7 Rules of Thumb for Retirement Planning

Rules of thumb often develop because they’re at least somewhat accurate and are helpful when running off-the-cuff measurements. When it comes to retirement planning, rules of thumb abound, and they’re often quite helpful in setting savings, investment and withdrawal goals. The following seven rules of thumb for retirement planning will help put you on the right track for a comfortable retirement:

1. Have an emergency fund equal to six months’ worth of income.This isn’t strictly a retirement planning goal, but having an emergency fund is the basis for many good financial plans. If you have money on hand to weather small and large emergencies, you’ll be less likely to stop saving in an emergency, borrow from a retirement plan or rack up high-interest debt because of unexpected expenses. And even if you do have an emergency fund, you don’t have to stick it into an account that earns next to no interest. There are plenty of great places to put an emergency fund, like a high-interest savings account or CD ladder.

2. Save at least 10 percent of your income for retirement. Many financial gurus advocate for paying yourself first by automatically saving 10 percent of your income for retirement. The personal savings rate for Americans is currently 3.2 percent of disposable income, according to 2013 statistics from the U.S. Department of Commerce. Saving 10 percent of your income in a 401(k) or IRA account every year will get you well on your way to retirement as long as you start early.

However, this rule of thumb breaks down a bit if you don’t start saving until well into your career, in your thirties, forties or even fifties. Starting early allows you to tap the power of compounding interest. The sooner you save, the less you’ll have to put in to meet your retirement savings goals.

3. The percentage of bonds in your portfolio should equal your age. As you age, most experts agree that you should shift more of your portfolio into less volatile investments, like bonds, which will be less likely to lose lots of money if the market crashes. If you’re very young, you can handle more uncertainty and potentially get better returns by investing in stocks.

This rule of thumb is quite conservative. While you might want to have 60 percent of your portfolio in bonds at age 60, having a full 30 percent in bonds at age 30 might be too much for you. It really all depends on your risk tolerance, which has to do with more than just your calendar age. Things like your current job, personality and family situation all play into your risk tolerance, too.

4. You can expect to get an average of 7 to 8 percent per year from a diversified domestic stock portfolio. When you’re setting goals for retirement savings, many online calculators will ask what you expect to make on your portfolio. Plenty of experts say that you can expect to earn an average of 7 to 8 percent per year from a diversified domestic stock portfolio.

Of course, this is the stock market we’re talking about, so nothing is guaranteed. Depending on where your investments lie, how diversified they are and what the economy is like, you could make more or less than this in any given year. Plan accordingly.

5. Shoot to replace 70 to 80 percent of your pre-retirement income during retirement. Many financial advisers will say that you should aim to replace 70 to 80 percent of your pre-retirement income with Social Security, retirement savings or any other retirement income you may have available to you. Again, this works out for many people, but not for everyone.

For some reason, you may have higher-than-average retirement needs. Maybe you or a spouse has serious medical issues, or you have a disabled dependent who will never be able to live on his or her own. In this case, you’ll want to try to replace even more of your pre-retirement income during your retirement years. However, at least one study suggests that many retirees will need just 35 percent of their pre-retirement income.

6. Plan to save around eight times your final income for retirement. Investment firm Fidelity offers one interesting retirement planning model that can help you set goals by age. The plan winds up with you saving eight times your income by the time you retire. So if you retire at 65, you’ll need to have saved eight times the amount you’re making per year as of that year. This plan is helpful because it gives you goals to meet throughout your working years, including saving one times your income by 35, three times by 45 and five times by 55.

7. Assume you’ll withdraw 4 percent of retirement savings each year during retirement. Many retirement plans are based on the idea that retirees will withdraw 4 percent of their savings per year during retirement. The theory is that you’ll earn 7 to 8 percent, spend 4 percent and invest the remainder to keep pace with inflation. But in today’s low-yield environment, 4 percent may be too much. One New York Times article recently noted that a retiree with a $1 million nest egg invested in municipal bonds (once a favorite of retirees) would have a 72 percent possibility of running out of money before death if they withdrew on those bonds at the rate of 4 percent a year.

Measure twice, cut once. As with all rules of thumb, these for retirement and savings are based on averages. And, of course, no single person is truly average. It’s better to develop a personalized plan when it comes to retirement than it is to operate solely off of rules of thumb. Instead, meet with a financial planner or do more extensive research to set retirement savings and spending goals based on your unique personality, life and financial situation.

