As humans, we tend to be overoptimistic on everything from our driving ability to investment prowess. It’s perennial problem when it comes to money and retirement management.
A recent study found that people routinely over-estimate their Social Security benefits. Two researchers from the University of Michigan found that “Americans face the challenges of retirement with varying degrees of preparation. Evidence indicates that that many individuals may not be making the best possible choices with respect to their Social Security and retirement savings.”
Why do people expect more than what they actually receive in benefits? Here’s what the researchers found:
Most retirees find that the amount of Social Security retirement benefits they receive is lower than what they had expected before claiming.
Not appropriately adjusting for early or delayed claiming could contribute to expectation biases about retirement benefits. In particular, this would be most relevant for those with lower levels of education.
Current workers recognize that they do not have a good idea of what their future retirement benefits will be. Forty-nine percent of our survey respondents declare having no knowledge about their benefit amount.
The average expectation bias for monthly retirement benefits in our sample is $307, which equals 27% of the average forecasted benefit for this sample (in current dollars).
Men display lower expectation bias and are less likely to overestimate their retirement benefits.
How to avoid these misconceptions? You need to estimate benefits based on the age you intend to claim them and your earnings record. A good place to start is Social Security’s benefits estimator tool.
Since people are living longer and are generally healthier in older age, the Social Security Administration raised the full retirement age to 67 for people born in 1960 or later, up from 65. You can apply for benefits as early at 62, although your benefit would be reduced by 30%. On the other hand, if you can wait until age 70, you will get 124% of the monthly benefit because you delayed getting benefits for 36 months.
Consider how each scenario might impact your retirement planning. Preparing for different outcomes now is the best way to help protect your savings – and peace of mind – down the line.
Planning today can make a big difference in your retirement lifestyle tomorrow. Once you leave the workforce, the years that follow can be all that you want them to be—if you pave the way with a comprehensive financial plan that includes your Social Security income.
Your plan should be based on what you know today and flexible enough to adapt to any changes—like unforeseen personal circumstances or developments that come out of Washington.
Social Security can be a valuable tool to help bridge any gap you may have between your expected sources of income and your expenses.
POINTS TO KNOW
Social Security has features for retirees that other retirement savings plans don’t have.
When creating your retirement plan, be sure to include your Social Security benefits as an income source.
It’s important to have a retirement budget: Itemize your income sources and expected expenses.
Another common consideration is determining the appropriate time for children to have access to their inheritance. Although my focus here is on distributions from trusts created by a will (testamentary trusts), these considerations also apply to trusts created during your lifetime (inter-vivos trusts).
A major distinction between your will and lifetime irrevocable trusts is that; during your lifetime your will can be regularly updated to reflect current thinking, while amending or changing provisions within a lifetime irrevocable trust will generally be more restrictive and often require a statutory solution (decanting), where possible, or having to seek permission from the courts.
Generally, distributions can be discretionary, mandatory or event-driven. For most (with high confidence in a trustee), I recommend a combination of allowing for both mandatory and discretionary powers to make distributions – assuming the facts and circumstances allow for it.
The most common distribution structure we’ve seen over time seems to include mandatory distributions at specified ages – i.e. ages 25, 30 and 35. This could mean that one-third of the principle is distributed at age 25, one-half of the balance at age 30, and the remaining balance distributed at age 35.
Prior to or between mandatory distributions, the trust can provide that the fiduciary has the power to make either fully discretionary distributions or distributions under some “ascertainable standard,” such as for the beneficiary’s health, education, maintenance and support (HEMS). The power to distribute can be very broad (absolute) or narrow – the HEMS standard is a statutory standard that lies somewhere in between and may provide certain tax protections.
I find it interesting that clients with young children often initially choose ages 25, 30 and 35, only to then stretch out the ages of mandatory distributions as both they and their offspring age. This implies that any initial confidence the parents had in their children’s ability to handle large sums of money early on (e.g. age 25) dissipates as the distribution becomes more imminent and, perhaps, the monetary sum increases.
