Episode 94: Get the Most of Your Social Security Benefit with Mary Beth Franklin
In this week’s episode, Lynn sits down with renowned journalist, Social Security expert, and Retirement Professional, Mary Beth Franklin, CFP to discuss getting the most out of your Social Security benefits.
As an award-winning journalist for over 40 years, including a stint on Capitol Hill for United Press International, Mary Beth has written about big-picture policy issues, such as the federal budget and tax legislation, as well as consumer-focused personal finance advice articles on how to maximize Social Security benefits, minimize tax bills, and enroll in Medicare. She spent 13 years as the tax and retirement editor at Kiplinger’s Personal Finance magazine and subsequently educating financial advisors as a Contributing Editor at Investment News. At Kiplinger, She also edited the annual Retirement Planning Guide and monthly Retirement Report newsletter.
In 2016, she received the prestigious Jesse H. Neal Award for Best Instructional Content for her article “Demystifying Social Security.” That same year, she received a Hero Award from the Women’s Institute for Secure Retirement (WISER) for her educational efforts to improve retirement security for women.
In 2021, Editor and Published presented her with an EPPY award, citing her “On Retirement” column as the best business blog of the year. In 2022, she received the runner-up EPPY award in the same category, and she also received the Investment News Trailblazer award for her contributions to the retirement income planning profession as part of Investment News’ annual Women to Watch event.
You can find out more about Mary Beth Franklin and her services at https://marybethfranklin.com/
Episode 93: Talking Work Life Sway with Retiree Jeanne Thompson
In this week’s episode, Lynn sits down with Jeanne Thompson to discuss work life balance towards the end of our careers. Jeanne Thompson is an author, speaker, transformational coach, former Fortune 50 HR executive, and now a retiree. As a Certified High Performance Coach (CHPC) trained by the High Performance Institute, founded by Brendon Burchard, and a Rapid Transformational Therapy Practitioner (RTTP), Jeanne partners with individuals, teams, and audiences in service of working to make them the best version of themselves they can be.
10 Steps to a Successful Retirement
Hello and welcome to this week’s episode of the Her Retirement Podcast. Welcome to Financial Literacy Month. I had no idea, and shame on me, but I have a valid excuse because I was caring for my mother, and she passed away on April 2nd. So the last few weeks have been somewhat of a blur, and lucky for me, my significant other had a full knee replacement two days ago. So yes, I have been on nursing duty, and I’ve kind of had my head under a rock, so to speak. But guess what? I came up from below the depths of nursing and a little bit of, or a lot, I should say, grieving. And now I’m just trying to look on the bright side and find the sun and happiness in life. And lo and behold, it’s financial literacy month, and I am all about financial literacy, particularly for the phase of life called retirement, however, you define retirement.
So I want to talk a little bit about that today. In today’s podcast, go over some financial literacy resources that I have on my website and talk about my new book and my masterclass coming up on May 4th that I would encourage you to come to. It’s a 90-minute class, which I’ll talk about in a few moments. But before I jump into the resources that I offer through the Her Retirement platform, I wanted to talk about the ten steps to a successful retirement. And this is actually a guide that I have on my website. So you can go and read the guide after you listen to me talk through the guide, and hopefully, that reinforces these steps for you listening, reading, and then taking action. So are you approaching retirement? Well, you’ve probably been planning for retirement in some way, shape, or form, I would think, for many years.
Maybe you’ve participated in your employer’s 401k; maybe you’ve contributed to a traditional or a Roth IRA. Maybe you’re fortunate enough to work for an employer that offers a pension plan. Although, although we are seeing those fewer and farther between, these are all important retirement income planning actions. And I think when we first set out contributing to these programs, at least I know when I was 20, I knew it was kind of for this later period in life called retirement. But I didn’t totally grasp the concept of taking that retirement plan and turning it into an income. And even ten years ago, prior to getting into this industry, I hadn’t really put that all together, you know, put all the pieces together. But as you get closer to retirement, it’s important to plan in more specific detail. And that’s why I created my platform because I want more women to take action and plan their retirement.