Source: http://money.usnews.com/money/blogs/On-Retirement/2013/08/02/7-rules-of-thumb-for-retirement-planning

Films about Finance

Margin Call (2011)

15 107 min  -  Drama | Thriller  

7.1

Your rating: 

  -/10 

Ratings: 7.1/10 from 65,547 users   Metascore: 76/100 
Reviews: 189 user | 271 critic | 38 from Metacritic.com

Follows the key people at an investment bank, over a 24-hour period, during the early stages of the financial crisis.

Director:

 J.C. Chandor

Writer:

 J.C. Chandor

Stars:

 Zachary Quinto, Stanley Tucci, Kevin Spacey |See full cast and crew »

Source:http://www.imdb.com/title/tt1615147/?ref_=fn_al_tt_1

Stay Tuned for More Information.

>

4 Overlooked Ways to Pay for College(3)- What is a 529 Plan?

529 Basics

A 529 plan is a tax-advantaged investment plan designed to encourage saving for the future higher education expenses of a designated beneficiary (typically one's child or grandchild). The plans are named after Section 529 of the Internal Revenue Code and are administered by state agencies and organizations.

All withdrawals from 529 plans for qualified education expenses will remain free from federal income tax! Many states mirror the federal tax advantages for 529 plans by offering state tax-deferred growth and tax-free withdrawals for qualified higher education expenses.

Why State Plans Differ

Each state that offers a 529 plan determines how its plan is structured and which investment options are offered. While most plans allow investors from out of state, there can be significant state tax advantages and other benefits, such as a state tax deduction, a matching grant, and scholarship opportunities, protection from creditors and exemption from state financial aid calculations, for investors who invest in 529 plans offered by their state of residence. 

Types of 529 Plans

There are two types of 529 plans: prepaid tuition plans and savings plans. There are currently 13 Prepaid Tuition Plans(sometimes called guaranteed savings plans) offered by 12 states and one not-for-profit organization, which allow for the pre-purchase of tuition based on today's rates and then paid out at the future cost when the beneficiary is in college. Performance is often based upon tuition inflation. Prepaid plans may be administered by states or higher education institutions.

Savings Plans are different in that your account earnings are based upon the market performance of the underlying investments, which typically consist of mutual funds. Savings plans may only be administered by states. 49 states and Washington, D.C. offer a savings plan. Most 529 savings plans offer a variety of age-based investment options where the underlying investments become more conservative as the beneficiary gets closer to college-age. They also offer risk-based investment options where the underlying investments remain in the same fund or combination of funds regardless of the age of the beneficiary. In addition, many savings plans offer an FDIC/NCUA insured, money market or guaranteed option designed to protect an investor's principal while providing for some investment growth, while others offer investments in certificates of deposit.

Source: http://www.collegesavings.org/whatis529.aspx

Films about Finance

Top 5000 Wall Street (1987) 15 126 min  -  Crime | Drama  -  11 December 1987 (USA) 7.4 Your rating:    -/10  Ratings: 7.4/10 from 96,281 users   Metascore: 56/100  Reviews: 204 user | 108 critic | 16 from Metacritic.com A young and impatient stockbroker is willing to do anything to get to the top, including trading on illegal inside information taken through a ruthless and greedy corporate raider who takes the youth under his wing. Director:  Oliver Stone Writers:  Stanley Weiser, Oliver Stone Stars:  Charlie Sheen, Michael Douglas, Tamara Tunie |See full cast and crew » Source: http://www.imdb.com/title/tt0094291/?ref_=fn_al_tt_1

4 Overlooked Ways to Pay for College(2)- Types of Federal Student Loans

     Source: http://studentaid.ed.gov/sites/default/files/federal-loan-programs.pdf 

Films about Finance

	Top 5000 Trading Places (1983)  116 min  -  Comedy  -  8 June 1983 (USA) 7.5 Your rating:   -/10  Ratings: 7.5/10 from 77,120 users   Metascore: 66/100  Reviews: 137 user | 64 critic | 9 from Metacritic.com A snobbish investor and a wily street con artist find their positions reversed as part of a bet by two callous millionaires. Director:  John Landis Writers:  Timothy Harris, Herschel Weingrod Stars:  Eddie Murphy, Dan Aykroyd, Ralph Bellamy |See full cast and crew » Source: http://www.imdb.com/title/tt0086465/?ref_=nv_sr_1

4 Overlooked Ways to Pay for College(1)

Paying for college is rarely easy. Ideally, it's a longterm process of building and using a collection of savings, institutional aid, free money, and—if necessary—loans. 

[Discover more ways to accumulate money at the College Savings Center.] 

