What’s Your Retirement Number #?: MS Excel Retirement Planning Spreadsheet

Army Community Service (ACS)

U.S. Army Garrison Rock Island Arsenal

Edition of April 29, 2013 version 4

“Uncle Jon” Cook • Survivor Outreach Services – Financial Counselor • Financial Readiness Program • Personal Financial Management (PFM) Specialist • Accredited Financial Counselor (AFC) • Army Emergency Relief (AER) • • Notary Public Employment Readiness Program • Military Spouse Employment Program (MSEP) • (Former) Professional in Human Resources (PHR) & (Former) Certified Workforce Development Professional (CWDP)

(309) 782 - 0815 1 – 877 – 882 – 0523 jon.c.cook.civ @ mail. mil www. riamwr. com / acs /

Disclaimer

• This presentation is for the information and education of the participants.

• The information presented is neither an endorsement nor a guarantee .

• Past performance is no guarantee of future performance.

• Before making any financial commitment, consult with your Family Members and appropriate professional advisers.

Sequence of this Presentation

• Purposes • The ACS Spreadsheet “philosophy” and introduction • Resources for your use • PowerSave Software from Utah State Extension Service • Other software and web sites • Come visit with us at ACS

Having a

Scooby Doo

moment?

Please ask questions as we proceed!

Sequence of this Presentation

•

Purposes

• The ACS Spreadsheet “philosophy” and introduction • Resources for your use • PowerSave Software from Utah State Extension Service • Other software and web sites • Come visit at ACS

Purposes of this Presentation

• To provide a method to develop the amounts of money needed to save for retirement planning.

• Illustrate that a portion of retirement funding will be accomplished through pensions and annuities (allowances) – and that a portion may need to be funded from savings and investments (piles). • Enable persons and families as a team to discuss retirement planning figures in a logical and rational manner.

Annuity

• An insurance instrument • Purchased over time or at one time (lump sum) • Payout – an income stream =

an allowance

• starting at a specified time • ending at a specified time; or upon death of the • beneficiary [single annuity] – or • beneficiaries [joint or group annuity] • for a • specific amount (fixed) – or • variable amount (variable) 8

• Annuities sector employer

by contract

Annuity

from an insurance company (e.g. Met Life) or a private •

Annuity – like

(government sponsored) income streams with cost of living increases (COLA’s), based on a formula : • CSRS (Civil Service Retirement System) • FERS (Federal Employee Retirement System) • Military Retirement • Social Security

When you die – it dies

9

Income Streams from your “Money Piles”

Live off of the Interest Only do not use the principal… Slowly draw down

both

the principal and the interest =

Annuitizing

10

Annuitizing

• Liquefying an asset (e.g. a mutual fund or savings account) • Over a specified time • Producing an income stream from a “$ pile” • “… like creating your own annuity”

You could outlive your $ or your $ could outlive you …

11

Allowance

Annuity

Their responsibility You have less control Can’t outlive the money Can’t increase or decrease the periodic amounts ? Cost of Living Increases due to inflation ?

What is in your Retirement Plan?

Annuitizing

Money Piles Vary the pay out’s

Your

responsibility You have more control Can outlive the money & the money can outlive you Can increase or decrease the periodic amounts You account for cost of living increases due to inflation 12

What’s Your Retirement Number #?

Time Line of Persons Involved Requirement over time “the number” $# Allowances annuities, retirement plans: Social Security; FERS / CSRS; Military Capabilities to reach “the number” Piles Money you grow, and then pay out: TSP, 401k, IRA

Sequence of this Presentation

•

Purposes

•

The ACS Spreadsheet “philosophy” and introduction

• Resources for your use • PowerSave Software from Utah State Extension Service • Other software and web sites • Come visit at ACS

Lay out your Person(s) Dates Ages Retirement options & time frames Financial obligations and options Building Your Time Line Paper or MS Excel (.xls) work sheet Page 1 15

Social Security Agency ( www. ssa. gov )

Unisex Life Expectancy at Retirement Table

Age at Retirement Closest to Year of Retirement

17.12

Years from 2010 is the half-way point =

2027

assumes that ½ of this retirement population will die before this year (age 83); ½ of this retirement population will die after this year, some living beyond 2044 (age 100)

Retirement Requirements MS Excel (.xls) Work Sheet

Page 2

Annual Budget over the phases of retirement • Go – Go • Go-Slow • No-Go • Estate Planning 17

Retirement Capabilities MS Excel (.xls) Work Sheet

Page 3

Spendable Income Annual Income over the phases of retirement • Go – Go • Go-Slow • No-Go • Estate Planning Ret Center Expense s* Deficit!

Insurance?

Other?

18

Page 4: Capabilities by Source “ What will the piles grow to?

What will the piles pay out?

” 19

Retirement Capabilities MS Excel (.xls) Work Sheet Spendable (Column 14) Taxable (Columns 4 – 12) Non-Taxable (Column 13) 20

1. Write your timeline starting with year of retirement and age(s) Retirement Capabilities MS Excel (.xls) Work Sheet Inflation (Cost of Living Increase! [You Hope]) Factors 2. Ages until ???