A common alternative is to allow for a portion of the principal to remain in trust for the beneficiary’s lifetime, while granting current beneficiaries the power to appoint future beneficiaries (e.g. descendants). Putting aside one’s choice of ages of distribution, I favor a hybrid approach that combines some mandatory distributions with the ability to make discretionary distributions for assets in continuing trusts. To me, this approach stands out for its flexibility and asset protection benefits.
Specifying only mandatory distributions or event-based distributions (i.e. earning a degree, marrying, passing drug screens, etc.), greatly reduces the fiduciary’s flexibility. As a fiduciary for many estates and trusts, I often see inflexibility as an unnecessary impediment to a more successful plan particularly when a beneficiary’s life circumstances change.
For example, recently a beneficiary with a medical degree finished his residency and chose to specialize in high-risk surgery. As a trust provides a significant degree of asset protection, I would have preferred that at least a portion of the principal remain in trust for the beneficiary’s lifetime. This would have been most beneficial to the beneficiary given his exposure to potential future liability due to his choice of profession.
Of course, decisions with respect to trust distributions include both the principal (as discussed above) and the income that is generated by that principal. It has been common to allow income distributions at age 21 or some other age. However, it should be noted that when an estate plan is designed, you may be unsure of the ultimate size of the children’s inheritance, thus requiring mandatory income distributions (or principal distributions) that may lead to very large distributions at relatively young ages.
An alternative approach can be to designate an income stream in today’s dollars, and then build in a cost of living adjustment to account for inflation. Even better, perhaps, would be to allow for income distributions to simply be at the discretion of the trustee. By giving greater flexibility to the fiduciary, distributions can be made based on the requisite need at the time.
Overall, there is not a “one size fits all” solution to these situations. It is of paramount importance to invest the appropriate amount of time, thought and care when drafting these documents. Doing so will help to lay the groundwork for more favorable outcomes later in life that ultimately better reflect the grantor’s initial intentions.
One Northern California-based Starbucks barista said she contemplated leaving her job after the controversial arrest last month of two black men sitting at a Philadelphia location of the coffee chain for several minutes without having purchased anything.
That employee, an African-American woman who asked TIME to remain anonymous due to concerns of losing her job, was angry. And when Starbucks later announced more than 8,000 stores across the country would participate in racial bias education training, she didn’t understand why.
“I was angry we had to educate people on how to not be racist,” she recalled in an interview with TIME Tuesday night shortly after attending the hours-long training that shuttered nearly all of Starbucks’ U.S. locations.
But, after completing Starbucks’ racial bias training program Tuesday afternoon with her coworkers, the California-based barista felt her perspective had changed. “I’m a black woman; I’ve already known all of this,” she said, referring to one section of the program that detailed living day-to-day in public spaces as a person of color. “But the fact that it was a video all employees had to watch, it really warmed me.”
More than 175,000 Starbucks employees participated in the mandatory racial bias education program Tuesday afternoon at thousands of U.S.-based locations as part of an initiative spurred by the high-profile incident in Philadelphia last month. Gathered around a few iPads at locations around the nation, Starbucks employees watched nearly two dozen videos featuring the rapper Common, documentary filmmaker Stanley Nelson, Starbucks executives and other prominent figures, while participating in wide-ranging discussions about race and identity with their colleagues.
The curriculum, released in full by Starbucks online Tuesday night, placed an emphasis on encouraging some employees to become “color brave” instead of “color blind” and meditated on the Starbucks’ responsibility as the “third place” for some members of the community, akin to a home and workplace.
TIME spoke with five Starbucks employees on what it was like to attend Tuesday’s training sessions. These employees shared differing perspectives on the impact of the curriculum and detailed how effective they each thought it truly was.
Jason, the only African-American employee at his Hollywood-based Starbucks location who asked TIME to identify him by his first name out of concerns over job security, said the program reiterated common conversations surrounding race like inclusion, acceptance and understanding.
But he said the training failed to address how to end instances like what happened in Philadelphia from occurring in the future. While a number of the videos featured the perspectives of people of color — and particularly African-Americans — Jason wrote in a message to TIME that “there were times where I felt they missed the mark.”
