We set the default rate for before retirement at 5. 75% and rate of return after retirement at 4. 0% with a legitimate variety of 0% to 20% for each. You need to choose presumptions-- or series of assumptions-- that are ideal for you based on your specific situations. Replacement Rate Computation The amount of money from your retirement benefits (e.
CSRS, FERS, Social Security), annuities from TSP and other cost savings, and any post-retirement revenues you went into are summed over the anticipated years in retirement. Click Here For Additional Info of money you would have made (with predicted raises) if you continued to work rather than retire is also summed up over the very same amount of time.
If the calculated replacement rate is less than the desired replacement rate, the TSP contribution rate is increased bit by bit (0. 25% of wage) up until the estimation comes out to the replacement rate objective or it strikes the tax deferral limitation (currently $17,000). If that isn't adequate money, the Federal Ballpark E$ timate does the very same with the non-TSP savings till the combined overall is enough to strike your replacement rate goal, or an absolute limit of 50% of salary is reached.
What this suggests is that the FBE will take the variety of years you expect to live in retirement and balance the replacement rate throughout that time. The Federal Ballpark E$ timate uses 70% as a default rate, but will enable you to select any rate in between 20% and 120%. Replacement Rate Desired The replacement rate is the part of your pre-retirement income that will be replaced by your retirement earnings.
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