21

Monthly Income (forecasted); Inflation factor increase for appropriate types Retirement Capabilities MS Excel (.xls) Work Sheet 22

Retirement Capabilities MS Excel (.xls) Work Sheet 4 & 5. Taxable Pensions • FERS and Annuities • CSRS (Taxable part) • Military • Insurance Co.

• Annuitized Funds • TSP • 401k / 503b • IRA 23

Retirement Capabilities MS Excel (.xls) Work Sheet 6 & 7. Social Security (Taxable part) 24

Taxable Pensions and • FERS Annuities • CSRS (Taxable part) • Military • Insurance Co.

• Annuitized Funds • TSP • 401k / 503b • IRA Retirement Capabilities MS Excel (.xls) Work Sheet 8. Work Social Security (Taxable part) 9. Other • Savings • Royalties • Rents 25

Retirement Capabilities MS Excel (.xls) Work Sheet

10. Taxable Income 12. After Tax Income 11. Taxable Rate

(

effective rate

for Federal and State) 26

Retirement Capabilities MS Excel (.xls) Work Sheet

13. Non-Taxable

Income

• VA • Disability Payments • Social Security (non-taxed part) • CSRS (non-taxed part) •

Roth IRA’s

• Life Insurance Pay-outs 27

Retirement Requirements & Capabilities MS Excel (.xls) Work Sheet

Page 3

Income Expenses* (carried over from previous .xls work sheet) Your results over time 28

Retirement Capabilities MS Excel (.xls) Work Sheet Make Adjustments to Income over time due to

transitions

Basic Retirement Financial Planning- Part 2 - ACS RIA 29

Retirement Capabilities MS Excel (.xls) Work Sheet Deficit!

Increase Ret Savings?

Insurance?

IRA?

Savings?

Other?

Basic Retirement Financial Planning- Part 2 - ACS RIA 30

Retirement Capabilities

How do you know it is accurate?

MS Excel (.xls) Work Sheet

OK – Now What?

Basic Retirement Financial Planning- Part 2 - ACS RIA 31

Retirement Capabilities Work Sheet

Build at least 3 “scenarios” or “tests”

Best Case Low Inflation Low Expenses High Income & Returns Worst Case High Inflation High Costs Low Income & Returns Middle Case In-between inflation and expenses Fair Income & Returns 32

Sequence of this Presentation

•

Purposes • The ACS Spreadsheet “philosophy” and introduction

• Resources for your use

•

PowerSave Software from Utah State Extension Service

• Other software and web sites

•

Come visit with us at ACS

www. powerpay. org

New? Sign Up Now

www. powerpay. org

PowerSave

Function “Money Future” Accumulating Wealth Withdrawing Wealth Accumulation Phase 1 st calculate what your money could grow to: Pay-out Phase - by time period - by set amount

www. powerpay. org

PowerSave

Function “Money Future” Accumulating Wealth

Potentially money growth Impact of inflation

www. powerpay. org

PowerSave

Function “Money Future”

Withdraw for a Specified Time

Withdrawing Wealth

Your “pile’s” monthly payout over 25 years = $_ Impact of inflation

www. powerpay. org

PowerSave

Function “Money Future”

Withdraw a Specified Amount

Withdrawing Wealth

If your “pile’s” monthly payout is $350, how long will the pile last? Impact of inflation

www.powerpay.org



PowerPay



Debt Pay-offs

Spending Plans Create a Budget

Free from the Utah State Extension Service

PowerSave Future Value of Money!

Once you create your account, you can create other profiles (e.g. family members); or just have them create their own accounts.

Create new profiles Go to your profile

Yes!

PowerSave!!

Got it!!!

What could possibly go wrong?

Sequence of this Presentation

•

Purposes • The ACS Spreadsheet “philosophy” and introduction • Resources for your use • PowerSave Software from Utah State Extension Service •

Other software and web sites

• Come visit with us at ACS

Interest Vision Software

for use at Army Community Service You fill in all but one of the missing data elements: it will figure out the one missing element for you!

www. mymoney. gov

From the Dept. of the Treasury and the FTC Basic Retirement Financial Planning- Part 3 - ACS RIA 43

Social Security Administration

www. ssa. gov

Retirement

Basic Retirement Financial Planning- Part 3 - ACS RIA 44

American Savings Education Council (ASEC) Calculators

www. asec. org / ballpark /

Ballpark Estimate Fed Employee Ballpark Estimate

45

T. Rowe Price Retirement Income Manager – a web simulation

www. troweprice. com

Retirement > Retirement Planning > Retirement Income Calculator

4% Rule

Plan to withdraw no more than 4% of your assets the first year; in following years draw 4% + small COLA factor

#1 Net Worth Statement

Net Worth Statement

Only way to get money out of a Fixed Asset is to sell or rent it

Assets (+) Fixed (stuff) Liquid or Monetary Liquidity!

Liabilities (-)

-

+ Assets Liabilities = Your Net Worth

Where ever you start is OK – start!

And make it grow from there: “build wealth – not debt”!

It’s not the money you make; it’s the money you get to keep! – Ric Edelman

Jon Cook

Accredited Financial Counselor (AFC) Army Community Service Bldg 102, 1 st Floor, SE corner [email protected]

(309) 782-0815 / -0829

www.riamwr.com/acs/financial-readiness