“It seems like a lot of talking from the videos,” he added, “and not enough discussion from us.”Employees said they were also given workbooks that included prompts for them to discuss their first experiences with racial identity and discuss in pairs questions like, “What makes me, me? And you, you?” The company also gave employees personal journals to write in and keep for the months ahead. The curriculum as a whole, Jason said, could have used some improvement.
“Helpful? [I don’t know],” Jason wrote. “It kinda reaffirms things that I know already.”
Jason was not alone. Mohamed Abdi, an employee at a Starbucks location in Alexandria, Virginia, told TIME he wished the program featured more discussions between coworkers as well. “Honestly I think they should have more hands-on courses speaking to different people and customers to figure out where they’re coming from,” he said. “It’s easy sitting through something and saying you learned something than actually learning something from the course,” he added.
His reception of the course, however, was generally positive. He particularly enjoyed the documentary produced by Stanley Nelson that displayed “the different things people of color go through just by leaving the house day by day.” That video featured an array of people of color who discussed how they access and experience public spaces than their white peers. (“When I go into stores, sometimes I get followed,” one woman said in the video. “Especially being a teen of color, they assume that you’re doing something bad.”)
The California-based, female employee told TIME that same video strongly resonated with her and — at one point — almost drove her to tears. “I often find myself even at other Starbucks locations where I don’t work at, and when I say I’m a partner, they look at me a certain kind of way,” she said in a phone interview after her store’s training session Tuesday night. “Just the fact that they really touched on that, it definitely made a lot of people in my job who work with me understand better.”
Ryan Curran, a white employee at a Sewell, New Jersey, location, said he and his coworkers learned a lot from the Starbucks training and wouldn’t change anything about the curriculum. “It would be helpful to continue the program when needed, for example, if a problem occurs in a certain store,” he said.
However, an Arkansas-based Starbucks employee who asked to remain anonymous out of concern over her employment, said she couldn’t imagine the curriculum would have much of an impact. “While this may be the most cost efficient way to handle the situation, I don’t feel like it will change much of anything,” the employee told TIME over text message before the training started.
She added that the store she works at initially didn’t plan on closing for Tuesday’s training, but eventually did once Starbucks’ higher ups stepped in. “Just driving an hour down the road takes you to towns where racism is alive and well,” she added.
According to estimates detailed by USA Today, Starbucks likely lost around $12 million by closing its U.S.-based stores on Tuesday afternoon. Since announcing it would close down the afternoon of May 29 for the training, Starbucks has emphasized the session was just the beginning of a long-term commitment to diversity and combating racial bias.
Indeed, in the weeks after Donte Robinson and Rashon Nelson were arrested at the Philadelphia location, Starbucks implemented new policies that allow people to sit in stores or use their bathrooms without purchasing anything. Hakeem Jefferson, a political science doctorate student at the University of Michigan who will join Stanford University’s faculty in the summer, told TIME ahead of Starbucks’ training day that structural and systematic changes like these policies could help prevent “negative outcomes” of unconscious biases manifest themselves
Starbucks’ curriculum, the company has said, is a launching pad for further initiatives as well as a tool for other companies to refer to and a program that may be used in the on-boarding of new employees in the future. But while movements within a company like Starbucks come as the result of a high-profile, racially charged incident, “I think we should worry that that doesn’t lead to the kind of change that we might want,” Jefferson, the social scientist, said.
“This has to be a core component of every company’s mission, particularly in an increasingly diverse world.”
If everyone who reads our articles and likes it, helps fund it, our future would be much more secure by your donations – Thank you.
Private equity investment funds have made many people and institutional investors billions. However, structural issues prevent all parties from experiencing the full benefits of this powerful investment vehicle.
Real estate investment has proven inaccessible to many investors across the marketplace. It has required massive initial buy-ins and/or intimate market knowledge for profitable participation.
Private equity today
Historically, private equity funds have been a reliable and steady source of income for investors and fund managers. Unlike public companies, a limited number of in-the-know partners hold private equity. Shares can’t be bought and sold on the stock market. Now, this is where shareholder governance and reporting are significantly easier. Unlike venture capital, private equity is traditionally used to invest in established businesses seeking to expand or restructure.
