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

1. 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

2. “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 /

3. 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.

4. 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

5. Having a Scooby Doo moment? Please ask questions as we proceed!

6. 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

7. 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. 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)

9. 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

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. 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 …

12. What is in your Retirement Plan? Annuity Allowance Their responsibility You have lesscontrol 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

13. What’s Your Retirement Number #? Time Line of Persons Involved Requirement over time“the number” $# Capabilitiesto reach “the number” Allowancesannuities, retirement plans: Social Security; FERS / CSRS; Military PilesMoney you grow, and then pay out:TSP, 401k, IRA

14. 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

16. 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 = 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 Expenses* Spendable Income • Annual Income over the phases of retirement • Go – Go • Go-Slow • No-Go • Estate Planning Ret Center Deficit! Insurance? Other?

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 Spendable(Column 14) Back to Page 3 Taxable (Columns 4 – 12) Non-Taxable (Column 13)

21. 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 ???

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 8. Work • 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

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

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 From Parts 1 & 2 Expenses* (carried over from previous .xls work sheet) Your results over time

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. How do you know it is accurate? 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

32. 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

33. 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

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

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

36. www. powerpay. org PowerSaveFunction“Money Future” Accumulating Wealth Potentially money growth Impact of inflation

37. www. powerpay. org PowerSaveFunction“Money Future” Withdraw for a Specified Time WithdrawingWealth Your “pile’s” monthly payout over 25 years = $_ Impact of inflation

38. www. powerpay. org PowerSaveFunction“Money Future” Withdraw a Specified Amount WithdrawingWealth If your “pile’s” monthly payout is $350, how long will the pile last? Impact of inflation

39. www.powerpay.org Free from the Utah State Extension Service PowerSaveFuture Value of Money! PowerPayDebt Pay-offs Spending PlansCreate 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

40. Yes! PowerSave!!Got it!!! What could possibly go wrong?

41. 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

42. 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!

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

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

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

46. 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

47. #1 Net Worth Statement • 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

48. Come visit! Jon Cook 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