Calculating Probability in Business Success

When we say that one event is more probable than another, we mean it's more likely to happen. The branch of mathematics called probability tries to express in numbers statements of the form: An event (A) is more or less probable than an event (B).

If a person tosses up a coin, there are only two ways it can possibly fall -- heads or tails. It's as likely to fall one way as the other, so we say that the probability of falling heads is ½ or half as probable. But, in tossing three coins, they're eight possibilities. These are: hhh, hht, hth, htt, thh, tht, tth and ttt. Only three of these these combinations have two heads, so the probability of throwing two heads is 3/8 or three eights.

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Wikipedia: Probability is a way of expressing knowledge or belief that an event will occur or has occurred. The concept has an exact mathematical meaning in theory, which is used extensively in such areas of study as mathematics, statistics, finance, gambling, science, artificial intelligence/machine learning and philosophy to draw conclusions.

Calculating Probability in Business Success

Now suppose a person throws two dice. There are thirty-six different combinations. But there's only one combination that'll give two "ones" so the probability of throwing two "ones" is 1/36th or one thirty-sixth. There's two ways to throw a "one" and a "two" so the probability of this throw is 2/36 or two thirty-sixth or you can call it 1/18th or one eighteen.

There's a mathematical statement for all situations of this kind. Let (M) stand for any number of events that are equally likely to happen. Let (N) stand for the number of these events that would be favorable if they happened. Then the probability that a favorable event will happen is (N/M).

These rules about probability are used by life insurance companies. When a person takes out a life insurance policy, it's important for the company to be able to estimate how long he will probability live. Each age has a different probability called life expectancy.

Mathematicians have prepared tables of life expectancy. The rules of probability are also used by scientists in interpreting statistics and estimating true values from experimental data. Actually, calculating probability is widely used in all facets of business. Even in your personal life, rules of probability are used without even thinking about it.

As a example when Donald Trump was asked by an interviewer, "Do you think you're a lucky real estate investor?" He says, "The harder you work the luckier you get!" Great answer, but he's also know as being paramount in calculating probability in business and real estate ventures. In other worlds more on the laws of probability and less on the luck part!

Calculating Probability in Business Success

Gary Cooper is a writer and real estate investor from Texas. He spent three decades in the HVAC industry before taking the plung into real estate full time. Stop by Gary's site anytime!

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Understanding Social Security Retirement Benefits

Each day I receive more and more questions from my baby boomer clients who are confused about Social Security benefits and taxation. Social Security benefits come in three flavors: Retirement benefits, survivor benefits and disability benefits. The questions I receive primarily involve questions regarding the retirement benefits area. With 365 baby boomers turning 62 each hour, since January 1st 2008, I have no doubt that the frequency and diversity of these questions will grow. Fortunately, most of the questions are very similar and I will address, in this article, the most common issues I am regularly confronted with.

When can I retire and collect benefits?
You have three choices as to when you can begin collecting retirement benefits:
Age 62 or
Normal Retirement Age or
Later than Normal Retirement Age

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Normal Retirement Age refers to the age you need to be in order to receive your Primary Insurance Amount ("PIA"). PIA is the full, normal retirement benefit you are entitled to. When you retire early (i.e. at age 62), your full retirement benefit is reduced to an amount equal to 75%. This means if you retire at age 62 you will receive 75% of what you would normally receive if you waited until you hit your normal retirement age. If you retire later than your Normal Retirement Age, your future retirement benefits grow by 8% per year until you reach age 70. After age 70 the Social Security Administration will not increase your benefit amount one red penny.

Understanding Social Security Retirement Benefits

Normal retirement age varies according to your year of birth:
Born 1937 and earlier = 65
Born in 1938 = 65 + 2 months
Born in 1939 = 65 + 4 months
Born in 1940 = 65 + 6 months
Born in 1941 = 65 + 8 months
Born in 1942 = 65 + 10 months
Born in 1943 to 1954 = 66
Born in 1955 = 66 + 2 months
Born in 1956 = 66 + 4 months
Born in 1957 = 66 + 6 months
Born in 1958 = 66 + 8 months
Born in 1959 = 66 + 10 months
Born in 1960 and later = 67

How are my Social Security retirement benefits determined?
The calculation of retirement benefits is based on earnings over a forty year period. The lowest five years are dropped and the remaining earnings are averaged over this thirty-five year period.