Don’t let it just happen. Retirement or that phase of life happens, you can be more proactive, and you can be a planner for that period of your life. So the question is, how much money will you have coming in the door every month when you retire? Is that money guaranteed, or could it fluctuate? How will you spend your time? How will you spend your money? Asking yourself these questions will help you nail down the answers to more important questions. Will you have enough income to cover your expenses in retirement? And if not, what can you do to resolve the issue? The sooner you answer these questions, the more effectively you can plan to cover any shortfalls or what I refer to as gaps. An insurance agent certainly could review your income needs and develop a plan for your future retirement income. A retirement advisor could be a financial advisor, A C F P.
There are so many different options, I have some opinions about that too. Definitely reach out to me before or while you’re engaging with some other advisors because, as you may or may not know, I co-own an advisory practice called your Retirement Advisor. And I’d certainly be willing to connect you with the fine people over at your retirement advisor to yet. Retirement advise. I focus more on retirement education and personal financial coaching. You can also do quite a bit of planning on your own if you feel up to that task of getting yourself educated. It’s about how much time you wanna spend getting educated and doing it yourself. It’s all about getting educated and doing this yourself. I’m going to give you ten questions that I want you to ask yourself. They’ll help identify areas of concern and help you develop action plans to resolve those issues. So number one is how much-guaranteed income do you have?
This is the problem. It’s always best to start your planning with those things you are certain about. There are some forms of income that are fixed and guaranteed. You know, you’ll receive the income, and you know generally what the amount will be. This income doesn’t fluctuate based on things like stock market volatility or interest rate changes. Knowing your base of guaranteed income will give you an idea of whether you have enough money to cover your most urgent expenses. And if you’re fortunate enough to have a significant amount of guaranteed income, you may have a good foundation from which to build. If not, you might have to do some extra planning. The three most common sources of guaranteed income are pensions, social security, and fixed annuities. And, of course, pension benefits are partially protected by the Pension Benefit Guarantee Corp, which is a federal agency. Guarantees provided by annuities are the responsibility of the issuing insurance carrier.
And of course, social security does face some financial challenges in the future, which we hope they’re going to be addressed by our government, but it’s still quite likely to be a reliable source of income for those who are approaching retirement. And the Social Security Retirement Trust fund is projected to run out in 2033, but even after that point, it will offer benefits. And, of course, you know it’s a good idea to have a Plan B, so you’re not totally relying on social security. So what you should do is really take a look at everything you have, all your sources of income, you know, including those pensions, social security, and any annuities, and determine your estimated guaranteed income from those sources. And if that information isn’t easy to find, we can help you do that. And, of course, as if you’ve listened to any of my podcasts in the past, my software platform helps you organize all of those guaranteed income sources.
The software adds all those sources up, and then it’s going to take a look at your expenses that you enter into the system, and it’s going to help you identify that gap so you don’t have to be scratching on a piece of paper or figuring out an Excel spreadsheet. My software is super easy to use, and I encourage you all to check that out. Number two is the pension payout that you should select. When it comes time to choose your pension benefit, you’ll be offered several payout options, and it’s tempting to take the highest-paying one, but that might not be the best choice. And in addition to the amount of the payout, you also need to consider what happens to the payout when you pass away. Most pensions offer joint and survivor options, and under this plan, your spouse would continue receiving a portion or even all of your pension payment after you pass away.
So selecting a joint life option over a single life payout likely will lower your benefit amount. However, your spouse may need that income to live off of if you pass away first. And this is often more of the issue with the man because men tend to pass away prior to their female spouses. So get all of your options from your employer’s Human Resources department in advance of your retirement. This will give you time to review your choices and figure out what’s best for you. Number three, when will you receive your guaranteed income? Once you’ve totaled up the annual amounts of your guaranteed income, you’ll receive, you need to determine when you’ll actually receive the payments. This is especially true if you don’t have much in savings and you’re operating on a fixed budget. Not getting a payment when you expect it could send you into a cash flow crisis. In retirement, it’s all about cash flow.
You need to know your cash flow, which is your income in and your expenses out, and identify your gap before you get there. So you need to make sure you know when you’ll receive the income so you can plan your income and expenses on a monthly basis. Social security for instance usually pays benefits monthly, and the exact day of the month depends on your date of birth. Pensions could pay quarterly, monthly, or even biweekly. And the payment frequency for an annuity could also vary. So make sure you understand when you’re going to receive that income. Number four, which I touched upon just a moment ago, is your expenses. How much will you spend in retirement? Many Americans, trust me, many Americans underestimate how much they’re going to spend in retirement. They assume they can get by on a percentage of their current income, like 70 or 80%.
