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Mary Beth Franklin

Episode 41: How to Maximize Your Social Security Benefits, with Mary Beth Franklin

Today’s guest Mary Beth Franklin is the author of a book called Maximizing Social Security Retirement Benefits.

Mary Beth has written about money from covering big-picture issues such as the federal budget, tax policy and Social Security reform on Capitol Hill to personal finance strategies for Kiplinger’s Personal Finance magazine. She was a Capitol Hill correspondent of United Press International, senior editor of Kiplinger’s Personal Finance magazine, contributing editor of Investment News and an award-winning journalist, and a certified financial planner. And, this one I really like, she’s the original member, one of the original members of the CFP Board’s Women’s Initiative and also a program called Women’s Institute for a Secure Retirement, which is called WISER. She was a hero for them in 2016.

Welcome, Mary Beth. I’m so excited that you’re going to talk to us today because there’s so many things I want to talk to you about.

Well, I am delighted to have the opportunity so thank you for inviting me to participate in your podcast.

You’re very welcome. It can be a little intimidating because I know you’re a journalist, and I don’t fancy myself to be one, but I think we can have a really good conversation.

Well, I think the most valuable conversations are basically between friends, so let’s start from that point.

All right. Thank you so much. That’s very kind. Let’s start with what you’re doing. My first question, because I am the author of a book which is a soft cover, paperback book, why did you choose to do your book as an eBook?

Well, my current career is as a contributing editor at Investment News, which is a publication for financial advisers. My job is answering advisers’ questions and their clients’ questions about Social Security. Investment News just felt like…from a delivery standpoint, it was so much easier for someone to just click on the link, buy the book, download it, print it out. It’s all right there. We were not going after a broad consumer market so that’s why we weren’t marketing through Amazon.

Well, it’s great but I also think that, as people are listening to this podcast, especially women, baby boomer women which is exactly the target market of what I’m doing, they will hopefully want to download that book and read it from cover to cover because it’s very, very important. As you and I have talked before we started this, it’s probably one of the most crucial decisions about retirement that most women will make, and it’s not necessarily that it is something that will make a difference for some women. It may not. But, for others, it will be a very important primary source of income in retirement.

I think it’s critical.

You don’t get a chance to go back and do it over, so it’s really important.

What’s so important is to put this in context. In an era of disappearing pensions, for many Americans, Social Security represents the only form of lifetime income that they can’t outlive. It’s also critically important that it is inflation-adjusted. Now, we’ve been living through such low inflation for so long. We forget what the ravages of inflation can do. But, at just a historic average of about 3% a year, your buying power gets cut in half in 25 years. That’s why I tell people claiming Social Security at 62 is not the idea of having extra money for that vacation. It’s waiting later so you can eat at 85.

For many Americans, Social Security represents the only form of lifetime income that they can't… Click To Tweet

Yeah. I love the way you put that. That’s great. So you can eat at 85. That’s terrific.

Here’s the other fact. I was just reading a very interesting study before we got on the line right now about increasing healthcare costs in retirement and what a role Social Security benefits will play in paying for many of those costs. We know these costs are going to continue to rise in the future. If possible, wouldn’t you like to be starting from a larger base of Social Security benefits by waiting a little bit to collect them initially? And, then that’s going to help pay a lot of these healthcare bills because the fact is, because women tend to live longer and traditionally women tend to marry men a few years older, it means they’re going to be on their own towards the end of their life either because of widowhood, divorce or increasingly many women never married in the first place. It’s really important that women understand how to manage money because at some point they’re going to be doing it on their own.

It's really important that women understand how to manage money...at some point they're going to be… Click To Tweet

It’s wonderful to hear you say that because that’s the message I’ve been trying to get out for years, and it’s great to hear you confirm all that. Here’s a question I have for you because I hear this a lot. I know I have an answer. I’m just curious to know what you would say. Many people say to me when we’re doing retirement income planning, “Do we really want to consider Social Security because the whole thing is going to be bankrupt in a couple of years? If that’s the case, maybe I should take it as early as I possibly can because then I think I’m pretty good if I take it quickly. They won’t usually do anything to people who are already in the system.”

