February 2005
Unemployment Draw Simulation:
The following simulation assumes a participant received a $5,000 draw from his contributions for supplemental unemployment compensation at the beginning of year 20 of program participation. He makes no contributions during years 20 and 21. He then pays off this draw with $2,000 in annual contributions starting in year 22.
| Year: 1 | Contributions: $1,000.00 | Accrued Interest: $17.00 | Balance: $1,017.00 |
| Year: 2 | Contributions: $2,000.00 | Accrued Interest: $80.55 | Balance: $2,080.55 |
| Year: 3 | Contributions: $3,000.00 | Accrued Interest: $192.77 | Balance: $3,192.77 |
| Year: 4 | Contributions: $4,000.00 | Accrued Interest: $355.88 | Balance: $4,355.88 |
| Year: 5 | Contributions: $5,000.00 | Accrued Interest: $572.23 | Balance: $5,572.23 |
| Year: 6 | Contributions: $6,000.00 | Accrued Interest: $844.25 | Balance: $6,844.25 |
| Year: 7 | Contributions: $7,000.00 | Accrued Interest: $1,174.48 | Balance: $8,174.48 |
| Year: 8 | Contributions: $8,000.00 | Accrued Interest: $1,565.59 | Balance: $9,565.59 |
| Year: 9 | Contributions: $9,000.00 | Accrued Interest: $2,020.36 | Balance: $11,020.36 |
| Year: 10 | Contributions: $10,000.00 | Accrued Interest: $2,541.71 | Balance: $12,541.71 |
| Year: 11 | Contributions: $11,000.00 | Accrued Interest: $3,132.68 | Balance: $14,132.68 |
| Year: 12 | Contributions: $12,000.00 | Accrued Interest: $3,796.47 | Balance: $15,796.47 |
| Year: 13 | Contributions: $13,000.00 | Accrued Interest: $4,536.40 | Balance: $17,536.40 |
| Year: 14 | Contributions: $14,000.00 | Accrued Interest: $5,355.95 | Balance: $19,355.95 |
| Year: 15 | Contributions: $15,000.00 | Accrued Interest: $6,258.78 | Balance: $21,258.78 |
| Year: 16 | Contributions: $16,000.00 | Accrued Interest: $7,248.69 | Balance: $23,248.69 |
| Year: 17 | Contributions: $17,000.00 | Accrued Interest: $8,329.67 | Balance: $25,329.67 |
| Year: 18 | Contributions: $18,000.00 | Accrued Interest: $9,505.89 | Balance: $27,505.89 |
| Year: 19 | Contributions: $19,000.00 | Accrued Interest: $10,781.70 | Balance: $29,781.70 |
| Year: 20* | Contributions: $14,000.00* | Accrued Interest: $11,916.15 | Balance: $25,916.15 |
| Year: 21* | Contributions: $14,000.00* | