CSB/REDUX Calculator

[tsptalk]

CSB/REDUX Calculator -

http://www.dod.mil/militarypay/retirement/calc/03_redux.html

[Rolo]

Don't do it!

Even if you paid no taxes on the lump sum andinvested it all, you would not get ahead.

Congress has people dream up these schemes in order to save money. (Remember High-8?) This time, they try to bait you by flashing cash.

[thinks]

We've also read about this before and all I've ever read makes my conclusion one shouldn't do it either. One needs to really research it all the way through before just leaping at this.... some people I don't think fully get it.

[Rolo]

thinks wrote:
some people I don't think fully get it.
I would say most. Most people make financial decisions based on emotion and CSB/REDUX is quite the snare for it.

At least there is a plus-side to my stunted emotional capacity...whoOo-hoOo! :shock:

[TSPMaxx]

hello, newbie to this site.

I really think taking the bonus is similar to those that take a lump sum for lotto winnings instead of taking payments over 20 years or so. Different calculations can be interesting if you consider the benefit of such a large amount "possibly" accumulating growth as compared to an extra couple hundred dollars a month coming in. Maybe a retiring officer bringing in a significant military retirement would feel it a lot more, but a retiring senior NCO,which plans on a successful post military career, could fair better taking the bonus. I havefew years before I am eligible for the bonus and I am strongly considering it. Plus at 62 (i think it is) there is a one time catch up that significantly closes that gap. Please tell me what you all think.

:^

[Rolo]

TSPMaxx wrote:
Different calculations can be interesting if you consider the benefit of such a large amount "possibly" accumulating growth as compared to an extra couple hundred dollars a month coming in.
I was thinking that also...been there, done that. There is no way one would get ahead by taking the bonus, evenwith tax evasion and unrealistic long-term gains. The only scenario that I coulddream is ifone knew he only had five years to live.

[TEUFEL HUNDEN]

There is a way to recoup a large portion of this $. Normally Military retirement is 20 years for 50% and you gain 2.5% every year thereafter until the 30 year mark and you would retire with 75%. Now with the CSB you could retire at the 20 year mark and loose 10% plus the 1% below inflation however, for each year that you stay in after 20 you gain 3.5% so at 30 years of service you would still retire with 75% just as you would have if you never took the CSB. The only thing that you would loose is the 1% below inflation. Seems like a nice little $20,000 bonus check half way through you career.

[stuart]

I plan on taking the CSB option, three payments of $10,000.00 with all funds going into my TSP account.

My current balance is around $11,000.00, I try to contribute around $2,500.00 a year. I have six years until I eligible for retirement, at the point without any gains my balance should be around $56,000.00.

At that point that will leave roughly seventeen years until age 60, rough estimates show my projected account balance around $200,000.00.

Without touching the principal the annual income should be around $14,000.00.

Leaving $200,000.00 for my kids.

Are my thoughts flawed, but I have been running the numbers and CSB option comes out ahead.

$14,000.00 additional annual income and nice lump sum.

Any advice or thoughts would be greatly appreciated.

[Ghageman]

I posted this below back in August...for anyone considering the CSB, please visit the CNA website. I STRONGLY recommend against it. The studies provide numerous examples based upon rank, years of service, and expected rates of return. Please read for yourself and come to your own conclusion, but as I indicate below, it will be VERY difficult to come out ahead by taking the bonus.

I haven't figured out the QUOTE function yet, so my old post is just copied below.


From August 2006...
There have been exhaustive studies completed by the Center for Naval Analysis (http://www.cna.org/ Search "redux") demonstrating the very UNrealistic scenarios which would lead one to choose CSB/REDUX over High-3 Average. That's assuming you are planning on using the CSB for investment/retirement purposes. If you plan to spend the money to purchase something such as a house, vacation, or car, the sacrifice in total compensation over your lifetime is enormous. It can easily total well over $200k.

The CNA website has calculators and examples which make it very apparent that one should take advantage of FY2000 National Defense Authorization Act which allows individuals formerly under REDUX to choose between the High-3 and CSB/REDUX systems.

I just faced this decision and it took me about 30 minutes of research to decide to decline CSB and take the High 3.

Just my 2 cents...

r,
Ghageman

[stuart]

I ran the CNA caluations. With the redux payment + my current TSP account balance + future principle payments I might even come out ahead.

Stuart