I hear that a lot and it’s usually people who have great distrust of the government and my response is, “Well, if you really want to screw the government, hold out for a bigger benefit.”

I never thought of it that way but that’s good.

While I generally believe it’s of great value for some people to delay collecting Social Security benefits as late as possible, which means up to age 70, because for every year you postpone collecting your Social Security benefit beyond your full retirement age up until age 70, you get an extra 8% per year. That’s mind-boggling. That means if you collect at 70 rather than 66, your benefit is going to be 32% larger than it would have been at your full retirement age. But, having said that, it makes sense for some people to collect benefits as early as possible, which is age 62, even though their benefits will be permanently reduced for the rest of their life. For example, if you need the money, go ahead and collect benefits. If you’re in poor health, go ahead and collect early because frankly Social Security benefits are like the lottery. You must be present to win. If you don’t think you’re going to make it into your 70s and 80s, well, then maybe you should claim early.

If you wait to collect Social Security at 70 rather than 66, your benefit is going to be 32% larger. Click To Tweet

But, the fact is the average 65-year-old woman today is going to live to about 86, and half of American women are going to live even longer. If you think you’re going to be in that club of women who are going to hang out together in their 80s and 90s, you may want to delay.

I like the way you put that. The club.

The club.

Actually there is a diminished number of women who reach that age. I remember my mother-in-law was like that. She had friends who celebrated their 90th birthday parties together and it was wonderful to be able to see that. But, it wasn’t very long after that that most of them had passed. Yeah, it’s still a wonderful thing to celebrate. Go out and do that kind of stuff and maybe Social Security will make the difference between your being able to go out and have a birthday cake with your friends and not.


Good. What do you think, Mary Beth, is the number one mistake that most women make when they get to the age where they’re eligible for Social Security versus full retirement age?

Well, I think part of our cultural mindset was always claim benefits at 62 as soon as you can. A decade or two ago, that probably made sense because people often retired at 62 with a pension. It made sense to claim Social Security benefits and frankly people didn’t live as long in retirement as we’re likely to do today. But things have changed dramatically particularly the fact that many people are working beyond traditional retirement age, beyond 62, beyond 65. And, what so many people don’t realize is that if you claim Social Security benefits early and you continue to work, meaning, you have earnings from a job, those Social Security benefits could be temporarily reduced or eliminated if you earn too much money. In 2017, too much money is defined as $16,920 a year. If you earn more than that while you are collecting Social Security benefits before your full retirement age, you are going to give some benefits back.

Now, once you get to your full retirement age, which is currently 66, any benefits you lost to the earnings cap are restored in the form of higher monthly benefits going forward. But, my number one rule is if you plan to keep working, it generally does not make any sense to claim Social Security benefits early.

My thoughts exactly.

I’m so glad we’re in agreement.

Oh, yeah. I don’t think people understand that part about the reduction of their benefits if they work because they think… I just think it’s just again, as you said, part of the cultural myth I think, urban myth, whatever you want to call it, that, “Oh, I’ll take my Social Security at 62 and I will work full-time or a part-time to some degree.” But you can’t because you’re only punishing yourself if you do that and people don’t know that.

Some people, when they’re dealing with government agencies, think, “Oh, I’ll just put a fast one over on them.” When I claim benefits early at 62, Social Security will generally say to you, “Do you plan to keep working?” Well, my reaction is don’t lie. They do talk to the IRS. They may not catch up with you immediately but they will eventually. At that point, you’re going to have to pay the money back and it could be a whole lot of money at once. Don’t put yourself in that awkward position.

First of all, if you plan to keep working, you probably don’t want to claim Social Security early. And, if you do and continue to work, be upfront with your estimate of how much you think you will earn.

Yeah. Is there really any accountability for that? If I’m sitting there with the person from Social Security and they ask me that question and I say, “Well, I think I might make forty or fifty-thousand on a part-time basis.” What difference does that make?

