We set the default rate for prior to retirement at 5. 75% and rate of return after retirement at 4. 0% with a legitimate range of 0% to 20% for each. You should pick presumptions-- or range of presumptions-- that are ideal for you based on your specific situations. Replacement Rate Estimation The quantity of cash from your retirement advantages (e.
CSRS, FERS, Social Security), annuities from TSP and other cost savings, and any post-retirement profits you entered are summed over the expected years in retirement. The amount of money you would have made (with forecasted raises) if you continued to work rather than retire is likewise summed up over the same amount of time.
If the calculated replacement rate is less than the preferred replacement rate, the TSP contribution rate is increased bit by bit (0. 25% of income) till the calculation comes out to the replacement rate goal or it hits the tax deferral limit (presently $17,000). If Did you see this? isn't adequate money, the Federal Ballpark E$ timate does the very same with the non-TSP savings till the combined total suffices to strike your replacement rate goal, or an outright limitation of 50% of wage is reached.
What this indicates is that the FBE will take the variety of years you expect to live in retirement and balance the replacement rate during that time. The Federal Ballpark E$ timate utilizes 70% as a default rate, however will enable you to choose any rate in between 20% and 120%. Replacement Rate Desired The replacement rate is the part of your pre-retirement income that will be changed by your retirement income.
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