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How You Can Prepare For Retirement by Don Chamberlin

How You Can Prepare For Retirement

Financial security isn’t something that doesn’t just happen.  You might get lucky, but it’s something that takes planning, commitment and money.  Fewer than half of Americans have calculated how much they need to save for retirement.  30 percent of private industry workers in 2014 with access to a defined contribution plan didn’t take part.  Yet it’s something you need to prepare for; the average American spends about 20 years in retirement, a fairly long time.  I recently came across an article that shares 10 ways you can prepare for retirement, listed below:

Start saving: Start small if you have to, then try and increase how much you save each month.  The sooner you start saving, the more time your money has to grow.  Devise a saving plan, stick to it and set goals.

Know your retirement needs: Retirement is expensive; experts estimate that you’ll need at least 70 percent of your preretirement income to maintain your standard of living after you stop working.  The key to a secure retirement is to plan ahead.

Contribute to your employer’s retirement savings plan: If your employee offers a retirement savings plan, sign up and contribute as much as you can.  Over time, compound interest and tax deferrals make a big difference in how much you accumulate.

Learn about your employer’s pension plan: If your employer has a traditional pension plan, check to see if you’re covered by it and understand how it works.  If you’re going to change jobs, find out what will happen to your pension benefit.

Consider basic investment principles: Inflation and the type of investments you make play an important role in retirement.  Know how your savings or pension plan is invested; learn about your plan’s investment options and ask questions.  Put your savings in different types of investments, which will help reduce risk and improve return.

Don’t touch your retirement savings: If you withdraw your retirement savings now, you’ll lose principal interest and could lose tax benefits or have to pay withdrawal penalties.  If you change jobs, leave your savings invested in your current retirement plan or roll them over to an IRA or your new employer’s plan.

Ask your employer to start a plan: If your employer doesn’t offer a retirement plan, then suggest that it start one.  There are a number of retirement saving plan options available that can help both you and your employer.

Put your money into an IRA: You can put up to $5,500 a year into an IRA, and can contribute even more after you turn 50.  When you open an IRA, you have two options: a traditional or Roth.  The tax treatment of your contributions and withdrawals will depend on which option you choose.  IRAs can provide an easy way to save, and you can set one up so that an amount is automatically deducted from your checking or savings account and then deposited into the IRA.

Find out about Social Security benefits: Social Security pays benefits on average equal to about 40 percent of what you earned before retirement.

Ask questions: You can always know more.  Talk to your employer, bank, union or financial adviser.  Make sure you understand what they’re saying.

5 Key Considerations for Retiring As a Couple

5 Key Considerations for Retiring as a Couple by Don Chamberlin

When planning for retirement, there are a lot factors to take into account like the age at which you want to retire, the income you require, and the future expenses you foresee. When you’re planning on retiring with a partner or spouse, your partners individual circumstances, health, goals, savings, and debt can all simplify or (more likely) complicate your retirement dreams. It’s important to sit down and make a plan together that will ensure both of you are able to retire in the best manner possible.

With so much to consider, it can be hard to know where to start. To get you started, here are four important aspects to discuss and find alignment on.

Individual Goals

It’s surprising how most people don’t really think about how they want to retire until it’s about to happen. But it’s crucial that you have these conversations before you retire, otherwise you might not be properly prepared to support the retirement you want.

Begin by asking both yourself and your partner these basic questions:

  • When do you want to retire? (Does one of you want to keep working longer than the other?)
  • Where do you want to live? (And what is the relative cost of rent/goods there?)
  • How much do you expect your essential month-to-month expenses to cost (housing, food, utilities, entertainment, transportation, etc)?
  • What kind of lifestyle do you want to have? (Do you want to go out to dinners, movies, and shows regularly or do you plan on spending most of your time doing activities around the house?)
  • How much do you want to travel (for both adventure and family purposes)? (Do you have relatives you know you will want to visit that are far away? Do you have a list of countries you’ve always wanted to visit once you had the time?)
  • What kind of hobbies or projects do you want to start? (How much time/money do you want to spend on gardening, refinishing the house, fitness classes, etc.)
  • How much do you expect to spend on other people (gifts for family, educational costs of children or grandchildren, medical expenses of unwell family members, etc)?

Getting a better picture of how you expect your average day, month, and year of retirement to be will make planning for the financial realities of it much simpler. It will also help you prioritize what’s most important and know where to cut if you end up having to make some sacrifices.

Account options

Once you figure out the “how much” you need to figure out the “where.”

Being a couple, you may end up with more and/or better options that if you had been planning for retirement alone. If you are thinking of your retirement days as a partnership, then you should be thinking of your retirement savings as a partnership, too. Examine all your options from every angle.