Well, it makes a big difference because based on your estimate, they’re going to say, “Okay. You’re $13,000 over the earnings limit for the year and you’re making… You’re supposed to get $1,500 a month in Social Security benefits so we’re going to withhold the first 10 months of your benefit to satisfy that earnings cap and then we’ll pay your benefits in November and December. If we withheld too much or too little, we’ll figure it out next year.” You don’t want that to go on for a couple of years and you hadn’t told them. Two or three years later, they come to you and say, “You owe us $33,000. We’d like that in a lump sum.” Where are you going to get that money? They always get their pound of flesh one way or the other. Honesty is best policy in this case, and you can avoid the entire problem by simply not claiming your benefits early.

Wait until you either retire or go to part-time work when you’re not making that much money. Or, here’s a really important fact. When you reach your full retirement age, as I mentioned, it’s 66 if you were born between 1943 and 1954, when you reach your full retirement age, the earnings cap goes away. Why not make it simple? Wait until you reach your full retirement age to claim Social Security benefits.

Yes, exactly. I think that’s very well said.

Here’s the really tricky part that confuses a lot of people. The full retirement age for Social Security benefits is 66. It’s gradually increasing. In fact, people who turn 62 this year in 2017 or later are subject to a higher full retirement age. Someone who turns 62 this year, full retirement age is 66 and two months, and it will gradually increase until people who are born in 1960 or later, their full retirement age is 67. But, here’s the conundrum, to sign up for Medicare is still 65. People get really confused. Should I sign up for Medicare at 65 but, oh, I should wait until 66 or later for Social Security? It’s understandable why people are confused.

Yeah, I think the interesting thing for me when I signed up for it, for Medicare, I am not drawing my Social Security benefits now, but the problem was when you sign up, it was just so confusing because so many people set it up so that the premiums were coming out of their Social Security benefit. If you don’t have that, then you have to pay for it yourself. I think most people are under the impression that that just is automatically taken care of.

That’s correct.

That premium is taken care of and that’s not right.

Only if you are—

That’s another one of those things.

Only if you are collecting Social Security benefits can your Medicare premium be deducted from those benefits. If you are enrolled in Medicare and not yet collecting Social Security, you have to pay that out of pocket usually on a quarterly basis.

A lot of interesting things you learn when you go through it yourself.

Experience is an amazing teacher. In fact, my husband just turned 65 in March, and I’ve written a series of columns that I call Dispatch From the Retirement Front on what it is like living with my retired husband and all the decisions we’ve had to make along the way. In fact, he was in an unusual situation in that he is a federal retiree, a federal employee who is retired so they get to keep their retirement health benefits, and not all federal retirees enroll in Medicare. It’s a choice and it’s a choice we decided to make but it was complicated to say the least.

I wrote a column that said, “He turned 65. I threw him a surprise party. He was surprised. Everyone had a great time. End of story, I thought. Oh, now we have to enroll in Medicare. Oh, now we have to call the health insurance to tell them about Medicare. Oh, while we’re at it, let’s check on those wills and trust. Wow, it’s been 15 years since we updated that and our kids who we appointed guardians for are now in their 30s. It’s time to update our plans.”

You opened the virtual Pandora’s box with that.

Exactly, exactly.

That’s funny and I was going to say, congratulations. It’s only 15 years when people are looking at 25, 30 years.

Exactly. The other key is our siblings who we trust and love and we had appointed as our executors are now in their mid 70s. Now the irony is we’re looking at our children who are now in their 30s to be our executors instead of having guardians for them so life marches on.

What a difference that 15 years makes, really. Let me switch this around for a little bit here. I’m very curious to know your background and your experiences with money. Let me start by asking you what was your family like when you were growing up?

I actually grew up in suburban Philadelphia. I know that you’re broadcasting from that area. I was the youngest of five children. In good Catholic families, my oldest brother was 18 years older than I was. My earliest memory of him was he was married and living elsewhere. I couldn’t get it in my head he was actually my brother because brothers lived in your house and this person was married and lived some place else.

