years, Social Security has evolved into a core pillar of retirement security, providing benefits to retirees and disabled workers, their... Read full post

Aug 7, 2018, 1:10 PM EST

Wages can boost Social Security taxes, Medicare premiums


By Mary Beth Franklin

My recent column on how income from a job can temporarily reduce or even eliminate Social Security benefits claimed before full retirement age prompted some interesting questions from readers.Those questions allow me to clarify how earnings from a job or net self-employment income can reduce current Social Security benefits while boosting future benefits. They also give me an opportunity to explain how an individual's income is the triggering factor in applying the earnings test, but household income is used when calculating the taxability of Social Security benefits or the application of a Medicare high-income premium surcharge.As a quick recap, the Social Security earnings cap temporarily reduces benefits if an individual claims benefits before full retirement age while continuing to work. In 2018, someone who is under full retirement age for the entire year would lose $1 in benefits for every $2 earned over $17,040. The test applies ... Read full post

Jul 31, 2018, 9:23 AM EST

7 surprising facts about the Social Security earnings test


By Mary Beth Franklin

Questions from InvestmentNews readers tend to run in cycles. This month, the Social Security earnings test seems to be a popular topic with financial advisers and their clients who want to claim benefits early but plan to keep working. That combination can result in some nasty surprises.Benefits can be temporarily reduced or wiped out if you claim Social Security before full retirement age and continue to work. Full retirement age is 66 for anyone born from 1943 through 1954, and gradually increases to 67 for those born in 1960 or later.Not only will your benefits be reduced by 25% or more if you file for Social Security at the earliest eligible age of 62, you will temporarily forfeit some or all of your Social Security benefits if you earn too much money.1. Earned income is defined as wages or net-self-employment income. The earnings test does not apply to other government benefits, investment earnings, interest, pensions, annuities... Read full post

Jul 25, 2018, 12:38 PM EST

Working longer is best way to boost retirement income


By Mary Beth Franklin

Working a few years longer has a much bigger impact on improving retirement income security for older workers than boosting 401(k) contributions during the last decade of work, according to new research published by the National Bureau of Economic Research.In fact, working a little longer and postponing the start of Social Security benefits can raise annual retirement income by as much as a modestly higher saving rate over several decades of work, according to NBER, a prominent nonprofit public policy research organization.The biggest impact of the working-longer strategy applies to older workers because the benefits of traditional retirement strategies, such as increasing savings or switching to a lower-cost portfolio, diminish with age. For example, a 36-year-old who boosted his 401(k) contributions from 6% to 7% of his pay (assuming a 3% employer match and 5% annual return) would get nearly four times more benefits from his... Read full post

Jul 24, 2018, 3:48 PM EST

Intriguing snapshot of HSA users


By Mary Beth Franklin

If financial advisers were asked to create a profile of the ideal prospective client, many might list young, college-educated workers with above-average incomes so they could help them grow their wealth over several decades. If that sounds like a river where you'd like to fish, the bait might surprise you: health savings accounts.A new survey of more than 1,400 U.S. health care consumers found that HSA enrollees are generally healthier, wealthier and wiser than the average worker.In fact, more than half of HSA enrollees are between the ages of 25 and 44; more than 60% are college-educated with at least one degree; and nearly 90% claim to be healthy or very healthy, according to the 2018 HSA Participant Profile survey published by Aegeus, one of the largest administrators of health care benefit accounts. The average household income for an HSA enrollee tops $72,000, according to the Alegeus survey.HSAs offer a triple tax break:... Read full post

Jul 17, 2018, 4:36 PM EST

Small businesses face a big retirement challenge


By Mary Beth Franklin

Here is an amazing statistic: Small businesses account for 99.7% of all U.S. firms and employ more than half of all American workers, according to the Small Business Administration. Collectively, small businesses drive the economy, but many of those small business employees are missing out on a key benefit of full-time employment: access to a retirement savings plan at work.Freelancers, consultants and other part-time and on-demand contractors are in an even more precarious situation when it comes to saving for their future.All told, about 55 million American workers — more than one-third of the U.S. workforce — don't have a retirement savings plan, jeopardizing their financial future and potentially straining an already overburdened Social Security system when they reach retirement age. And that just doesn't make sense when solutions are readily available."Small business owners want to offer the kind of benefits that... Read full post

Jul 10, 2018, 10:27 AM EST

Improved health outcomes can boost retirement savings


By Mary Beth Franklin

What would you say about a planning tool that quantifies how improved management of a chronic health condition can reduce a client's medical expenses, increase their life expectancy and boost disposable income? What if you took it a step further and used the tool to show clients how investing those savings in a 401(k) could bolster their retirement security and allow them to delay claiming Social Security benefits until a later age?How about: Show me the money?That's what HealthyCapital, a joint venture between the Mercy health care system and HealthView Services, a provider of health care cost data for financial services firms, did. The results are impressive. The firm studied how providing 401(k) plan participants with specific health care cost data could encourage them to manage their health conditions and increase retirement savings. The findings are detailed in a new report, "Health & Retirement Savings: Leveraging Healthcare... Read full post

Jul 5, 2018, 4:12 PM EST

New ways to estimate and fund long-term care costs


By Mary Beth Franklin

Nothing strikes fear in the heart of retirees more than the three letters: LTC. The potentially crushing costs of long-term care in a nursing home, memory care unit or even at home — most of which are not covered by Medicare — can easily destroy a retirement plan.But the unpredictability of who will require costly care and the diminished availability of traditional long-term care insurance policies create a challenge for even the savviest financial advisers.An estimated 70% of people 65 and older will need some form of long-term care as they age, according to the Department of Health and Human Services. The national annual cost for a private room in a nursing home is $97,452, according to the 2017 Genworth Cost of Care Survey, which includes a state-by-state breakdown of costs for various levels of care. The average length of a nursing home stay is 2½ years.The traditional funding choices for long-term care expenses... Read full post

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