ChatGPT says
06-15-2023, 07:28 AM
#1
Gets Weekends Off
Thread Starter
Joined APC: Jan 2006
Position: MD-11 F/O
Posts: 234
ChatGPT says
I’m not a FedEx pilot, but it’s been interesting for me to get up to speed on Market Based Cash Balance Plans. I started wondering if someone starting a 25 year career, retire at 60, will get close to the existing A plan amount. I used different questions to play with the numbers in different ways. The one below was to compare MBCBP with 11% contribution earning 5% to a pension paying $169k… what annual income would that individual need over 25 years to have the same result.
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
06-15-2023, 07:43 AM
#2
Gets Weekends Off
Joined APC: Feb 2018
Posts: 284
Originally Posted by cessnapilot
I’m not a FedEx pilot, but it’s been interesting for me to get up to speed on Market Based Cash Balance Plans. I started wondering if someone starting a 25 year career, retire at 60, will get close to the existing A plan amount. I used different questions to play with the numbers in different ways. The one below was to compare MBCBP with 11% contribution earning 5% to a pension paying $169k… what annual income would that individual need over 25 years to have the same result.
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
06-15-2023, 07:49 AM
#3
Gets Weekends Off
Joined APC: May 2006
Position: Chemtrailing since 1981
Posts: 181
Originally Posted by cessnapilot
I’m not a FedEx pilot, but it’s been interesting for me to get up to speed on Market Based Cash Balance Plans. I started wondering if someone starting a 25 year career, retire at 60, will get close to the existing A plan amount. I used different questions to play with the numbers in different ways. The one below was to compare MBCBP with 11% contribution earning 5% to a pension paying $169k… what annual income would that individual need over 25 years to have the same result.
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
“
If the employee contributes nothing to the market-based cash balance plan, and the employer contributes 11% of the employee's annual income, we can calculate the required annual income for a 25-year career to achieve the desired accumulated balance at age 60.
Let's denote the annual income of the employee as E. The employer's contribution would be 11% of E, which is 0.11E.
We can set up an equation based on the desired accumulated balance at age 60, considering the employer's contributions and the assumed 5% return over 25 years:
0.11E * 25 * 1.05 = Required accumulated balance at age 60
From the previous calculation, we know that the required accumulated balance is approximately $1,949,750.
0.11E * 25 * 1.05 = $1,949,750
Simplifying the equation:
0.1155E = $1,949,750
E = $1,949,750 / 0.1155
E ≈ $16,883,041
In this scenario, for the employer's 11% contribution to accumulate to the desired balance, the employee would need an annual income of approximately $16,883,041 over their 25-year career.
Please note that this calculation assumes a consistent 11% employer contribution and a 5% return on investments. Individual circumstances and specific plan details may vary, so it's always advisable to consult with a financial advisor for a more accurate assessment based on your specific situation.“
06-15-2023, 07:50 AM
#4
Gets Weekends Off
Thread Starter
Joined APC: Jan 2006
Position: MD-11 F/O
Posts: 234
Originally Posted by BertMacklinFBI
ChatGPT does not guarantee any accuracy whatsoever. It just spits stuff out....Also if my math theory is worth anything you are giving a one time 5% return over the life of the plan and not compounding the ROI over the 25 years. The equation is simplistic and worthless. Thanks robots. Ask GPT to write you a bedtime story where your mommy comes and saves you from the monsters under your bed. Haha. I'm not championing the plan, or the TA, at all. However, ChatGPT is not smart unless you are trying to make your mommy a superhero.
good catch…
”Apologies for the confusion in my previous response. The 5% return should be calculated annually over the 25 years of the employee's career.
Let's recalculate the required annual income considering the 5% annual return.
The equation can be set up as follows:
(0.11E) * (1.05^25) = Required accumulated balance at age 60
Using the desired accumulated balance of approximately $1,949,750:
(0.11E) * (1.05^25) = $1,949,750
Simplifying the equation:
0.11E = $1,949,750 / (1.05^25)
E = ($1,949,750 / (1.05^25)) / 0.11
E ≈ $431,086
In this scenario, for the employer's 11% contribution to accumulate to the desired balance with a 5% annual return over 25 years, the employee would need an annual income of approximately $431,086 over their 25-year career.
Again, please note that this calculation is based on the assumptions mentioned, and it's always recommended to consult with a financial advisor for a more accurate assessment based on your specific circumstances.”
06-15-2023, 08:20 AM
#5
Gets Weekends Off
Joined APC: Sep 2017
Posts: 144
You are missing a big part of the equation. IF this plan takes effect, the contribution won’t actually be 11%. (Nor will the DC contribution be a full 9%) The actual contribution will be 11% of earnings up to the IRC 401(a)(17) limit (28.C.7.) That limit for 2023 is $330,000. Some years it may increase, but that’s not guaranteed as it’s controlled by the IRS.
06-15-2023, 08:40 AM
#6
Gets Weekends Off
Thread Starter
Joined APC: Jan 2006
Position: MD-11 F/O
Posts: 234
Originally Posted by Freighthumper
You are missing a big part of the equation. IF this plan takes effect, the contribution won’t actually be 11%. (Nor will the DC contribution be a full 9%) The actual contribution will be 11% of earnings up to the IRC 401(a)(17) limit (28.C.7.) That limit for 2023 is $330,000. Some years it may increase, but that’s not guaranteed as it’s controlled by the IRS.
