Army Community Service (ACS) U.S. Army Garrison Rock Island Arsenal

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Presentation transcript:

Army Community Service (ACS) U.S. Army Garrison Rock Island Arsenal 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 (309) 782 - 0815 1 – 877 – 882 – 0523 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) My name is Jon Cook and I am the Financial Counselor at Army Community Service (ACS), your Military Family Service Center. My contact information is on the slide. Please feel free to make an appointment to discuss your Personal Financial Management (PFM) topics. An Accredited Financial Counselor (AFC) is not a financial planner – I do not sell anything or have a bias towards any particular financial products. I am a neutral money coach. Now I do advocate saving and investing, and I do sponsor the Arsenal’s Military Saves Campaign, but I am a money coach – you make the decisions and I am a free service of the Arsenal. (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. Saving and investing is a personal matter. No one class or presentation can cover all of the possibilities. This class is not an endorsement or a guarantee from any institution. We encourage to save as part of a team so let family members know what you are planning. Think about what you are planning to do and seek advice from the appropriate professionals.

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.

An asset producing and income stream 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)

Allowances Annuity Annuities from an insurance company (e.g. Met Life) or a private sector employer by contract 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 Steady allowance for life (of the beneficiary) They have the responsibility They have control When you die – it dies

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

You could outlive your $ - or your $ could outlive you … An asset producing and income stream 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” It can be steady or periodic or ____? You have the responsibility You have control You could outlive your $ - or your $ could outlive you …

What is in your Retirement Plan? Annuity Allowance 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 ? 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

What’s Your Retirement Number #? Time Line of Persons Involved Requirement over time “the number” $# Capabilities to reach “the number” Allowances annuities, retirement plans: Social Security; FERS / CSRS; Military 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

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

Unisex Life Expectancy at Retirement Table 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

Retirement Capabilities MS Excel (.xls) Work Sheet Page 3 Expenses* Spendable Income Annual Income over the phases of retirement Go – Go Go-Slow No-Go Estate Planning Ret Center Deficit! Insurance? Other?

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

Retirement Capabilities MS Excel (.xls) Work Sheet Spendable (Column 14) Back to Page 3 Taxable (Columns 4 – 12) Non-Taxable (Column 13)

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

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

Retirement Capabilities MS Excel (.xls) Work Sheet 4 & 5. Taxable Pensions and Annuities CSRS (Taxable part) FERS Military Insurance Co. Annuitized Funds TSP 401k / 503b IRA

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

Retirement Capabilities MS Excel (.xls) Work Sheet Taxable Pensions and Annuities CSRS (Taxable part) FERS Military Insurance Co. Annuitized Funds TSP 401k / 503b IRA Social Security (Taxable part) 9. Other Savings Royalties Rents

Retirement Capabilities MS Excel (.xls) Work Sheet 10. Taxable Income 12. After Tax Income 11. Taxable Rate (effective rate for Federal and State)

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

MS Excel (.xls) Work Sheet Page 3 Retirement Requirements & Capabilities MS Excel (.xls) Work Sheet Page 3 Income From Parts 1 & 2 Expenses* (carried over from previous .xls work sheet) Your results over time

Retirement Capabilities MS Excel (.xls) Work Sheet Make Adjustments to Income over time due to transitions Basic Retirement Financial Planning- Part 2 - ACS RIA

Retirement Capabilities MS Excel (.xls) Work Sheet Deficit! Increase Ret Savings? Insurance? IRA? Savings? Other? Basic Retirement Financial Planning- Part 2 - ACS RIA

How do you know it is accurate? It isn’t – no person knows the future! Retirement Capabilities MS Excel (.xls) Work Sheet It isn’t – no person knows the future! OK – Now What? Basic Retirement Financial Planning- Part 2 - ACS RIA

Build at least 3 “scenarios” or “tests” Retirement Capabilities Work Sheet Build at least 3 “scenarios” or “tests” Best Case Low Inflation Low Expenses High Income & Returns Goldie-Locks and the Three Bears Worst Case High Inflation High Costs Low Income & Returns Middle Case In-between inflation and expenses Fair Income & Returns

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

Free from the Utah State University Extension Service www. powerpay. org Free from the Utah State University Extension Service New? Sign Up Now

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

Potentially money growth 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

Free from the Utah State Extension Service PowerPay Debt Pay-offs www.powerpay.org Free from the Utah State Extension Service PowerSave Future Value of Money! PowerPay Debt Pay-offs Spending Plans Create a Budget 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

What could possibly go wrong? 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

Retirement www. ssa. gov Social Security Administration Basic Retirement Financial Planning- Part 3 - ACS RIA

www. asec. org / ballpark / Fed Employee Ballpark Estimate American Savings Education Council (ASEC) www. asec. org / ballpark / Calculators Ballpark Estimate Fed Employee Ballpark Estimate

This is a commercial web site T. Rowe Price Retirement Income Manager – a web simulation www. troweprice. com Retirement > Retirement Planning > Retirement Income Calculator This is a commercial web site 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 Liquidity! Net Worth Statement Assets (+) Fixed (stuff) Liquid or Monetary Liabilities (-) + Assets Liabilities = Your Net Worth Only way to get money out of a Fixed Asset is to sell or rent it Liquidity! 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 Army Community Service Come visit! Accredited Financial Counselor (AFC) Army Community Service Bldg 102, 1st Floor, SE corner jon.c.cook.civ@mail.mil (309) 782-0815 / -0829 www.riamwr.com/acs/financial-readiness