| Table 3 |
| INCOME INSURANCE |
| Insurance Reserve Fund (% of OASI) | 35.0% | Invested in Stock Fund (% of OASI) | 25.0% |
| Invested in Bond Fund (% of OASI) | 25.0% | | |
| Income Insurance Premium | 15.0% | Minimum Retirement Income | $18,000 |
| Bond Fund Rate of Return | 5.0% | Stock Fund RoR, Investment Period | CREF4 |
| Earning and Investment Period |
| | Gp 1 | Gp 2 | Gp 3 | Gp 4 | Gp 5 | Insurance Fund |
| Value of Investments after 40 years | $125,575 | $202,100 | $318,771 | $477,770 | $575,398 | |
| Bond Fund | $40,015 | $57,144 | $99,407 | $148,224 | $176,881 | $318,598 |
| Stock Fund | $85,560 | $144,955 | $219,364 | $329,546 | $398,517 | |
| Income Maintenance Insurance | | | | | | $106,199 |
| Calculation of Retirement Benefits1 |
| Bond Fund Annuity Value @ 2%2 | $2,447 | $3,495 | $6,079 | $9,065 | $10,817 | $12,990 |
| Stock Fund Annuity Value @ 5%3 | $6,866 | $11,632 | $17,602 | $26,444 | $31,978 | |
| Total | $9,313 | $15,126 | $23,682 | $35,509 | $42,795 | |
| Income Insurance Paid | $8,687 | $2,874 | $0 | $0 | $0 | $11,561 |
| Dividend | $179 | $256 | $446 | $665 | $793 | $1,429 |
| Initial Retirement Benefit | $18,179 | $18,256 | $24,128 | $36,173 | $43,589 | |
| Percent Preretirement Income | $1 | $1 | $0 | $0 | $0 | |
| Retirement Income1 |
| Year | Insured Minimum | Yearly Stock Fund Returns | Gp 1 | Gp 2 | Gp 3 | Gp4 | Gp 5 | Insurance Fund |
| 1 | $18,000 | 0.0% | $18,179 | $18,256 | $24,128 | $36,173 | $43,589 | $106,199 |
| 2 | $18,540 | -5.2% | $18,540 | $18,540 | $22,617 | $33,901 | $40,836 | $111,509 |
| 3 | $19,096 | 3.0% | $19,096 | $19,096 | $22,504 | $33,730 | $40,625 | $115,179 |
| 4 | $19,669 | 37.1% | $20,282 | $20,678 | $27,475 | $41,195 | $49,648 | $118,136 |
| 5 | $20,259 | 4.7% | $20,623 | $20,853 | $27,628 | $41,422 | $49,917 | $124,043 |
| 6 | $20,867 | 23.1% | $22,360 | $23,383 | $31,339 | $46,996 | $56,653 | $130,245 |
| 7 | $21,493 | 3.5% | $22,614 | $23,387 | $31,227 | $46,825 | $56,440 | $136,758 |
| 8 | $22,138 | -9.7% | $22,138 | $22,138 | $28,164 | $42,220 | $50,866 | $143,595 |
| 9 | $22,802 | 21.4% | $23,365 | $23,767 | $31,554 | $47,311 | $57,017 | $149,670 |
| 10 | $23,486 | 10.8% | $24,286 | $24,864 | $33,083 | $49,605 | $59,786 | $157,153 |
| 11 | $24,190 | 12.2% | $25,375 | $26,229 | $35,016 | $52,507 | $63,288 | $165,011 |
| 12 | $24,916 | 9.1% | $26,220 | $27,167 | $36,298 | $54,429 | $65,607 | $173,261 |
| 13 | $25,664 | -2.6% | $25,908 | $26,131 | $34,589 | $51,859 | $62,493 | $181,924 |
| 14 | $26,434 | 13.0% | $27,136 | $27,690 | $36,803 | $55,181 | $66,504 | $191,021 |
| 15 | $27,227 | -7.5% | $27,227 | $27,227 | $33,837 | $50,722 | $61,105 | $200,572 |
| 16 | $28,043 | 10.2% | $28,043 | $28,043 | $35,321 | $52,949 | $63,791 | $208,332 |
| 17 | $28,885 | 21.3% | $29,365 | $29,804 | $39,538 | $59,281 | $71,441 | $216,896 |
| 18 | $29,751 | -8.1% | $29,751 | $29,751 | $36,204 | $54,268 | $65,372 | $227,740 |
| 19 | $30,644 | -13.7% | $30,644 | $30,644 | $31,976 | $47,914 | $57,680 | $235,808 |
| 20 | $31,563 | -13.3% | $31,563 | $31,563 | $31,563 | $42,891 | $51,598 | $238,585 |
| 1. Entries shown in red indicate that income insurance is paid. |
| 2. Bond Fund annuities are graded annuities designed to increase over time to help counter inflation. They begin as if they were a 2% annuity and increase annually at the rate of about 3% with a 5% bond fund return. See Appendix C. |
| 3. Stock fund annuities are variable annuities which begin as if they were a 5% annuity and are adjusted each year to reflect actual stock fund performance. |
| 4. Historical returns form CREF from 1961 to 2001 — See Appendix A. |