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Transcript of Retirement Planning
an Army Officer and Beyond. Determining Workforce Income Retirement Purpose Key Assumptions Facts The Basics To model:
The amount of money earned after retirement and the amount necessary to survive comfortably
The total and average lifetime earnings for a military career and a civilian career until retirement
The amount needed to be saved in order to have enough money to retire comfortably Assume a retirement age of 68
Assume all calculations are made without taking in to account taxes
Assume no changes to the military pay chart other than the 1.9%annual increase Initial Terms Workforce Income Requirements a. Social security benefits start at age 68
b. Colonels retire at 30 years of service
c. Graduation for the class of 2016 is June 1, 2016 Variables Basic Allowance for Housing Key Recursion Equations For Each Rank Military Pay Civilian Pay Rate Retirement Income Our Replacement Rate is modeled with two different percentages 75% and 102%. Thus the savings needed for retirement is:
161,327.58 for 75%
219,405.51 for 102% Retirement Plan Assuming social security exist when we retire...
We will be receiving an average amount of
31,284.00 per year plus and additional 199,431.00 from our annual pension rate as a retired officer. Our total earnings accumulated over the course of 44 years: 9,464,551.46
Our Average Annual Income over 44 years: 215,103.44 Our Saving plan is considers to both a Thrift Savings Plan (TSP) while in the military and a Money Market Account while working as a civilian. Both accounts earn 3% annual interest. We modeled three different situations the time in service that we began to save and the corresponding savings rating required to reach our goals: If we began saving the year we commission we would need to save 3% of our annual pay to to achieve $646,411.06 in savings 3% annual savings plan: R(n)=.03* R(n-1) -d
7% annual savings plan: R(n)=.07* R(n-1) -d
12% annual savings plan: R(n)=.12* R(n-1) -d Saving 15 years in service requires 12% annual savings to achieve $644,008.81 in savings If we began saving 10 years in service would would need to save 7% of our annual pay to achieve $647,397.95 in savings Resources... a.http://www.aarp.org/work/social-security/social-security-benefits calculator/%3Fcmp%3DRDRCT-SOCI_JUNE15_011