Am I eligible to collect Social Security retirement benefits? I did not work that much during my life.
In order to qualify for Social Security retirement benefits you need to have worked forty quarters and earned a specified minimum amount during each quarter, in order for the quarter to qualify. A quarter is a three month period.

My wife was a homemaker and has never worked. Is she eligible for any Social Security retirement benefits?
If a spouse did not work they are still eligible for Social Security benefits equal to 50% of their working spouse's PIA (full retirement amount). When the working spouse dies, the surviving, nonworking spouse, is entitled to 100% of their deceased working spouse's retirement benefits.

Should I begin collecting benefits at age 62 (early retirement)?
If you are hell-bent on early retirement and need the retirement benefits to survive, then the answer is an obvious yes. If you do not need the benefits to survive and there is longevity in your family, then waiting until full retirement age is probably the best option as your increased benefits will begin paying off after age seventy-six.

What if I retire early, collect retirement benefits at age 62, and soon after realize I need to work because I am not making ends meet?
In this case the amount of earnings you make during the year cannot exceed ,160 (2009). If your earnings exceed this amount you will be required to pay back one dollar in Social Security retirement benefits for every two dollars of earnings that exceed this ,160 (2009) amount. You can find yourself in a financial mess when this happens so you must consult your CPA if you are thinking of returning to the workforce, even part-time.

I am divorced and I did not work much during my life. Am I eligible for Social Security benefits?
A divorced spouse who does not meet the forty quarter minimum requirement and who was married for ten years to the same spouse, is entitled to 50% of their ex-spouse's PIA (full retirement benefit) if they wait until their full retirement age. If they want to collect at age 62, then they are eligible for 37.5 % of their ex-spouse's PIA (full retirement benefit).

When should I apply for retirement benefits?
The earliest you can apply for benefits is three months prior to turning age 62.

I never worked but want to apply for early retirement benefits (age 62) on my husband's account. My husband says he is going to continue working. Is this a problem?
Yes. Generally, a spouse cannot collect on their spouse's account until their spouse begins collecting. There is an exception, however. The working spouse can "file and suspend" (apply for Social Security benefits and then immediately apply to suspend collecting benefits).

I intend on applying for early retirement (age 62) but I will work part-time. Do I have to pay Social Security tax on my earnings?
Yes. Everyone who works, even those collecting Social Security benefits, must pay Social Security tax on their earnings.

How much of my Social Security benefits will be taxed?
The maximum amount of your benefits subject to income tax is 85%. It may be lower, depending on your Modified Adjusted Gross Income.

Understanding Social Security Retirement Benefits

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxes. Tom is founder of the Rich Habits Institute and author of "Rich Habits".

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Train Your Memory to Perfection!

All it takes to achieve an organized and a large-capacity memory is to dedicate 5-10 minutes of your daily life to simple techniques destined to either directly and/or indirectly positively impact your cognition and memory. Some of these techniques are:

Proper nutrition
Your intake of foods can have a positive or negative impact on your overall cognition including memory. Eating a plethora of sugars will certainly provide the brain with the glucose it needs to carry out its proper function, however there is a certain saturation point which when surpassed will bring no further benefit, other than your taste buds, and can actually be detrimental to your cognition and overall well-being. Therefore try to avoid excess sugars in your diet by simply substituting soft drinks with water or by performing other similar measures. This step is not essential to attaining a perfect memory, but rather acts as a catalyst making it easier to achieve the desired goal.

Nootropics
There are a variety of supplements and substances designed to enhance cognitive processes including learning and memory at a cost of no side effects. Among these we find substances such as Piracetam and related compounds, which modify neural function in your favor. Pills are certainly not an answer to attaining a perfect memory, but again as the case above, can serve as useful catalyst enabling you to attain what you desire more easily.

Memory improvement techniques
These techniques are the primary sources for attaining an excellent memory because these techniques implement paradigms into your cognitive skills that will allow you to form and retain memories more quickly and with a greater ease than without them. These often include exercises borrowed partially from psychology such as the creation of a mental palace: you pick some familiar structure, preferably a building you know well, and designate each room to different groups of information. Once you want to revive some of this stored information just navigate through the mental palace and retrieve what is needed. Not only does this technique bring more order to your memories but also ties your visual sense to them as you deposit the information to be remembered in the designated palace areas. The more senses(touch, sound, sight etc.) you assign to some event/information the easier to retain in memory it becomes.

There are many more memory improvement techniques and all share an ease of implementation into your daily life and a high efficiency bringing you noticeable results in a short amount of time. So don't be afraid to try it for yourself!

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