Are my retirement 5 year buy in calculations correct?
Assumptions . Age 44. Retirement at 55. Cost of buying 5 extra years toward retirement ~50,000*. Current yearly pay ~ $65,000. 5 years extra retirement benefit x 10%. Current benefit $6,500. Years to retirement (55) 11. Future value of benefit with 2% COLA and 10 years compounding ~$8,000. Conservative investment comparison. A) $8,000 a year with 2% COLA for 20 years (age 75) @ discount rate of 11% ~$87,000. Present worth of $87,000 in 11 year @ 5% ~$50,000*. Added value $37,000. Rate of Return 5.04%. Aggressive investment comparison. B) $8,000 a year with 2% COLA for 20. years (age 75) @ discount rate of 6.5% ~$157,000. Present worth of $157,000 in 11 year @ 10.5% ~$50,000*. Added value $107,000. Rate of Return10.45%. Average Rate of Return 7.75%.
Public Comments
- Correct.
