Uncovering the Truth About REDUX RetirementAuthor: Webmaster
I have received a couple of questions regarding the REDUX Retirement "bonus". If you are seriously considering the $30,000 bonus, please keep reading. If your not, please keep reading so you can tell your friends. In recent months, the government has proved to the people in uniform they want to save a buck and cut costs as much as possible. Look at the battle for retiree health care, they want to increase Tricare membership by over 100%. The funny thing is that this concept is not new. Like I said already, the government is looking at saving a buck. The sad part of all of this is REDUX. It is sold as a 15 year bonus to stay in with a couple of strings. In all honestly, If you think $30K will put you ahead in the long run it isn't like unless you find the next Microsoft and put the entire $30K into it. Since the chances of that success is close to hitting the lottery, lets look at it in another way. Say you want to retire at 20 years at E7. In order to keep the numbers simple, I am looking at this years monthly pay. (Yes, I know it is the highest 3 years, but lets just keep this simple.) According to this years pay that would be approx. $3,600. So 50% of it would be $1800 before taxes. Not a bad monthly check. Now lets look at 40% (REDUX payments), the monthly payment would be $1440 before taxes. A $160 difference a month and $1920 the first year. S Seems like a smidgen of a difference until you pull out the ol' crystal ball and look at the next 20 years with COLA adjustments. Say COLA is 4.3% a year, non-REDUX would see a raise of $77 to $1877 a month ($22,534 yr) REDUX would get only 3.3% for a raise of $47 to $1487 month ($17,844 yr), equaling $360 the first year... Again, it looks like peanuts until one views the crystal ball. In order to do that, lets look at a quick spreadsheet looking at the first 20 years for retirement: | E7 | | $ 3,600.00 | | | | | | Month | Year | REDUX Mth | Year | Difference | 3.3% | | | Year 1 | $1,800.00 | $21,600.00 | $ 1,440.00 | $17,280.00 | $ (4,320.00) | 4.3% | | | Year 2 | $1,877.40 | $22,528.80 | $ 1,487.52 | $17,850.24 | $ (4,678.56) | | | | Year 3 | $1,958.13 | $23,497.54 | $ 1,536.61 | $18,439.30 | $ (5,058.24) | | | | Year 4 | $2,042.33 | $24,507.93 | $ 1,587.32 | $19,047.79 | $ (5,460.14) | | | | Year 5 | $2,130.15 | $25,561.77 | $ 1,639.70 | $19,676.37 | $ (5,885.40) | | | | Year 6 | $2,221.74 | $26,660.93 | $ 1,693.81 | $20,325.69 | $ (6,335.24) | | | | Year 7 | $2,317.28 | $27,807.35 | $ 1,749.70 | $20,996.44 | $ (6,810.91) | | | | Year 8 | $2,416.92 | $29,003.07 | $ 1,807.44 | $21,689.32 | $ (7,313.74) | | | | Year 9 | $2,520.85 | $30,250.20 | $ 1,867.09 | $22,405.07 | $ (7,845.13) | | | | Year 10 | $2,629.25 | $31,550.96 | $ 1,928.70 | $23,144.44 | $ (8,406.52) | | | | Year 11 | $2,742.30 | $32,907.65 | $ 1,992.35 | $23,908.20 | $ (8,999.44) | | | | Year 12 | $2,860.22 | $34,322.68 | $ 2,058.10 | $24,697.17 | $ (9,625.50) | | | | Year 13 | $2,983.21 | $35,798.55 | $ 2,126.02 | $25,512.18 | $(10,286.37) | | | | Year 14 | $3,111.49 | $37,337.89 | $ 2,196.17 | $26,354.08 | $(10,983.81) | | | | Year 15 | $3,245.28 | $38,943.42 | $ 2,268.65 | $27,223.77 | $(11,719.65) | | | | Year 16 | $3,384.83 | $40,617.99 | $ 2,343.51 | $28,122.15 | $(12,495.83) | | | | Year 17 | $3,530.38 | $42,364.56 | $ 2,420.85 | $29,050.18 | $(13,314.37) | | | | Year 18 | $3,682.19 | $44,186.23 | $ 2,500.74 | $30,008.84 | $(14,177.39) | | | | Year 19 | $3,840.52 | $46,086.24 | $ 2,583.26 | $30,999.13 | $(15,087.11) | | | | Year 20 | $4,005.66 | $48,067.95 | $ 2,668.51 | $32,022.10 | $(16,045.85) | | Total | | | | | | | | $(184,849.21) |
As you can see, in 20 years you would lose over $180,000!!! 6 Times the 30K Before TAXES! The 30K taken for REDUX would have to be invested for 25 years at 7.5% to about break even | REDUX | | $ 30,000.00 | | Interest Rate | | | | | | Intest Rate | | Year 1 | $ 30,000.00 | | 7.5% | | Year 2 | $ 32,250.00 | | | | Year 3 | $ 34,668.75 | | | | Year 4 | $ 37,268.91 | | | | Year 5 | $ 40,064.07 | | | | Year 6 | $ 43,068.88 | | | | Year 7 | $ 46,299.05 | | | | Year 8 | $ 49,771.47 | | | | Year 9 | $ 53,504.33 | | | | Year 10 | $ 57,517.16 | | | | Year 11 | $ 61,830.95 | | | | Year 12 | $ 66,468.27 | | | | Year 13 | $ 71,453.39 | | | | Year 14 | $ 76,812.39 | | | | Year 15 | $ 82,573.32 | | | | Year 16 | $ 88,766.32 | | | | Year 17 | $ 95,423.79 | | | | Year 18 | $ 102,580.58 | | | | Year 19 | $ 110,274.12 | | | | Year 20 | $ 118,544.68 | | | | Year 21 | $ 127,435.53 | | | | Year 22 | $ 136,993.20 | | | | Year 23 | $ 147,267.69 | | | | Year 24 | $ 158,312.76 | | | | Year 25 | $ 170,186.22 | | |
Now at age 62, the rates equalize but the next year REDUX is still is 1% COLA. so If you plan on living another 10, 15, 20 or 30 years, the values start to multiply exponentially. Make a good decision with your retirement. there are very few places left in this country that offer a retirement pension. For those that have retired with them, the health of the company plays a significant role in there future. Don't believe me, ask a retiree from GM, Delphi, Dana, WorldComm, etc..
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