But, back then, I was born in 1954 so mainly the ’60s are what I’m thinking about growing up, pretty much our family did not have credit cards. It was a cash existence. I can remember Friday nights my father coming home from work and my mother and I would go with him to the grocery store. The money that came out of his paycheck was buying the groceries that week. It was very much you didn’t spend money you didn’t have.

Right. Yeah. I think most of us lived in that world. The whole concept of credit cards, it really has a black mark on the kind of currency that we would use in order to purchase things. I remember the first time my mom…she called it a charge card. That’s what it was called at the time. We would go to one of the local department stores with the charge card, and we were only allowed to have a certain limit to it. Then the bill would come at some point in time and she would pay the bill but there was never any presumption that you would carry balances from month to month. That was just unheard of.

Exactly. In fact I think in those old days, you couldn’t. It wasn’t an option.

I think you’re right.

It was a convenience that you could charge it. When they sent the bill, you would pay it in full, but I don’t think it was an option to carry a balance back then. When you think about it, we can talk about all the different changes of how Americans are responsible for their own retirement and the shift from pensions to 401(k) plans. But, I think the big difference between our parents’ retirement and ours is they didn’t have credit card debt, and there are so many people that would be so further ahead in their retirement savings if they weren’t paying off those credit card debts.

Yup. Absolutely. I agree with you. I think that it’s not just so much that it’s a credit card debt, but it’s the habit behind it that’s hard to break.


When people consider credit cards as an extension of their income, that’s where they get into trouble. I don’t know how we change that because when you look at all of the commercials that are on television with all the different companies that want you to get their credit cards, and how easy they make it to get the credit cards, and how convenient it is for you to use it everywhere instead of money, it makes it very difficult to try to change that habit literally and figuratively.

I think what’s unfortunate, there was a bit of a move a few years ago for people to raise their consciousness about their money handling abilities. A lot of people were switching to debit cards so they really couldn’t spend more than was in that account. But, then there was various identity theft and hacking, and people’s bank accounts were compromised. I think it scared people off from using debit cards.

You’re right. Then the other side of that was that with credit cards, even if your credit was stolen, you were only liable for a certain amount.


That wasn’t the case with debit cards.

Not the case with debit cards.

It did not happen. Let me ask you another question about your life with your siblings. What lessons about money did you learn when you were growing up?

Well, I was the baby of the family. It was interesting, I was reviewing your questions in advanced, trying to picture what is my earliest memory of money. It’s funny. I’ve gone to Catholic school and I can remember that during Lent preceding Easter, we were encouraged to save money and give to charity. We used to have these little cardboard coin holders where you would put the dimes in the cardholders as a donation to a certain charity. That is honestly my first concrete memory of money is charitable contributions.

I remember those. You just reminded me of that. I forgot about those. Yes, it was such a great sense of accomplishment when you put that last dime in that thing.


That was great.

I can think back again. Do you remember S&H Green Stamps?

Oh, yes. Oh, yes.

When your mother would go shopping at the grocery store, you would get sheets of stamps that you could then paste into these coupon books and your tongue would turn green. It was sticky, minty flavor, and then you could turn these many, many books of stamps in for some sort of prize or whatever. I remember I wanted a guitar so badly but I only had enough stamp books for a ukulele.

That’s funny. I remember that to the point where I was told that I could only go to stores that gave the S&H Green Stamps because forget the rest of them. That’s it. It had to be. That’s a great memory. I forgot about that.

I guess early memories… Now, predating me, I can remember my mother and aunts talking about… I guess it was during World War II. To encourage women to go to the movies, they would give away dishes or something like that.

Oh, yes. It was dishes. Yes.

I grew up in the era of opening bank accounts where they would literally give you a toaster. There was certain incentives I think tied to my early memories of money.

That’s right.

I guess that’s why I like to shop at T.J. Maxx and Marshalls now.