But with so many avenues for financing your education, it's often difficult to sort out what might work best for you, given your situation and time frame. Whether you'll be moving into your dorm room in two months or you're starting to save now for your toddler's college education, here are four often-overlooked considerations that may lessen your financial burden:

Exhaust your federal options: Because federal loans (Stafford andPerkins) are cheaper and have more flexible repayment options, students with financial need should always exhaust their federal options before looking to private loans, says Kevin Walker, cofounder and CEO of SimpleTuition.com. It's an often overlooked route, he adds, because some families mistakenly assume it's a complicated process for a loan they may be too well off to qualify for anyway. 

"Some families might believe, 'We're upper middle class; our income is upper level so we wouldn't qualify,'" Walker notes. "Whether you're Bill Gates's kid or a child of a family with zero income, you can get a federal Stafford loan." 

[Learn more about the benefits of federal student loans.] 

And, if college is around the corner and you've yet to apply for federal aid, it's also a mistake to assume you're too late, Walker notes. You can still fill out the FAFSA and work with your college's financial aid office to evaluate your payment options. Sites such as SimpleTuition, the Department of Education, and Sallie Mae offer more information on federal loans and help students navigate the private loan sector, if necessary. 

Consider 529 plans: If you have some time before college, a 529 savings plan may be an attractive route for you. Named after Section 529 of the Internal Revenue Code under which it was created, a 529 plan allows users to select from a variety of funds in which to invest, including real estate and money market accounts. In 34 states and the District of Columbia, parents with a 529 plan qualify for an income tax deduction or credit on contributions. 

[Find out more about 529 plans.] 

These savings plans with tax advantages were effectively created to lessen the number of investment choices families have to make, says Mark Kantrowitz, founder of FinAid.org. But it seems the message hasn't been fully communicated; in a recent parent survey conducted by Sallie Mae, about half of all respondents who aren't using a 529 plan didn't know the option existed. That lack of information was the most commonly cited reason parents didn't use the college savings plan, according to the 2010 study, How America Saves for College, which surveyed 2,092 parents around the country with children under the age of 18. 

"This is not rocket science," Kantrowitz says, adding that parents and students should be able to navigate the options. Ideally, a 529 savings account will be opened when a child is young, so savings can accrue over time according to an age-based investment allocation. Then, any risky investments have a decade or more to recover. 

Though 529 plans—and the accompanying fees—vary by state, eligibility is not determined by residency. You can opt to enroll in Ohio's plan if you live in Virginia, for example. Consider your state's plan first, Kantrowitz recommends, then look elsewhere if its fees aren't lower than 1 percent or if it doesn't offer an attractive income tax deduction.

Regiment yourself: No matter how far away college is for you or your child, it's crucial to start adhering to a savings plan now. Though it might feel painful at first, research shows that students and parents who stow away set levels of college cash at specific intervals are more inclined to feel confident about their ability to pay for college. 

"It's something called perceived self control: When people save regularly, they start to really feel that they have greater control over their lives and their future, and it leads them to build a much higher level with capability in dealing with financial matters and their financial future," says Ben Mangan, president and CEO of EARN, a financial aid nonprofit organization, which founded MyDebtStory.com. 

To make the process easier, get yourself on a manageable plan, focus on the savings goal each month rather than the large end figure, and have your savings stowed away automatically, FinAid's Kantrowitz advises. "Once you get started," he says, "you become accustomed to not spending that money." 

Explore last-minute options: If you are beginning college this fall, don't assume it's too late to find scholarships, SimpleTuition's Walker says. Use these next few weeks to scour the Internet, community listings, and your high school's counseling office for any last-minute sources of aid or scholarship money that went unused in the traditional school year award period. Other scholarships have deadlines throughout the calendar year. In an online scholarship search, specify what state you live in to help you find local results, Walker recommends. 

Students can also use the Web to find summer contests, such as the one being held through July on Mangan's site, MyDebtStory.com. In an effort to create a community of financial aid users, the newly launched Web site is offering $5,000 to the highest user-rated video of how to pay for college. If you have other tips not listed, the site welcomes video success stories of students who have mastered the financial aid process, too. 

Though these types of contests won't garner money for the majority of students who enter, the process can at least be informative—and possibly therapeutic, Mangan notes."We've found that people sometimes feel hopeless about this," he says. "The simple act of sharing their story and knowing they're not alone gives them a sense of relief from the burden they feel in carrying the education debt." 