Does one of you have access to a 401(k) with matching dollars? You just found your top priority (for the both of you!) If you each have access to your own, you probably want to contribute as much as you can to fully take advantage of both.

Next, discuss your other account choices: do either of you already have a Traditional and/or Roth IRA? Should you start one? Depending on if you are married or not, you may choose to allocate your funds in one fashion or another.

Factoring in your age now and your expected date of retirement, you should be able to figure out where your combined savings efforts will get you the farthest by the time you want to begin withdrawing funds. You should also get a better idea of how much of your individual incomes you will need to contribute to these accounts each year until then.

Taxes

Taxes are extremely important when you are considering to save collectively! You both need an individual and collective strategy in place for when and where to access your funds. Ideally, you want your retirement resources to come from a variety of tax treatment, such as tax-deferred funds found in plans like IRAs and 401(k), tax-free funds in Roth accounts, and even already-taxed funds in brokerage accounts.

This mix of distributions will minimize your tax burden and allow you to hold onto more for retirement.

Beneficiary designations

Here’s an important fact many people either forget or simply neglect: the beneficiaries on your retirement accounts and life insurance trump your will.

This means that if you go through a divorce, re-marry, and forget to change your beneficiaries, you could end up leaving a big sum to your ex while neglecting to take care of your current loved one as well as you could have.

Keeping your designations up to date as your family evolves over time is important.

Planning for the good and bad

No one likes tragedy, but unfortunately some things we simply can’t control. While no couple likes thinking of a day where they could divorce or one of them could unexpectedly pass away, preparing for the worst will make dealing with these situations in reality a lot less awful.

Planning starts with a simple, though sometimes uncomfortable, conversation topic: money. As important as it is to understand both you and your partners financial situation, more people than you think avoid ever talking about money. In fact, an astounding 43% of couples can’t identify their spouse’s salary.

While we may worry that discussing how much our spouse makes is somehow “rude,” it’s actually the financially responsible thing to do. In case tragedy hits, you must be aware of your spouses financial details, account logins, and paperwork, or you could be left alone and untaken care of.

Final Thoughts

Remember, through all of this planning: you are a team. The end goal is to make sure that both of you are taken care of in the way you want to be. Proper planning, compromise, and a common goal are going to be important for your retirement in the same way they are for your relationship in general.

Will your new business succeed?

Will your new business succeed- by Don Chamberlin

Is there such a thing as a proven method that can predict if a new business idea is any good with 100 percent accuracy? No. Investing in business ideas comes with inherent risk. That said, there are ways to mitigate that risk.

One of those ways is by studying the market – its needs, its flows, its history. Keep in mind though that if your idea is truly innovative, you won’t have anything truly comparable to juxtapose it to, which can mean great things for your idea but bad things for predictability.

One great example of this is Airbnb, a company currently valued at 10 billion dollars with 1.5 million listings all over the world. When Airbnb’s CEO Brian Chesky and his partners were starting out back in 2008, they were proposing a brand new idea: create an online platform where homeowners could offer their homes to strangers looking to stay the night for an affordable nightly fee. For some VC companies, Airbnb’s proposal was innovative and promising (profit wise), but for others the proposal seemed too risky (who would let potential serial killers into their house?) and doomed for failure. The line between genius and insanity is pretty thin, and the outcome for an idea like this seemed impossible to predict at the time.

Fortunately, things worked out in Airbnb’s favor, but all over the world, startups like Airbnb go through a similar process where investors simply can’t determine the probability of success.

Pian Shu, an Assistant Professor and member of the Technology and Operations Management unit at Harvard Business School, and her colleagues decided to try to tackle this problem in a new study.

Shu and her co-author Erin Scott from the National University of Singapore used the MIT Venture Mentoring Service (MIT VMS), a program that connects first-time entrepreneurs to successful businesspeople to develop their ideas. When an entrepreneur first applies to the program, a staff member writes up a short description of their business idea in a uniform format and circulates it amongst a pool of more than 100 mentors. Shu and Scott realized that they could compare the number of mentors expressing interest in an idea to the eventual success of that idea, hence discovering if there is in fact a formula that determined if the amount of interest in the idea has anything to do with predicting that idea’s true potential for success.

The first thing they noticed was that the mentors in the program had an uncanny ability to predict successful ideas. Numbers wise, the average venture idea attracted interest from about 6 mentors, while a venture that attracted twice as much interest was 27% more likely to commercialize (the researchers defined commercialization as having multiple repeated sales, an Amazon storefront, technology licensing, and others similar measures of success).

