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1. What information do I need before using
PlanAhead?
PlanAhead estimates your retirement needs and income based on the information you
enter. While estimates of the following information may produce a reasonable guide
to your retirement needs and income, having recent actual information available
will produce more accurate estimates.
If you plan to include your spouse (or partner) in your planning, you should have this information available for both you and your spouse (or partner).
- Annual compensation.
- Your Accrued Benefit from your most recent Benefit Statement.
- The hourly rate of your pay that earns Credited Service.
- The number of hours you expect to work per year, on average.
- Your spouse (or partner)'s employer-provided pension and savings plan descriptions.
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Recent statements from your savings, investment and retirement accounts, including:
- Personal savings accounts, brokerage accounts, IRAs, 403(b)s and all other accounts that will provide you income in your retirement
- Any pension plan statements in addition to those from your and your spouse (or partner)'s current employer
- Current rate of contribution (as a percentage of annual compensation) to your employer-provided retirement savings plans.
- Current rate of contribution to you and your spouse (or partner)'s other savings, investment and retirement accounts.
2. What accounts should I include in Other
Investments under Other Savings Information?
You should include all accounts you expect to use to provide retirement income.
This might include checking and savings accounts, brokerage accounts, IRAs, 401(k)s,
403(b)s, and employer-provided savings accounts.
3. How is my pension benefit determined?
Why is it different from the estimate on my statement?
Your pension benefit is estimated using the formula specified in your plan. Some plans express the benefit as a formula. Some plans express the benefit as an account balance that the tool converts to retirement income. If your retirement date is earlier than normal retirement (the age you can retire and begin receiving unreduced benefits), the pension will be adjusted for early retirement as provided in your plan. If you request that your pension payments continue to your eligible survivor after your death (a joint and survivor annuity), the pension payments are also adjusted as provided by your plan for the cost of this protection.
The tool assumes continuous employment up to retirement, working the same number of hours each year as currently. If your work pattern or work history is very unusual, the estimate of your pension benefit produced by the tool may be significantly inaccurate.
The tool produces an estimate of your benefits and uses approximations. Your actual benefit at retirement will be calculated based on the exact provisions of your plan, your Credited Service and compensation history.
4. Does the tool take into account legal
limits on the amount of benefits or contributions to my retirement plans?
The tool can reflect legal limits on your benefits and contributions. For most middle
income workers, the limits may not apply. For higher income workers, the limits
are more likely to apply. However, the results for higher income workers may be
more meaningful with the limits turned off. This would be the case if your employer
sponsors nonqualified supplemental plans that make up the benefits lost due to legal
limits on the benefits provided from the basic qualified plans.
The tool applies certain limits in the following manner. If your 401(k) or 403(b)
contribution rate produces a contribution exceeding the annual limit, the excess
contribution is treated as an after-tax contribution to your plan if after-tax contributions
are permitted. If after-tax contributions are not permitted or if your contribution
exceeds the overall contribution limit, the contribution is treated as other savings
outside the qualified plan. Therefore, the tool uses the full amount of your contribution
toward retirement, but may shift where the money is applied.
The legal limits are applied on an approximate basis only. PlanAhead For Retirement
is not intended to be used as a tool for providing tax advice or compliance information.
5. How is my savings plan balance used
to provide retirement income?
Your savings are used by the tool to fill the gap between your needs and your pension
and Social Security income over your expected lifetime. The tool assumes all your
projected savings will be spent by the end of your expected lifetime. If you indicate
that you are married, the tool assumes your projected savings will be spent by the
end of your joint life expectancy.
If you want to leave an estate rather than exhaust all your savings, go to the Advanced
Inputs page. Find the question about one-time needs after retirement. Enter the
dollar amount of the estate you would like to leave to your heirs as a need. Enter
the age of your life expectancy from the graph (the highest age where the graph
is still showing retirement income being paid.) This will reserve some of your savings
for an estate, and will result in a lower score.
6. How are cost-of-living increases reflected
in my retirement income?
Your Social Security benefits are projected to increase with inflation. Your pension
and other benefits are not projected to increase unless increases are provided by
your employer plans. (For example: some retiree medical plans provide increasing
benefit levels as medical costs rise.) PlanAhead uses your savings balances to fill
in your retirement needs. As your needs increase with inflation, the amount of your
savings allocated to provide income increases accordingly. In this way, PlanAhead
shows how your projected savings plus employer pension plans can provide retirement
income that increases as your needs increase.
7. What does it mean that X% of needs
are met?
Your score is the average percentage of your projected needs expected to be met
by your projected retirement income. This result is calculated as the present value
at retirement of your projected retirement income divided by the present value at
retirement of your projected retirement needs. The present values are calculated
using your post-retirement rate of return. If the result is more than 100%, the
value of your projected income exceeds the value of your projected needs.
In a few cases, the graph may show that retirement income exceeds your needs in
some years and is less than your needs in other years. The percentage of needs met
is the average percentage of your needs that will be met throughout retirement,
taking into account both years of excess income and years of shortfall. This percentage
of needs met by projected income is the best measure of your overall retirement
income projection, based on all the information and assumptions you have entered.
8. Why do my needs end at a fixed age?
The tool uses your life expectancy (the expected number of years you will live beyond retirement) at your retirement age to illustrate your retirement needs and income sources. Life expectancy at age 65 for men is approximately 22 years; for women it is approximately 24 years. Your life expectancy is merely an average length of life. In reality, half of us will live longer, and half of us will die sooner. To be conservative, the tool adds 7 years to your life expectancy as a default. If you want to change the number of additional years, you can do so on the Advanced Inputs page.