Source: http://www.usnews.com/education/best-colleges/articles/2011/07/07/4-overlooked-ways-to-pay-for-college

Films about Finance

	1 The Wolf of Wall Street (2013) 18 180 min  -  Biography | Comedy | Crime  - 9 January 2014 (South Korea) 8.6 Your rating:   -/10  Ratings: 8.6/10 from 109,457 users   Metascore: 75/100  Reviews: 471 user | 295 critic | 47 from Metacritic.com Based on the true story of Jordan Belfort, from his rise to a wealthy stockbroker living the high life to his fall involving crime, corruption and the federal government. Director:  Martin Scorsese Writers:  Terence Winter (screenplay), Jordan Belfort(book) Stars:  Leonardo DiCaprio, Jonah Hill, Margot Robbie |See full cast and crew » Source: http://www.imdb.com/title/tt0993846/

Welcome to The Milestone Coach Blog - Website to Be Coming Soon!

Life is full of milestones from birth to college, to your first job, all the way to retirement. At each milestone, a person’s life can change dramatically for better or worse.

Our Milestone Coaches® are trained and certified in various fields in order to help individuals and families plan at any stage in life. Through educational workshops, one-on-one and group consultations, our experts take into consideration the individual’s situation and what their goals are before providing any guidance.

Unlike most financial professionals, Our Milestone Coaches® are independent and don’t get paid to sell products.

The Milestone Coach® has filed its Form 1023 to become a non-profit organization which will allow our Milestone Coaches® to reach more people and work with other organizations to spread financial education.

College Funding 101: Uncovering the Myths

The first step to any planning process is to always uncover what information is true and what is false. Throughout my career, I have come across many families who have told me this or that about their college funding experience and I have found 3 myths that many parents believe are true before they even start their planning. These myths often cost parents thousands of dollars or even worse, it may force students to change their plans and say no to their dream schools. This article will clear up those myths so that proper and effective planning can begin.

Myth #1: There are many resources out there to help plan for college, planning should be easy

This myth is true to a certain extent. There are many resources out there that try to help families properly plan for college. The question becomes “which resources should I trust and what do I really need to know?” When searching online, you will come across hundreds of thousands of articles on every aspect of college planning, however what you won’t find as easily is exactly what plans are right for your situation.

To give you a better idea of what I mean imagine walking into a restaurant wanting a burger and the menu has a list of over a hundred burgers that all look equally good. What would you do in this situation? Many people would be confused and choose the first one that they think is good even though there may be much better options out there. Trying to sort through all of the college planning resources can be confusing and many settle for plans that are simple even though it might not be the right plan for them.

Myth #2: My family has too much money to qualify for financial aid

This is probably the most common myth that costs many families thousands of dollars. There was an article in Forbes magazine recently, which explained how a family making over $120,000/year and who had multiple properties was still able to qualify for financial aid.

If your child is currently in high school, they may have heard the counselor say something like “you should apply for FAFSA anyway.” The thing is, many counselors have not been trained themselves on how to fill out the FAFSA forms so they bring in special speakers from FAFSA. Those speakers, however, have been trained to help lower income and lower middle income families. The FAFSA speakers are also trying to help hundreds if not thousands of students every year to fill out the forms correctly. Many simply don’t have enough time to individually go over the form with you to make sure you can qualify.

If you think that you have too much money to qualify for financial aid, my recommendation would be to go to a specialist, who will take the time to sit down with you individually to help you fill out the form.

Myth #3: Our family needs to go into debt to pay for college

According to American Student Assistance, there are over 20 million students attending college annually and of that, over 12 million have taken out loans to pay for it. The nation as a whole has over $1 trillion in student debt, according to the Consumer Finance Protection Board.

Many of the families that I have visited over the past few years have told me that they plan to take out a loan in order to pay for their children’s education. This may not be a bad solution because there are some advantages to taking out loans, however I want to make it known that it is not the only way to pay for college.

When it comes to the question of taking out a loan, everyone needs to take a look at their own situation first. Just like many families consult a tax adviser before filing their taxes, I recommend that you consult an advisor who specializes in college planning.

College is a big milestone for the entire family and this series will continue to help uncover some of the myths of college planning. It will also give you insight to what strategies others have used to successfully fund higher education.

The First Step to Starting a Successful Business

Have you ever dreamed of one day starting your own business and being the next Bill Gates or Mark Zuckerberg? If so, then you’ve probably had someone in your life try to tell you some statistic like half of all small businesses fail within the first year and 90% fail within the first 5 years.

Well, the Small Business Association has some “good” news, the rate has fallen to 30% of small businesses fail within the first year and only 50% fail in the first 5 years.