Good plug for T.J. Maxx and Marshalls. When you were talking about the plates and the movies, it reminded me that my husband’s mother did that all the time. We have 10 to 12 dinner plates, all different kinds of whatever the series was that was… You go to the movies and you get these plates, and we had cups, and saucers, and all this stuff. I just said to him, “How did she get all these?” Because it wasn’t something that was local. I didn’t do anything like that nor did my mom. But, it was something that was in some of the bigger cities. He grew up in Brooklyn so New York, obviously, they had that stuff at everyone’s theaters. I thought that was one of the coolest things ever. That’s how you get your whole kitchenware. You were entertained at the same time. Wow, what a deal. Yeah, that was good. What would you say has been the most threatening to your financial security?

Let’s see. I’ve been very fortunate all my life to have worked all my life. From the time I was in high school and college, I always had summer jobs. I was out of college two weeks when I had my first permanent job. It always felt I had stability in that sense. I was a journalist. I married a journalist and we had a child. And, we bought a big new house to be near his new job, and he lost that job the following month. That was the first time it was really scary. Oh, this is not as we planned. But, to his credit, he started his own business as a public relations consultant and was very successful. I guess that was the frightening part. We could lose it all. But, we were fortunate that we found a solution to make it work.

Why did you decide to get a CFP?

That’s interesting. As I said, I’ve been a journalist all my life generally writing about money. When I was at Kiplinger’s Magazine for 13 years, we were always specializing in those real people stories. I wouldn’t just talk about saving for retirement. I would find people who could do it successfully, and I often found those people by talking to financial advisers. Hey, this is great advice. Could you put me in contact with a client who would be willing to tell their stories? Frankly, I was so impressed with how financial advisers helped people. I thought, “I’d like to do that.”

I also noticed, excuse the plug, but there was different qualities of financial advisers, and I was very impressed by those who held the CFP, the Certified Financial Planner certificate. I decided that I wanted to get that designation, not that I ever wanted to advise people one-on-one, but I thought it would make me a better financial journalist.

I wanted to do the course in person because a lot of it is online. When the University of Virginia opened a satellite campus one mile from my house and was offering the CFP certification program, I said, “OK, God. I get it.” I did one course per semester so it took me about two and a half years because I was working full-time, and then I studied for the 10 hour two-day test, and I studied for about three months to do that. I was very proud that I passed it on the first go round.

Yay, I did, too.

I’m very proud to say I am a CFP.

That’s great.

I do not take private clients but I find it is very useful. I’m on a plane almost every week going around the country preaching the ins and outs of Social Security to both consumer groups and to financial planning association chapters. I think having that CFP designation really makes me just a little bit more believable.

I agree with you. I think knowing that you’ve gone through the program and you understand some of the basics of what true financial planning is makes you a far more credible speaker on any topic, especially to your peers.

I’m not selling anything. I’m not signing you up for anything. I’m just trying to tell you what your rights are under the Social Security program, what might be appropriate depending on your circumstance and, most importantly, how it fits into a broader retirement income plan. Social Security alone is not enough to retire on, but it can be a very important piece.

I couldn’t agree with you more. Let me wrap this up by saying thanks so much to you. My guest today has been Mary Beth Franklin, author of a eBook called Maximizing Social Security Retirement Benefits available at investmentnews.com, and thanks to all of you in my Power Of The Purse community. I hope today’s podcast was helpful in enriching your understanding of money and how it can help you achieve your life goals.

If you’d like to spend 15 minutes on the call with me and ask me questions about your personal finances, please go to my website powerofthepursepodcast.com. Select the contact tab and find the time that works for you. Thanks again, Mary Beth Franklin, for sharing your time and knowledge. Let everybody know how they can reach you.

You can send me your questions to mbfranklin@investmentnews.com. That’s my first two initials, last name, mbfranklin@investment, that’s singular, news is plural, dot com.

Who knows? You might be another one of her columns. Feel free to call. Thanks again. Until the next time. Thanks for listening and remember money is not the enemy. Your ignorance of it is. Thanks and goodbye.

How to contact Mary Beth:


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