However, having free time in retirement can lead to some heavy overspending. Once you’re retired, your schedule will be freer to potentially dine out, go shopping, take up costly hobbies, and spend money on your kids. For example, you might wanna travel more than you did when you were working. Many people also fail to consider healthcare medical expenses. You may feel healthy now, but you’re likely, you know, let’s face it, you’re likely to face health issues as you age. If you need in-home care or treatment in a facility, you can expect to pay a large amount for that care. So what you need to do is analyze what you spend today so you can better plan for spending in retirement and have a better estimate. You can break down your spending between required and discretionary expenses. And another plug for my software, I have a smarter spending tracking tool.
You can track your pre-retirement expenses, and you can pr, and you can track your retirement expenses. So one of the cool things is it has all the expense categories. You can fill in some expense categories if we’ve forgotten some, and you can really get down to the nitty-gritty of your spending. You can be a smarter spender pre-retirement and in retirement and get a really, really good estimate of those retirement expenses. To analyze that all today. Break down your spending again between those required and discretionary expenses, and then you can determine if you’re going to have any gaps. Number five, do you have enough guaranteed income to cover your required spending? This is a big question. It will help determine how much additional planning you need to do. How much of a gap do you need to figure out how to fill? If your guaranteed income exceeds your required spending every month, then you at least know that you have enough money coming in to cover the basic expenses and maintain a comfortable lifestyle.
However, if your guaranteed income is less than your required expenses, you might have some difficulty maintaining your quality of life. That’s especially true if you don’t have a nest egg and non-guaranteed sources like a 401K or an ira. You may have to implement strategies to help you cover the shortfall. So sit down with somebody like a retirement advisor to review those guaranteed income sources and your expenses and any potential gap. Doing the gap analysis is so very important. It’s one of the things I talk about in my book, and in my class, in my software is really a gap analyzer and a risk mitigator. Two very, very important things to do in retirement. Number six, what to do if you’re short? You know what, what to do if you have that gap? Well, and in an ideal world, your guaranteed income would exceed or at least match your required expenses, like those non-discretionary things like housing and transportation, and food.
You could then tap into your nest egg, your 401k, your ira, you know, any stock that you hold. You could tap into your nest egg for those discretionary expenses and for any unpredictable expenses like medical and healthcare. However, if your guaranteed income doesn’t exceed your required expenses, you do have options. You need to either find a way to reduce your required expenses or increase your guaranteed income, or there’s a third way they are called heroes, her efficient retirement optimized strategies. And these are some very unique strategies that I do talk about in my masterclass that can help you cover a gap. So before you panic about a gap, you need to consider these little-known heroes to help you close the gap. Some people say, oh no, I have to go to work. Well, guess what? One of these strategies might help you avoid having to work if you choose or aren’t able to work.
These strategies are very important. So come to my May 4th live masterclass and learn about these heroes. Next, number seven, what if cutting expenses doesn’t do the trick? Well, you know, I just kind of explained a little ahead of the game here. If cutting expenses doesn’t do the trick, you can look at these strategies called heroes. You know, it would be great if you could cut your expenses enough to get under your guaranteed income level. It’s not always reality, though. And there are some minimum expenses you just have to pay. So what can you do in addition to considering these heroes? Obviously, you could work part-time to bring in more money, but that might not be conducive to your schedule, your desires, and your health. Another option is to increase your guaranteed income. There are a variety of investment in insurance vehicles that can generate guaranteed income.
They come with their own benefits, costs, and risks. So it’s always important to consider your options carefully before committing to anything. So again, definitely check out my May 4th live masterclass so you can learn about these strategies to help close the gap. Number eight, what to do with the rest of your nest egg. So once you’ve balanced your guaranteed income and required expenses, you can start planning on how best to use and invest the rest of your next nest egg. So, in this case, you have a gap, and you’re trying to figure out, okay, I’ve got, you know, this lump of money here over in my nest egg. I’m going to see how I can use that to cover my gap. But there are very efficient strategies that are covered in heroes that can help make that money in that nest egg more efficient and sustainable, right?