To give you more facts, CareerBuilder.com reported that small business owners (businesses with fewer than 500 employees) make an average of only $36,266 a year. Only 5% of all small business owners make over $100,000 a year.

Now the question is how do you make sure your business succeeds and you become one of the 5%? The answer is simple… BURN THE SHIPS.

I have found that the most useful advice comes from an insurance producer in California, Darren Sugiyama. After only 7 years in the insurance industry, Darren has grown his insurance agency to producing over $38 million in annual premium collected and his agency has become the highest producing voluntary benefits firm in California.

Despite his success, he too started out like most business owners, in debt and with little time to start making a profit. After 8 months in the industry and after placing thousands of dollars into the business Darren’s business still generated little to no revenue at all. The one thing that got him through that time was the saying “burn the ships.”

“Burn the ships” is a saying that refers to Hernando Cortez and the journey he took with 500 soldiers and 100 sailors to conquer the Aztecs in 1519. At the time, the Aztecs had ruled the Yucatan peninsula for over 600 years and was one of the most populous civilizations in Mexico. Many conquistadors tried to conquer the Aztecs over the years, but all failed.

To make sure that he and his men were successful, when they reached the peninsula, Cortez ordered his men to literally burn the ships that they were on.

Of course all the men objected, but the logic behind it was that they are there to conquer the Aztecs. They are either going to conquer the Aztecs or die trying. He demanded all of his men to be fully vested and go all in. In the end, Cortez and his men conquered the Aztecs.

The message of this story is, if you are going to start your own business and you want to make a lot of money, you need to go all in.

There hasn’t been a single successful person in the world that has become successful without fully believing in their idea and fully committing themselves to that idea.

The Right Coach

“All coaching is, is taking a player where he can't take himself.” -  Bill McCartney, football coach at the University of Colorado

I am a strong believer that the best mentors and advisors tell the truth no matter how hard it is to hear or how unpopular it may be. This blog was created in the hopes that I would be able to shed some light on the important milestones in everyone’s lives.

Before 2008, the real estate market was at the highest peak it has ever been and when the bubble burst, many lost their homes and their entire lives. At that point, no one wanted to listen to the signs that said the bubble was going to pop and things were going to crash. Even prior to that, however, I was advising my clients to go with the guarantees and I helped many steer clear of the financial crisis.

Throughout my 16 years of experience in the financial field, I have consistently been one of the highest producers in any organization I was with, whether it be Mutual of Omaha, Bankers Life and Casualty, or CFC Capital Partners. I have consistently qualified for the Million Dollar Round Table and am a former board member of NAIFA, the National Association of Insurance and Financial Advisors. In 2010, Pacific Integrity was founded and it has become one of the most respected agencies in Hawaii. Despite my success, I have come to the realization that I would not be where I am today if it wasn’t for the coaches I had in my lifetime that shaped the beliefs and opinions that I hold.

One of the most influential mentors in my career has been my father, Allan Nakata. My father has been in the insurance industry for almost 40 years and has earned designations as a CLTC (Certified in Long-Term Care), CLU (Chartered Life Underwriter), RHU (Registered Health Underwriter), REBC (Registered Employee Benefits Consultant), and MSM (Masters in Science and Management). My father spent years advising businesses, both large and small regarding employee benefit programs and he has been asked to hold countless seminars on Elder Care and Elder Law in Hawaii.  Most recently, he was awarded the National Leadership Award from Washington DC.

Growing up, he always had high expectations and pushed me in sports to always be the best. I carried this into my career and always competed to be the best in any company I was with. He also instilled in me the importance of being able to pass down what I know to the future generation. I was fortunate to have someone who is highly regarded in the financial industry as my father, but not everyone is and it is my goal to be able to provide young individuals the same insights my father gave me.

After 16 years in the industry, I know that I still don’t know everything and I am continuously searching for new mentors to learn from so I can better service the people of Hawaii. Most recently, I have found a great mentor in David Scranton. As founder of Advisor’s Academy and Scranton Financial Group, and author of the popular financial book: "Stop the Financial Insanity, How to Keep Wall Street's Cancer from Spreading to Your Portfolio", David Scranton is one of America’s most respected and successful advisors. We have recently created a partnership in which we will bring a new type of planning to Hawaii. I am confident his straight forward approach will help our clients get to places they have never been before.

The mentors I have had throughout my lifetime have helped to shape the beliefs and opinions that I will share with you throughout this blog. I do not intend to offend anyone in this blog, but I will tell the truth, like it or not.

Stay tuned for more posts shortly.