Another thing Shu and her researchers noticed was that the predictability of success was also determined by the industry of the proposed idea. For example, ideas associated with sectors that were R&D (research and development) intensive, such as such as energy, hardware, medical devices, and pharmaceuticals were more predictive than ideas associated with non-R&D intensive ventures like mobile, apps, and software.

Lastly, Shu’s team was surprised to discover that the evaluators of these businesses were no better at predicting the success of ideas within their industry of expertise than they were of those ideas outside their industry of expertise. By no means does this mean that expertise in a certain field is not useful, but it should encourage us to discuss our business ideas with successful entrepreneurs in general, and not just ones within our own niche. In fact, an “outsiders” perspective could benefit the evaluation process on the whole.

While Shu and her colleagues weren’t able to come up with a simple formula for predicting success, they were able to identify these useful guidelines anyone can use when determining whether or not their latest business idea is worth fighting for and/or investing in.

Google X: What is it?

Google is a powerhouse in the world of business. From pioneering the driverless car to functional virtual reality, Google has maintained a prominent position on the cutting edge. If Google has proven anything, it’s that they can and will continue to grow. Always looking for that next turn in the world of tech, Google has acquired additional companies to fold into their ever-expanding empire.

Google’s robotics team, responsible for many of the aforementioned leaps in technology, have recently acquired companies for their top-secret branch, Google X. All those taking part in the project must adhere to a very strict code of conduct, forbidding them from speaking about current projects to even their family members. Google knows how to play an unveiling, and any new technology they’re working on is being held close to the chest.

After announcing that Google X will be absorbing a solar-powered drone company, speculation has been swirling regarding the mysterious reason for its purchase. Don ChamberlinGoogle X already started to form the future, pumping out science fiction like the Moonshot – their self-driving car, or airborne wind turbines to give us renewable, clean energy. So why then has Google X started to buy up random robot companies? Some speculate that Google is trying to establish and corner the personal robot market, placing a shiny new friend in every home. Others feel that Google may turn toward military application, removing soldiers from the field and saving lives.

No matter the application, Google will surely be able to deliver what it sets out to accomplish. With multiple branches under the Google X named Project Replicant and Project Wing, I wouldn’t be far from surprised if their next announcement was a fully-functional robot, but we’ll have to see what is waiting when Google chooses  to open the curtain.

The Modern CFO

Don ChamberlinThe plight of the modern CFO is having to be more than their job title. As times change, so too must the face of business. With hundreds of companies around the world, each vying for the biggest slice of pie, it behooves the modern CFO to fold multiple skills into their portfolio. Rising above their station, CFO’s are tasked with more than ever before. What are some elements that make for a competent and modern CFO? Below is a short list of qualities that companies are looking for in their Chief Financial Officers.

Business Acumen: It goes without saying that to venture into the world of business demands an understanding of the terrain. A CFO’s job was once to just understand the financial side of the company they served, but now it has grown to something more all-encompassing. You cannot effectively lead a portion of the company without understanding how the whole will function as a result, so CFO’s must be able to see the bigger picture beyond their spreadsheets.

Flexibility: Now more than ever, CFO’s are being called to work with non-financial aspects of their companies. Most often paired with human resources, a modern CFO must be willing to adapt to a change in roles and involvement. As head of finance, the company relies on a CFO like a body relies on a heart. Without one, the other ceases to be.

Communication: A necessary skill branching off of the above two, communication is a vital skill in any workplace. However, as a CFO, you are tasked with translating your meticulously gathered financial data to the rest of your company. While your vernacular will clearly be suited for the task, being able to translate that information into bite-sized portions for the rest of the company requires the ability to communicate.

Financial Planning: When Dad Isn’t the Greatest Financial Role Model

The following article, written by st. louis based financial planner and founder of the chamberlin group, don chamberlin, was originally published on money.com on october 6th, 2015:

Sometimes the best money lessons come when you learn from someone else’s mistakes.

Financial Planning When Dad Isn’t the Greatest Financial Role Model

The bond between a father and son can be special. Fathers pass family traditions down with the idea that their son will maintain the legacy. However, if the family tradition is poor financial practices, it’s my job as a financial planner to step in and put a stop to those bad habits.

Some time ago, after a client’s father passed away, the client asked me to help make sense of his father’s assets. The father left his son with what he thought was a well-thought-out legacy, but a few elements of it ended up leaving the son extremely confused.

Reviewing the father’s assets, I realized he was a perpetual investor in certificates of deposit. The son explained that his dad would go online to find the state that offered the best interest rates, and he would open an account with a bank there and invest in a CD.