So rather than just rolling over your 401K and then using it to cover your gap, you definitely wanna get yourself educated on what are some ways to make that money last longer. It’s like squeezing more juice out of the lemon, okay? Also, you need to keep saving for the future if at all possible. You could be retired for several decades, and you’ll likely see prices go up and down during that time due to inflation. As we all know right now, you may also need to tap into additional savings to help pay for healthcare in the future. Retiring doesn’t mean you stop saving and investing, okay? On the contrary, it may be even more important than ever to have a well-thought-out but risk-protected investment strategy. So, you know, you’re not gonna take all of your nest egg at once, right? It’s, it’s gotta stay invested in making it more sustainable.
But there are some very important strategies to make sure that it can be sustainable without having too much of it At risk. To avoid market volatility, you really have to strike a careful balance between funding today’s discretionary expenses and saving for those unplanned expenses down the road. So really important to talk to experienced and knowledgeable security licensed financial professional, i.e., a retirement advisor, that can help you determine the appropriate risk level for you. And then, design an allocation for your investments that meets your needs, your risk tolerances, your personality, your preferences, and your goals. So very important. And number nine, what happens when you pass away? You know, no one likes to think about this, but when you’re planning for retirement, you’re usually not just planning for yourself. You may have a spouse who will need financial support after you’re gone. And as I said before, this is more likely for men because they typically don’t live as long as their female spouse.
But you may wish to leave money to children or grandchildren. And what is the most effective way to do that? Well, leaving a financial legacy really starts with early planning. You need to prioritize your wishes with a spouse, you know, try to get on the same page for all of this, actually. And if supporting a spouse is a primary concern for you as a couple, and all the other goals are secondary, you need to put that on paper in writing. And it’s easier to make estate planning decisions when all your goals are really clearly communicated and stated and agreed upon. The problem is many people really don’t address this because they don’t like thinking about their own demise, and it’s normal, but you have to get past it to really accomplish those legacy goals. So schedule a time to talk to an estate planning attorney or to your retirement advisor, and of course, with your significant other and family so that you can have a plan for any money and other things that you choose to leave to those you love.
And finally, number 10, what happens if you can’t make decisions for yourself? This scenario may also not be a pleasant one to think about, but it’s a reality for many people. Dementia, Alzheimer’s, and other diseases can rob many people of their ability to make and communicate decisions later in life. So the sooner you try to make those decisions and put them in writing, the more important it is. And although you might not be able to stop the disease, you can take steps to protect your assets, your income, your legacy, and those you love. Problems do arise when there are no clear goals or wishes stated in writing. Trust me, I know I’ve been going through this with my mom’s passing. Luckily, she was very organized. She had everything clearly written down, even written down to the point of saying, I want Lynn, my daughter, to have my mother’s tea wagon.
So she even has a playlist that she left us. God bless her soul, she was just an amazing planner, and she was brave enough to face the thought that someday she wouldn’t be here. And she made her wishes very clear. Various family members, you know, may try to make decisions often with good intentions, but those may go against your wishes. So you really, really need to kind of, as I say, suck it up and do the planning. The best steps you can take are to put as much information as possible in writing. Various power of attorney documents can designate who can act on your behalf if you’re unable to make these decisions. And if you would like to have access to some trust and will estate planning resources that are extremely affordable because they’re offered virtually online, just reach out to me, and I can connect you with those resources.
So as I like to say, you know, your main takeaway from these ten steps is that a happy and successful retirement starts with planning efficiently. You know, and sufficiently by planning early, you’re gonna give yourself the opportunity to take action and address potential issues before they become your reality. And you can start the planning process by sitting down and either, you know, writing down new goals. Yeah, you could use a spreadsheet to run the numbers. I always say this is all part numbers crunching and part soul searching because you’re gonna do a little bit of both when you’re doing this planning. And you know, again, I have this software platform that I’ve worked on for the past three years that can really help organize and get everything in a format that’s both consumable and easy for you to work with. And the software is going to identify those gaps automatically for you.