Therefore, a growth-oriented private equity fund invests the capital it raises in companies seeking growth capital to facilitate expansion, an acquisition strategy, and/or restructuring. In addition to providing capital, the fund’s investment team will use its expertise to assist a portfolio company in achieving its growth goal.
After a prescribed amount of time, the fund divests its interests in the portfolio companies. Hence, this provides a return to the fund’s investors. After divesting its holdings, the fund will be wound down. Then, the private equity firm will start a follow-on fund and repeat the cycle.
In the past, this investment model has been successful. However, it also has struggled with several inefficiencies.
Private equity fund managers have sought to work with a relatively limited number of investors to minimize shareholder reporting needs. Hence, the amount of cash typically required for participation means only large institutional investors like pensions or wealthy individual investors can buy in. A huge portion of the investing world simply isn’t able to participate in this profitable investment structure.
Furthermore, private equity fund structures have defined liquidation deadlines. These deadlines drive certain behavior that isn’t always in the best interest of maximizing underlying asset value. After the downturn, many funds liquidated their holdings. And, as a result, suffered tremendous losses. These structural deadline elements oftentimes constrain the investment manager from generating the best returns for their investors.
Blockchain token solutions
Blockchain’s immutable ledger can be used to tie real-world assets to tokens. This strategy combines the benefits of blockchain — its transparency, accessibility and security — with the reliability of real-world investments. Smart contracts and an immutable ledger means ownership of those real investments can be secured within the blockchain itself.
Cryptocurrency has made a few people very rich over the past six months. Yet, many tokens have experienced price drops almost as dramatic as their price increases.
People who need lower-risk investment opportunities have been shut out of the cryptocurrency boom. No one wants to sink a large portion of their kids’ college fund into a cryptocurrency that might be worthless tomorrow. This is where asset-backed blockchain tokens come into the picture.
A secure option for investment: Asset-backed tokens
Founded in 2012, Muirfield Investment Partners is a private equity firm. It will launch a TAO for a new generation of private equity investment. Murfield built MIF, a security asset token. And, a private equity real estate investment portfolio managed by the private equity real estate firm will back the token.
Initially, a limited number of U.S. accredited investors and non-U.S. approved parties will receive tokens. Then, public exchanges buy and sell MIF tokens. This can happen after a lock-out period of 90 days to a year. This groundbreaking model presents several opportunities.
Breaking the rigid structure of private equity investment
Tokenization allows a lower barrier of entry to participation. Anyone who owns just one token is participating in the fund.
Furthermore, tokenization allows liquidity that was previously impossible in private equity fund structuring. As a result, this helps optimize the private equity fund structure. Investors in need of redemptions can sell their tokens in exchanges. Someone else acquires the token.
Fund managers face far lighter redemption burdens under the tokenization model. Plus, the fund doesn’t have a liquidation deadline. Therefore, they can manage the fund far more efficiently and drive greater economic returns for their investors.
In fact, tokenization means no fund liquidation. Instead, managers can focus on maximizing the fund’s long-term net asset value rather than reaching a target exit date.
Now, Muirfield wants to improve the traditional private equity fund world. Tokenization opens this world up to a larger participant pool. As Thomas Zaccagnino, Founder of Muirfield Investment Partners, explained, “We are very excited to bring a new and much improved private equity investment structure to the market.
A structure offering better alignment between the investors and investment manager, improved ability to maximize assets values, and enhanced liquidity allowing investors the ability to control how long they participate in the growth of the underlying real estate portfolio.”
If everyone who reads our articles and likes it, helps fund it, our future would be much more secure. For as little as $5, you can donate us – Thank you.
Your bounce rate can be such a scary number, right?It’s common knowledge that a high bounce rate is bad and a low rate is good.Every time you log into your Google Analytics account, it’s right there waiting for you.
I understand the feeling when you see that number creeping up.But the problem is that numbers can be misleading.After all, how high is really too high?In this post, I’m going to show you how you can fully measure and assess your bounce rate. That way, you’ll know if it’s actually too high for your industry or if it’s perfectly normal.