While this may have seemed like a smart strategy, the father didn’t keep accurate records of each of his accounts.

In fact, the son couldn’t even figure out how many CD accounts his father had opened up; he only learned about each of them as he received his father’s statements in the mail. To make the son’s life easier, I advised him to keep the estate open for at least a full year, while these surprise statements trickled in.

The father also had the foresight to establish a trust to hold the CDs, but he didn’t properly title all his assets. So two of the 12 CDs he turned out to have owned at his death had to go through the probate process.

Ultimately, much of the savings and earned interest in the father’s rate-hunting portfolio was wiped out by his estate planning mistakes. The legal fees associated with probate ate into the the two incorrectly titled accounts. So much for avoiding probate.

An Organized Legacy

Despite seeing his father’s mistakes, the son wasn’t sure how he could do it better. As a father himself, he wanted to ensure his family wouldn’t go through the same difficult experience in the future, so he came to me later for help.

I advised him to open his own trust to pass all his assets to his children outside of probate, and I made sure he worked with an attorney who could advise him how to title his family’s assets correctly. Then I helped create organized records in a “Family Estate Organizer” binder that compiled important legal, financial, and other estate planning information–everything from account statements to a personal belongings inventory.

We also prepared for his wife documentation on what to do in the event of his death. This “Survivor’s Checklist” gives family members guidance on the various steps of settling an estate. It’s particular helpful for surviving spouses or beneficiaries who have not been involved in deceased’s finances.

This was a crucial step for not just the son, but for his family legacy as well. He wanted to ensure he would leave his own family with a well-organized, easy-to-manage inheritance, and the binder provided just that. It allowed him to sleep better at night knowing his family could easily step in to manage the assets should the need arise.

As a financial planner, I understand a well-thought-out estate plan is a critical part of a holistic retirement plan. But I don’t think I realized how foreign this concept might be for some people until I met this client. I have since come to realize that some of the most valuable advice I have given clients is also the simplest: get organized and stay organized.

So share your plans with your loved ones and seek the assistance of a holistic adviser. You can even make it a family affair. Take the time to document your assets, then sit down with your loved ones so they can understand what you own, how it’s titled and what needs to happen as major life events take place. It will be time well spent and money well saved.

For the original Money.com article, please click here. To contact Don Chamberlin and The Chamberlin Group visit their website here.

Don Chamberlin Debunks 4 Social Security Myths

Although we live in an age where information is often readily available, we still require some expert guidance when it comes to certain topics. Personal finance, in this case preparing for retirement, is an example of one of those areas where it is hard to obtain the right, trustworthy information with ease. If you are thinking about retirement, whether it will be happening soon or many years down the line, you are most likely planning out those years around the idea of social security benefits.

If so, there are 4 myths that come up often when people discuss social security benefits that you should be aware of. Financial planner Don Chamberlin, as the CEO and Founder of The Chamberlin Group, has appeared on Fox 2 Now (KTVI) in St. Louis, MO to set the record straight:

1. 65 is the “Full Retirement Age”

As Don Chamberlin explains in the video below, the full retirement age (FRA) actually depends on the year in which the individual was born. In fact, you can start claiming at any time between 62 and 70. At 62 you can start claiming at a discounted rate but the longer that you put off claiming your benefits, the more money you will get. Don points out that many times, people miss out on thousands of dollars that they could have received in all had they just put off claiming for longer. As for the FRA, for those people retiring soon it is likely to be 66 but if you were born after 1960, it will be 67.

2. It is easy to decide your claiming strategy

It is important to decide on your claiming strategy but it is not exactly easy. The number of claiming strategies that are available to you depend on whether you are single or married, and that can make a huge difference. If you are single, you have 9 different strategies as options. However, if you are married you suddenly have 81 different claiming strategies. This is one of the many reasons why it is important to dedicate time to plan out your retirement. Choosing the worst strategy for yourself or for yourself and your spouse can mean losing out on tens of thousands of dollars down the line.

3. Those who claim Social Security benefits don’t have to pay taxes

Just because you are retired and claiming your Social Security benefits does not mean that you do not have to pay taxes. In fact, Social Security benefits can be taxed up to 85% – that can really put a dent in certain plans post retirement. When preparing to retire, you should evaluate your Social Security benefits with the goal of minimizing tax liabilities as you should do with any source of retirement income.

4. One can live comfortably on Social Security benefits

This claim goes against one of the very foundations of Social Security. Social Security, as Don Chamberlin explains, was not intended to replace a person’s income. In fact, when Social Security was founded the average life expectancy was 64 while Social Security benefits were taken at age 65. So in all, Social Security benefits were designed not to replace income but to supplement other sources of post retirement income. Now with our average life expectancy reaching close to 80 years, it is even more important for retirees who do wish to live comfortable to also have other sources of income post be it regular savings, retirement savings or investments.