So you don’t have to do any math <laugh>, I don’t like math. So the software is gonna come back and analyze those gaps. It also educates you so you know not only do you potentially have some financial gaps, but you may have some knowledge gaps. And that leads me to some of my resources. So I mentioned the software, which you can check out on the website. I mentioned my May 4th live masterclass. It’s a 90-minute pretty new content that I’m putting together, and I’ll be ready for you on May 4th. You can go to her retirement class.com to sign up for that. And you can just go to Her retirement website to check out the software. I do offer a membership program, and in the membership program, you get access to a whole bunch of resources in addition, addition to the software. So you can check out the Her Retirement Membership program.
You can also check out my new book, that’s on Amazon. It’s the first one, and it’s called The Big Book of Retirement Questions and Answers. And you can go to her retirement book.com to check out that book. It’s about 90 pages, and it’s 15 different categories with common questions that I’ve heard about retirement from people over the last decade. So hopefully that gives you like, oh, I’ve thought about that question before, and what does the research and what do the experts say on how to, you know, answer that question. So that’s kind of the format of that book. It’s actually a nice compliment to my full six-hour masterclass. And there’s a learning center on my website where I have lots of videos and guides that are free for anyone to watch and download. So I do try to offer a lot of content. Obviously, you’re listening to this podcast, which I do each and every week.
I’m on social media; I do a ton on TikTok, so yeah, I’m just putting a lot of content out there for free. And then I do have the Her Retirement Masterclass on demand, and that is a six-hour class that you can get on demand. It does cost money, but it’s not a lot, and it’s well worth it because when you know more, you can have more. And I believe that financial literacy can be a woman’s superpower. Like I, I wish I had fully embraced this superpower when I was younger. It’s one of the things that I regret. I did a little, you know, but I could have done more. But there’s so much more conversation about this. Women just need to make a commitment and understand that this really, really isn’t all that hard to understand. You just have to make a commitment to it, right?
It’s just like committing to being healthier and eating right. You just have to make a commitment, a time commitment to getting financially educated to being more financially literate because knowledge is power, and I believe that you can know more and have more and have a healthier, happier, and wealthier retirement when you take the time to get educated. I’m not saying that you have to make your own plan, but when you get educated, you can make more informed decisions, you can have more informed conversations, and no one will ever sell you anything, right? The worst thing is to buy something you don’t understand or to be sold, something that will never happen when you get educated because you’ll know enough to ask the tough questions and to not have the wool pulled over your eyes. And yes, I do believe that you need help. In some cases, you might DIY this; you’re certainly welcome to do this.
You can learn, you can plan, and you can implement on your own. There are resources to do that. For me personally, you know, I was always of the opinion that I had so many other things that I wanted to spend my time on, namely my children and raising them in my career that, you know, I said I’m just gonna hire someone to do all this other stuff for me, this financial stuff. So getting a financial plan and having someone else paying attention to it can free you up to do other things. But I do encourage you to make sure that you understand what you need to do for retirement. Like what are the components of a retirement plan? I just went over a bunch of them. There are so many other things that you should make sure that whether you’re doing it yourself or you’re working with someone that they are covering all your bases, making sure that each component of your financial life is covered.
And then you got all the non-financial stuff, which I talk about also in my six hours on demand, her retirement class. I’ll touch a little bit on that on May 4th. But the May 4th class is really about the financial aspects of retirement planning. There’s a whole nother set of issues for the non-financial part of retirement planning. So anyway, thank you so much for listening to this week’s podcast. I hope that you reach out, check out my book, leave me a review on Amazon; that would be awesome, and try to attend the May 4th live class. It’s 90 minutes, 6:30 PM Eastern Standard Time. And if you can’t make it, I encourage you to keep interacting with my content, join my private Facebook group, her retirement, whatever it is. Just keep learning, ladies, okay? We can do this. The best investment you can make is in yourself. And speaking of investing, I do have a separate class, and I’m investing that I’m about to launch, and I’m gonna let you know about that because investing for retirement is so very important. All right, ladies, I’ve done enough gabbing here for this particular episode. So thanks for listening. Here’s to knowing more, having more, and getting her done.
SVB’s Collapse and What It Means for You
Why Did Silicon Valley Bank Fail?
