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
Mar 26, 2015
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.
8
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)
An asset producing and
income stream
9
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
Allowances
• Steady allowance for life (of the beneficiary)
• They have the responsibility
• They have controlWhen you die – it dies
10
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
11
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”
An asset producing and
income stream
• It can be steady or periodic or ____?
• You have the responsibility
• You have controlYou could outlive your $ -
or your $ could outlive you …
12
AnnuityAllowance
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 ?
AnnuitizingMoney 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 is in your Retirement Plan?
What’s Your Retirement Number
#?Time Line of Persons
InvolvedRequirement
over time“the number” $#
Capabilities to reach
“the number”Allowances
annuities, retirement plans:Social Security; FERS /
CSRS; Military
PilesMoney 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
15
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
Social Security Agency (www. ssa. gov)
Unisex Life Expectancy at Retirement Table
Closest to Year of
Retirement
Age at Retirement
17.12 Years from 2010 is the half-way point = 2027assumes 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)
17
Retirement Requirements
MS Excel (.xls) Work Sheet Page 2
Annual Budget over the phases of retirement
• Go – Go
• Go-Slow
• No-Go
• Estate Planning
18
Retirement Capabilities
MS Excel (.xls) Work Sheet Page 3
Annual Income over the phases of retirement
• Go – Go
• Go-Slow
• No-Go
• Estate Planning
Ret Center
Deficit!Insurance?
Other?
Spendable Income
Expenses*
19
Page 4: Capabilities by Source
“What will the piles grow to? What will the piles pay out?”
20
Retirement Capabilities
MS Excel (.xls) Work Sheet
Taxable (Columns 4 – 12) Non-Taxable (Column 13)
Spendable(Column 14)
Back to Page 3
21
Retirement Capabilities
MS Excel (.xls) Work Sheet1. Write your timeline starting with year of retirement and age(s)
2. Ages until ???
Inflation (Cost of Living Increase! [You Hope]) Factors
22
Retirement Capabilities
MS Excel (.xls) Work Sheet
Monthly Income (forecasted);Inflation factor increase for appropriate types
23
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
24
Retirement Capabilities
MS Excel (.xls) Work Sheet
6 & 7. Social Security
(Taxable part)
25
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)
8. Work
9. Other• Savings• Royalties• Rents
26
Retirement Capabilities
MS Excel (.xls) Work Sheet
10. Taxable Income
11. Taxable Rate (effective rate for Federal
and State)
12. After Tax
Income
27
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
28
Retirement Requirements & Capabilities
MS Excel (.xls) Work Sheet Page 3
Income
Expenses*(carried over from previous .xls work
sheet)
Your results over time
From Parts 1 & 2
Basic Retirement Financial Planning- Part 2 - ACS RIA 29
Retirement Capabilities
MS Excel (.xls) Work Sheet
Make Adjustments to Income over
time due to transitions
Basic Retirement Financial Planning- Part 2 - ACS RIA 30
Retirement Capabilities
MS Excel (.xls) Work Sheet
Deficit!Increase Ret Savings?
Insurance?IRA?
Savings?Other?
Basic Retirement Financial Planning- Part 2 - ACS RIA 31
Retirement Capabilities
MS Excel (.xls) Work Sheet
How do you know it is accurate?
It isn’t – no person knows the future!
OK – Now What?
32
Retirement Capabilities Work Sheet
Build at least 3 “scenarios” or
“tests”
Goldie-Locks and the Three
Bears
Best CaseLow InflationLow ExpensesHigh Income & Returns
Worst CaseHigh InflationHigh CostsLow Income & Returns
Middle CaseIn-between inflation and expensesFair 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
www. powerpay. org
Free from the
Utah State
University Extension
Service
New? Sign Up Now
www. powerpay. orgPowerSave
Function“Money Future”
Accumulating Wealth
WithdrawingWealth
Accumulation Phase 1st calculate what your money could grow to:
Pay-out Phase- by time period- by set amount
www. powerpay. orgPowerSave
Function“Money Future”
Accumulating Wealth
Potentially money growth
Impact of inflation
www. powerpay. orgPowerSave
Function“Money Future”
WithdrawingWealth
Your “pile’s” monthly payout
over 25 years = $_
Impact of inflation
Withdraw for a Specified Time
www. powerpay. orgPowerSave
Function“Money Future”
WithdrawingWealth
If your “pile’s” monthly payout is $350, how
long will the pile last?
Impact of inflation
Withdraw a Specified
Amount
Once you create your account, you can create other profiles (e.g. family members); or just have them create their own accounts.
Go to your profileGo to your profile
Create new profiles
Create new profiles
PowerPayDebt Pay-offs Spending Plans
Create a BudgetSpending PlansCreate a Budget
PowerSaveFuture Value of
Money!
PowerSaveFuture Value of
Money!
www.powerpay.org Free from the Utah State Extension
Service
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 Softwarefor 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!
Basic Retirement Financial Planning- Part 3 - ACS RIA 43
www. mymoney. govFrom the Dept. of the Treasury and the FTC
Basic Retirement Financial Planning- Part 3 - ACS RIA 44
Social Security Administration
www. ssa. gov
Retirement
45
American Savings Education Council (ASEC)
www. asec. org / ballpark /Calculators
BallparkEstimate
Fed Employee BallparkEstimate
T. Rowe Price Retirement Income Manager – a web simulation
www. troweprice. com Retirement > Retirement Planning > Retirement Income Calculator
4% RulePlan to withdraw no more than 4% of your assets the first year; in following years draw 4% + small COLA factor
This is a commercial web
site
#1Net Worth Statement
Net Worth Statement
Assets (+) Fixed (stuff) Liquid or Monetary
Liabilities (-)
+ Assets- Liabilities= Your Net Worth
It’s not the money you make; it’s the money you get to keep! – Ric Edelman
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”!
Jon CookAccredited Financial Counselor (AFC)
Army Community ServiceBldg 102, 1st Floor, SE corner
(309) 782-0815 / -0829
www.riamwr.com/acs/financial-readiness
Come visit!