I’ll share tips and tricks on how to audit your bounce rate and understand what’s driving it up.I’ll also tell you some of my secrets for lowering your bounce rate.But first, let’s talk about exactly what a bounce rate is and why you should care.
What is a bounce rate and why does it matter?
A “bounce” occurs when someone visits your website and leaves without interacting further with your site. Your bounce rate shows you the percentage of your visitors who bounce off of your site.
By default, Google Analytics considers a visitor to have interacted with your site if they visited at least one additional page.
The bounce rate you see in your overview report on Google Analytics is your site-wide bounce rate.
It’s the average number of bounces across all of your pages divided by the total number of visits across all of those pages within the same period.
You can also track the bounce rate of a single page or a segment or section of your site.
I’ll show you how once we start looking at the different segment reports.
The bounce rate of a single page is exactly what it sounds like. It’s the total number of bounces divided by the total number of visits on a page.
If you run an e-commerce site that also has a blog, you may want to implement a segmented bounce rate.
Your blog posts may have a very different average bounce rate than your product pages.
We’ll get into the exact details later, but segmenting the two can make your numbers more meaningful when you’re looking at the data.
Now that you know the different ways that you can segment your site traffic, I’ll show you how you can create adjusted bounce rates.
You can adjust what Google Analytics considers an interaction. This will directly impact your bounce rate.
For example, you might feel that a visitor has interacted on your site if they watched a video.
In Google Analytics, you have the option to set an event like playing a video, clicking a button, or completing a download as an interaction.
Then, users who complete these “events” will no longer count toward your bounce rate.
However, you need to careful with this. Make sure that automated events don’t skew your results.
If you’ve set up your videos to play automatically, you need don’t want to count video views as interactions.
The simple way to modify how Google records interactions is by sending events into your Google Analytics that tell you when a user spends a certain amount of time on a page, scrolls through a certain percentage of a page, or sees a specific element a the page.
You can send events from Google Tag Manager:
1. Adjust your bounce rate through scroll percentage events
The “Scroll Depth” trigger allows you to create custom events based on how far a visitor scrolls down a page.
First, you need to create a new tag.
Then, name your tag, select “Universal Analytics” for tag type and choose “Event” for the track type.
Next, you need to type in the event category and event action.
To get the action, simply click the small plus sign beside the field and select “Page Path.”
For the event label, pick “Scroll Depth Threshold.”
If you don’t see this option available, go to your “Built-In Variables” screen and enable the scrolling variables:
Now, select “Non-interaction Event” as “False,” and add in your UA tracking ID .
If you’ve completed all of those fields, it should look like this:
For this tag, I recommend setting the scroll to 75% of the page. That means that Google will consider a visitor to have interacted on your site if they scroll 75% of the way through the page.
Make sure you’ve selected “Scroll Depth” as the trigger type. Then, in percentages, put down “75 percent”.
Once done, you can save, preview, debug, and then publish.
2. Adjust your bounce rate through the timer function
You can also decide that Google should consider a visitor to have interacted on a page if they spend a minimum amount of time on it.
Create a new tag and give it a name, such as “UA — Adjusted Bounce Rate — Timer.”
You can choose the length of time that you want to start with. I suggest trying 30 seconds.
To do this, add a new trigger and name it “Timer — 30 seconds”.
The interval is in milliseconds. So, for 30 seconds, you need to put enter “30000.”
Select a limit of one. Then, in the conditions section, set it for “Page URL matches RegEx*.”
This will make it so that Google Analytics includes all of your pages in the tracking.
Make sure you save, preview, and debug before publishing.
Other methods for decreasing bounce rate
Here are some more ways to see where visitors are bouncing and how you can use that information to boost conversions.
Review top exit pages
Another report you should check out is your top exit page report.
You can find it right below the landing pages report in the left-hand menu.
This report will show you which pages people most often abandon your website from.
Take a look at your top traffic pages and compare your bounce rate and your exit rate.
This will show you who’s landing directly on that page and bouncing versus who’s arriving there from an internal link and exiting.
It can help you narrow down where you should spend your time testing and making improvements on your site.
Review in-page analytics
Another great report within Google Analytics is the in-page analytics report.