Chris Chen

CFP®, CDFA®
Retirement, Investing, Lifestage Based Planning
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“Chris Chen CFP® helps individuals and families plan difficult life transitions such as retirement and divorce”
Firm:

Insight Financial Strategists LLC

Job Title:

Founder

Biography:

Chris Chen CFP® helps individuals and families plan difficult life transitions such as retirement and divorce. 

As a CFP® professional, Chris works with your own legal and tax advisers to build cost-effective and tax-efficient strategies to help you achieve your long term financial goals with wealth preservation, retirement income planning, and legacy planning.His calming confidence and knowledgeable guidance through complex financial transitions such as retirement and divorce can help you gain a sense of security and reassurance for your financial future.

Chris’s career in financial services followed a rewarding career in strategic business management during which he lived, worked, and grew successful businesses in the US, Asia/ Pacific and Europe. Chris earned his Bachelor’s degree in Economics and his MBA in Finance. He is also a CERTIFIED FINANCIAL PLANNER® practitioner and a Certified Divorce Financial Analyst. Chris is a member of the Financial Planning Association, the Massachusetts Council on Family Mediation and he is the Treasurer of the Association of Divorce Financial Planners, a non profit organization.

Chris invites you to sign up to start your own financial plan for free at po.st/financialplan

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August 2017
    Marriage / Divorce, Retirement Plans, Women & Money
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    Asset Allocation, Investing
June 2017

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    Retirement Plans
How does a defined benefit pension plan differ from a defined contribution plan?
90% of people found this answer helpful

It is all in the nomenclature:

Defined Benefit Plans define the benefit ahead of time.  That benefit is usually a monthly payment in retirement, based on the tenure of the employee, his or her salary, and possibly other factors.  Payments are usually defined to be for the lifetime of the employee. Employees are not usually expected to contribute to the plan, and as such they do not have individual accounts.  The employee right is not to an account, it is to a stream of payments. 

Defined Benefit Plans used to be common across large American companies.  They are expensive to maintain as they require regular contributions from the employer to be funded.  As a result, defined benefit pensions are often underfunded.

The funding expense usually accrues entirely to the company. Since the 1980's . companies have progressively reduced their defined benefit commitments, partially to reduce costs. Currently, most defined benefit plans are for government employees, union employees, with a smattering of legacy plans in corporate America.  

In Defined Contribution Plans, the benefit is not known, but the contribution is. The contribution usually comes primarily from the employee, although many employers also have a company match. The advent of the defined contribution plan has allowed corporate America to disengage from defined benefit plans and to push the responsibility for retirement planning on the employee.

As opposed to defined benefit plans, employees have accounts in defined contribution plans. Subject to the vesting of the employee match, the money in the account is the employee's. Unlike defined benefit plans, the employee's retirement money is portable, ie it can be withdrawn or transferred to another account, within the limits of the rules.  Some of the common defined contribution plans include 401(k), 403(b), 457, IRA, Roth IRA, SIMPLE IRA, and SEP IRA. 

Employees in Defined Contribution companies have a choice for investments in their account. Most plans have a choice of mutual funds that attempts to cover the universe of possibilities, including fixed income and equity funds. Given that everyone's investment result will differ, and are no inherently predictable, the benefit at retirement is an unknown, unlike defined benefit plans. 

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