1. Best Retirement Plan: College vs. Part-Time Work vs. Work Than go to School Team 3 Ronald Lee– Summarizer Rafael Gutierrez– Techie Walter Areas – Techie Andrew Quezada- Organizer EGR403: Asset Allocation and Technical Decision Making

2. PROPOSAL  Determine which Life Path will Provide the Best Savings at Retirement. 1. College Full-Time after H.S. 2. Work Full-Time for 2 Years after H.S. 3. Work and College Part-Time after H.S.

3. Scenario 1: College Full-Time  Go to college after high school.  Graduate in 4 years.  Take out loans to pay for tuition.  Repay loans after graduation.  Live at home.

4. Scenario 2: Work Full-Time  Work full-time after high school for 2 years.  Save money for college tuition.  Save 10% of income for investments.  Return to college and graduate in 4 years.  Live at home.

5. Scenario 3: Part-Time C/W  Part-time college and work after high school.  Pay for tuition along the way.  Graduate in 6 years.  Live at home.  Save 10% of income for investments.

6. Comparison College Full-TimeWork Full-TimeWork and School Part-Time Housing Expense Paid Living ExpensePaid TuitionStafford LoanPaid Income (H.S.)$0$39,111$18,750 Savings (H.S.)0%10% Income (C.)$59,215 Savings (C.)Year 0-4: 0% Year 5 : 9.4% Year 6+ : 10% 10%

7. College Full-Time Pros  Focus on school  Finish school faster Cons  Need to repay loans  No money being saved  No work experience

8. Work then College Pros  Tuition is paid  Work experience  Savings during first 2 years accumulate interest Cons  Time  Low Salary

9. Work/College Part-Time Pros  Tuition is paid  Work experience Cons  Time  Low Salary after High School

10. Spreadsheet Rates The following are data that are assumed for spreadsheet calculations: Salary Upon Graduation $59,215.00 Annual Salary Increase4.0% 401k Annual ROR8.0% Retirement Age65 Annual Savings10%

11. Analysis Assumptions Students going to school full time will graduate in 4 years, those working and going to school graduate in 6 years 4% yearly raise 10% savings Loans apr 6.8%, interest differed until 6 months after graduation

12. Analysis Results Working Full-Time for 2 years after High School makes the most money at retirement College Full-Time makes 4% less money College and School Part-Time makes about 2% less money

13. Sensitivity Analysis  Rate of Return  Tuition Loan  Savings Gradient  Percentage of Income to Repay Loan

14. At minimum, ROR needs to be at least 7% to have the most Savings Work Full-Time for 2 Years At minimum, ROR needs to be at least 9% to have the most Savings College Full-Time At minimum, ROR needs to be at least 8.5% to have the most Savings Work and College Part-Time S.A. Rate of Return

15. S.A. Tuition Loan Tuition Loan needs to be less than about $12,000 for the Best Savings College Full-Time

16. S.A. Savings Gradient Regardless of Savings Gradient, Work-Full-Time for 2 Years is Always Better Savings Gradient needs to be at least 9.5% to have the most Savings Work Full-Time for 2 Years Savings Gradient needs to be at least 11% to have the most Savings College Full-Time Savings Gradient needs to be at least 10.5% to have the most Savings Work and College Part-Time

17. S.A. Repaying Loans Need at Least 30% of Income to Repay Loans to Have the Best Savings College Full-Time This is NOT Realistic

18. Conclusion: Work Full-Time  With the Initial Assumptions Provide the Most Savings $3,497,882!  Need one to have the MOST SAVINGS: 7% ROR 9.5% Savings Gradient

19. Conclusion: College Full-Time  For those Going to College Full-Time  Need one to have the MOST SAVINGS: 9% ROR 11% Savings Gradient Less Than $12,000 in Tuition Loan

20. Conclusion: Work and College  For those Going to Work and College Part- Time  Need one to have the MOST SAVINGS: 8.5% ROR 10.5% Savings Gradient

21. Resources SalaryWizard.com 1. Customer Service Rep – High School Diploma $39,111. 2. Waiter/Waitress $12.50/hr. 3. Entry Level Engineer $59,215. StaffordLoan.com