Watch Don Chamberlin on St. Louis’ Fox 2 Now (KTVI):

Planning for Retirement: 10 Things to Avoid

Retirement is one of the most difficult things to plan, especially in this day and age. As our life expectancy continues to increase, so does the amount of years we spend in retirement. This means that it is important for your retirement savings to last Retirement Savingslong as well. More so, it is important that you have retirement savings in the first place.

Below are 10 of the biggest retirement blunders that have been pinpointed by financial experts that you can make and how to avoid them:

  •  Not having a plan for your retirement money: This seems relatively self-explanatory. Not planning for retirement is literally the worst thing you can do when it comes to retiring. How to avoid: Create a cash flow scenario says Herb White, a certified financial planner  and president of Life Certain Wealth Strategies in Denver.
  • Forgetting about or ignoring inflation: One very common mistake is completely forgetting about or, even worse, ignoring the reality that is inflation. How to avoid: Make sure you take this into account so that you have enough money when you are ready for retirement. For starters, work with your financial expert to ensure that your investments are keeping up with the rate of inflation.
  • Not saving enough money: This is almost as bad as not planning for your retirement at all. Making sure you have enough money is key to being able to retire comfortably and happily. How to avoid: Although it may not seem like you can afford to save, you certainly cannot afford to not save. According to T. Michelle Jones, vice president of Bryn Mawr Trust, working towards eliminating small expenses, like eating out instead of at home, can help you free up cash to put into savings. It adds up over time.
  • Withdrawing from retirement accounts early: Pulling money out of your accounts before you even retire is a way to ensure that you have less money for when you really need it in the future. How to avoid: Don’t withdraw from your accounts. Don Chamberlin, the president and CEO of The Chamberlin Group in St. Louis, Missouri, says that taking loans and money from your 401(k) accounts and IRA is possible, but it is a mistake to do so. By keeping your money in those accounts, it will accumulate compound interests. Over time, this has the potential to add tens of thousands of dollars, or more, to your account over the course of your career.
  • Investing emotionally: Wealth management advisor Chuck Downs points out that we live in a culture of timing and selection. When investing in funds, people look at the recent performance and then panic when the market downturns. By buying high during these periods of hot performance and then panic-selling, they are letting emotions run their strategy. How to avoid: Patience. While that’s a lot easier said than done, having an expert by your side can help with being patient.
  • Being a conservative investor: This ties in with having your investments keep up with inflation. Currently, many investors are underperforming even when the market is performing well because of little exposure. How to avoid: Retired investors need higher growth in their funds to ensure that they can stretch their retirement money over what is expected to be a longer retirement period. This wasn’t the case many years ago.
  • Missing out on employer’s 401(k) match: Recently, a study by Financial Engines, an independent investment advisory firm, revealed that American workers miss out on $24 billion in matching funds for their 401(k)s yearly. How to avoid: Not making your own contribution to your 401(k) if your employer matches it is a big mistake, says Don Chamberlin. By not taking advantage of this, employees are essentially missing out on what equates to a free 50% return on the money they are already setting aside.
  • Letting all your retirement money be taxed: Putting all of your money into retirement accounts that do not ensure that at least some of your money is tax-free later in life is a mistake. How to avoid: Don Chamberlin of The Chamberlin Group points out that putting money in a Roth IRA or asking if a Roth 401(k) account is available through your employer is a great alternative. Money deposited into Roth accounts is taxable, but then it grows tax-free. If you already have all of your money in a traditional IRA, the Internal Revenue Service allows for those accounts to be converted to Roth IRAs.
  • Underestimating healthcare: Medical expenses can get large during retirement. Herb White of Life Certain Wealth Strategies explains that people overlook or underestimate future health care expenses. How to avoid: Properly planning for future medical expenses is important. This isn’t difficult and an expert can help you strategize on the best plan that will fit your needs and deliver the best benefits.
  • Filing for Social Security too early: Once you retire, it may appear tempting to begin filing for your Social Security benefits at the age of 62, when you are allowed to do so. But you will be receiving a lower amount. How to avoid: Plan out your retirement and wait to file for your Social Security benefits by the full retirement age. If you are retiring this year, that will be 66 years of age. By this age, you will receive a higher amount than if you did it by 62. T. Michelle Jones of Bryn Mawr Trust points out that those who wait up to four years to file for benefits can 132 percent of their monthly benefit.

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