”To calculate the accumulated balance after 25 years and the corresponding annual distribution at a 4% withdrawal rate, let's use the provided assumptions.
The formula for the accumulated balance after 25 years, considering an 11% contribution up to the IRC 401(a)(17) limit and a 5% annual return, is:
Accumulated balance = (0.11 * min(Earnings, $330,000)) * [(1 + 0.05)^25 - 1] / 0.05
Let's calculate the accumulated balance:
Accumulated balance = (0.11 * $330,000) * [(1 + 0.05)^25 - 1] / 0.05
Accumulated balance ≈ $2,408,382
Now, let's calculate the estimated annual distribution in retirement at a 4% withdrawal rate:
Annual distribution in retirement = 0.04 * Accumulated balance
Annual distribution in retirement = 0.04 * $2,408,382
Annual distribution in retirement ≈ $96,335
Based on the provided assumptions, it is estimated that after 25 years, the accumulated balance in the market-based cash balance plan would be approximately $2,408,382. At a 4% withdrawal rate, the estimated annual distribution in retirement would be around $96,335.
Please keep in mind that these calculations are based on the assumptions provided and do not account for fees, taxes, inflation, or other factors that may affect the actual distribution amount. It is important to consult with a financial advisor or retirement planning professional for a more accurate analysis tailored to your specific circumstances.”
06-15-2023, 02:47 PM
#7
Beaches and Sand
Joined APC: Feb 2007
Position: Chasing Surf
Posts: 368
Don't trust chatGPT, don't trust the company, and don't trust the Negotiating Committee. Read the TA, talk to your Financial Advisor, and make a sound decision for you. For me, this isn't even close but you may disagree and you have that right. Good luck.
06-15-2023, 09:55 PM
#8
On Reserve
Joined APC: Oct 2018
Posts: 24
Originally Posted by cessnapilot
since I have the thread open and I can easily feed the AI to build on the answer…
”To calculate the accumulated balance after 25 years and the corresponding annual distribution at a 4% withdrawal rate, let's use the provided assumptions.
The formula for the accumulated balance after 25 years, considering an 11% contribution up to the IRC 401(a)(17) limit and a 5% annual return, is:
Accumulated balance = (0.11 * min(Earnings, $330,000)) * [(1 + 0.05)^25 - 1] / 0.05
Let's calculate the accumulated balance:
Accumulated balance = (0.11 * $330,000) * [(1 + 0.05)^25 - 1] / 0.05
Accumulated balance ≈ $2,408,382
Now, let's calculate the estimated annual distribution in retirement at a 4% withdrawal rate:
Annual distribution in retirement = 0.04 * Accumulated balance
Annual distribution in retirement = 0.04 * $2,408,382
Annual distribution in retirement ≈ $96,335
Based on the provided assumptions, it is estimated that after 25 years, the accumulated balance in the market-based cash balance plan would be approximately $2,408,382. At a 4% withdrawal rate, the estimated annual distribution in retirement would be around $96,335.
Please keep in mind that these calculations are based on the assumptions provided and do not account for fees, taxes, inflation, or other factors that may affect the actual distribution amount. It is important to consult with a financial advisor or retirement planning professional for a more accurate analysis tailored to your specific circumstances.”
”To calculate the accumulated balance after 25 years and the corresponding annual distribution at a 4% withdrawal rate, let's use the provided assumptions.
The formula for the accumulated balance after 25 years, considering an 11% contribution up to the IRC 401(a)(17) limit and a 5% annual return, is:
Accumulated balance = (0.11 * min(Earnings, $330,000)) * [(1 + 0.05)^25 - 1] / 0.05
Let's calculate the accumulated balance:
Accumulated balance = (0.11 * $330,000) * [(1 + 0.05)^25 - 1] / 0.05
Accumulated balance ≈ $2,408,382
Now, let's calculate the estimated annual distribution in retirement at a 4% withdrawal rate:
Annual distribution in retirement = 0.04 * Accumulated balance
Annual distribution in retirement = 0.04 * $2,408,382
Annual distribution in retirement ≈ $96,335
Based on the provided assumptions, it is estimated that after 25 years, the accumulated balance in the market-based cash balance plan would be approximately $2,408,382. At a 4% withdrawal rate, the estimated annual distribution in retirement would be around $96,335.
Please keep in mind that these calculations are based on the assumptions provided and do not account for fees, taxes, inflation, or other factors that may affect the actual distribution amount. It is important to consult with a financial advisor or retirement planning professional for a more accurate analysis tailored to your specific circumstances.”
06-15-2023, 10:51 PM
#9
Gets Weekends Off
Joined APC: Apr 2023
Posts: 139
Originally Posted by Freighthumper
You are missing a big part of the equation. IF this plan takes effect, the contribution won’t actually be 11%. (Nor will the DC contribution be a full 9%) The actual contribution will be 11% of earnings up to the IRC 401(a)(17) limit (28.C.7.) That limit for 2023 is $330,000. Some years it may increase, but that’s not guaranteed as it’s controlled by the IRS.
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