SVB, the 16th largest bank in the U.S. and heavily skewed toward serving companies and individuals from the technology industry, faced significant challenges amid a tough phase for tech firms and the Federal Reserve’s move to increase interest rates. The bank, like others, invested billions in safe investments, such as Treasuries and bonds, whose value began to plummet due to higher interest rates. Typically, banks aren’t required to report the loss in the value of bonds until they sell them. However, with the bank’s customers (primarily tech-focused startups) withdrawing deposits, it was forced to sell a substantial portion of its bonds, leading to huge losses. As news of the withdrawals spread, it worsened the situation, ultimately leading to the bank’s insolvency marking the second-largest bank failure in United States history and the largest since the 2008 financial crisis.
What Did the Government Do in Response?
In response to the recent bank collapses, the US government has taken steps to guarantee deposits in banks, including Silicon Valley Bank and Signature Bank, beyond the $250,000 insured deposit limit. This move is critical because many of Silicon Valley’s tech-focused clients had deposits beyond the limit, and as much as 90% of the bank’s deposits were uninsured. By guaranteeing all deposits, the government aims to prevent bank runs and to reassure businesses and individuals of the safety of their deposits. Additionally, the Federal Reserve has launched an emergency lending program to provide banks with the necessary funds to cover customer withdrawals without resorting to bond sales, which could threaten their financial stability. The program has no borrowing limit, but banks will need to provide collateral to borrow money. The primary aim of the program is to reassure the public that the government is committed to protecting their deposits and will lend whatever is needed to ensure their safety.
How is this Program Designed to Work?
In contrast to its convoluted efforts to rescue the banking system during the financial crisis of 2007-08, the Fed’s current strategy is much simpler. They have established a new lending program called the “Bank Term Funding Program,” which will provide loans to banks, credit unions, and other financial institutions for up to one year. The banks will be required to put up Treasuries and other government-backed bonds as collateral. The Fed is offering favorable terms, with a low-interest rate that is only 0.1 percentage points higher than market rates and lending based on the face value of the bonds rather than the market value. This provision will enable banks to borrow more funds as the value of the bonds has decreased on paper due to rising interest rates. According to the FDIC, US banks held securities with approximately $620 billion in unrealized losses at the end of last year. If they were compelled to sell these securities to cover a wave of withdrawals, they would suffer significant losses.
What Does This Mean for Consumers?
According to Mina Tadrus, CEO of investment management firm Tadrus Capital, the failure of banks like SVB and Signature can have negative impacts on both customers and investors. These include a decrease in overall account settings, liquidity issues when needing quick access to funds, and potential difficulty transferring funds to other banks depending on withdrawing or transfer limits. Additionally, hedge fund firms that use these banks for operations may experience losses that could spread into a wide array of businesses in the financial sector, causing instability within institutional banking systems. The effects of these failures extend beyond depositors, as seen with online marketplace Etsy and venture-backed retailer Camp, which both experienced delays and encouraged purchases to stay afloat. The collapses also caused anxiety among consumers and small business owners and halted trading in several bank stocks due to volatility. However, President Joe Biden sought to reassure Americans that their deposits are safe, and the Federal Reserve has implemented measures to prevent future collapses.
What Will This Cost Taxpayers?
Both insured and uninsured deposits at the two failed banks will have access, but taxpayers won’t bear any losses, as both the FDIC and President Biden mentioned on March 13. Instead, banks will pay for the funds through the Deposit Insurance Fund, which consists of premiums banks pay quarterly for deposit insurance coverage. According to Treasury Secretary Janet Yellen’s testimony ahead of the Senate Finance Committee hearing on March 16, the funds to cover deposits at the two banks will come from fees imposed on banks. Emergency actions were taken by the Fed and the Treasury on March 12 to ensure public confidence in the banking system, as maintaining access to deposits and credit for consumers and small businesses helps to foster strong and sustainable economic growth, the statement said.
So I Don’t Need to Panic?
No. It is reassuring to note that most investors need not worry as the current situation does not demand immediate action. At this time, most experts will advise that the best strategy is to do nothing. The equity market, particularly bank stocks, may be affected in the short term, but a repeat of the 2008 financial crisis is unlikely. Regulations put in place since then ensure that banks hold capital buffers to protect against systemic risks. However, it is vital to be aware of significant aspects related to the rapidly changing situation and how it could affect your financial plan.
As always, feel free to reach out to us if you have any questions or ideas regarding your financial objectives.