9. Can I set my own estimate of my needs?
Yes. The tool allows you to override the needs calculated with your own needs estimate.
You can set your own needs percentage using the Advanced Inputs page. You may want
to use your own estimate of needs if you expect much lower or higher income needs
than are shown in the tool. Note that if you use this override, the tool will calculate
your needs as that percentage multiplied by your compensation immediately before
retirement. It will not include an adjustment for medical expenses. You will need
to include medical needs in your override percentage.
10. How are cost-of-living increases
reflected in my needs?
PlanAhead For Retirement increases the amount you need for living expenses each
year by the cost-of-living increase rate you entered. Similarly, the amount you
need for medical expenses is increased each year by the medical trend rate you entered.
These assumptions are necessary to project an income that maintains your purchasing
power during retirement. There are various reasons for using a lower estimate of
inflation. (For example: your income needs may gradually reduce as you grow older
and become less active.) If you think you will need a different level of inflation
protection than is listed in the graph, you can specify another rate of increase
on the Advanced Inputs page.
11. What is the basis for the Social
Security benefit shown?
Your Social Security benefit is estimated beginning with your current pay and projecting
both forward and backward to estimate a full career of earnings history. The tool
assumes that you have been, or will be, employed in a job covered by Social Security
for the full 35 years used to calculate the benefit level. If this is not the case
because you were not working in all years or worked in a non-covered job such as
certain government jobs, the tool may overestimate your Social Security benefit.
The Advanced - Social Security page allows you to enter a different estimate of
your Social Security benefit.
You can
enter your earnings history into one of the online benefit calculators at
www.ssa.gov to get a more precise estimate.
If you think Social Security benefits will not be provided at the same level as
the current law, you can adjust the tool in the Advanced - Social Security section.
If you have input an income for your spouse, the tool will project your spouse's
earnings history forward and backward in time to estimate your spouse's Social Security
benefit. The tool will then use the larger of your spouse's Social Security benefit
or 50% of your Social Security benefit for your spouse. If you have a more accurate
estimate of your spouse's Social Security benefit based on his/her own work history,
enter that number in the Advanced - Social Security page. If 50% of your spouse's
Social Security benefit is larger than your Social Security benefit, this will be
used for you. Be aware that both your estimate and the estimate for your spouse
assume a full career of covered employment and could overstate your benefit if there
are long periods when you were out of the work force. For a non-working spouse,
this benefit is computed as 50% of your Social Security benefit beginning at the
later of your retirement date and the age when your spouse is eligible to receive
Social Security.
12. How is Medicare reflected?
The tool assumes you and your spouse will be eligible for Medicare at age 65. The
retiree medical insurance expenses shown reflect medical insurance costs beyond
those covered by Medicare. These expenses will either be paid out-of-pocket or through
supplemental insurance. Because the tool includes information about your employer-sponsored
retiree medical plan, if any, the tool assumes that you will enroll in any employer
retiree medical program offered.
Since Medicare coverage is not available before age 65, early retirees will have
higher needs for medical coverage in the years before they turn 65. Your spouse
will turn 65 in a different year from you unless you are the same age. So, you may
see the needs for retiree medical coverage in the graph reducing once at your age
65, and again when your spouse reaches age 65.
13. What are some of the key assumptions
used in PlanAhead?
PlanAhead uses the following basic assumptions and methods.
- Your retirement income needs can be estimated from your projected compensation and
national average research on needs.
- You are covered by Social Security and Medicare, and 100% of the current law Social
Security benefit is projected to be available when you retire.
- Pre-tax income is compared to pre-tax estimated needs. Taxes are considered in estimating
needs after retirement.
- Knowledge of past investment performance over long periods is useful in planning
for the future.
14. Is the information I enter protected?
The data you enter into PlanAhead is your personal information. To protect your
privacy, PlanAhead uses a secure internet connection and may require your email
address and a password in order to access your records. Do not share this information
with others, and be sure to log off the site completely when you are finished working.
PlanAhead requires the use (including, in certain cases, the storage and retrieval)
of your personal information, including nonpublic personal financial information.
By using PlanAhead, you consent to such use by Milliman for the purpose
of providing you access to the tool.
"Cookies" and Your Privacy: A cookie is information that a web site puts
on your computer's hard disk so it can remember something about your web session
at a later time. When your PC's browser uses cookies, it "remembers" what web sites
look like - it doesn't have to build a page from scratch every time you want to
go back to it.
PlanAhead uses cookies to connect your input on one page to calculations and graphs
on a different page. PlanAhead will not work without cookies being enabled by your
browser. However, none of your personal information is stored in the cookies themselves.
15. What do I do if the email link is
not working?
If you are having trouble using the email links, try opening your email and starting
a new message. Highlight the email address link, right click and choose Copy. Then,
click in the "To" field of your email and right click and paste. Now, send your
email as usual.
16. Who do I contact for help?
PlanAhead provides more detailed information to answer your questions in two ways:
- The pages contain useful descriptions. When you move your mouse over green underlined
words, information about that term will pop up.
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If you have questions about using the tool or technical issues, contact Milliman at PlanAhead@milliman.com.
Please include a detailed description about the technical issues encountered, and include a note that you were using the I.B.E.W. Local No. 332 tool.
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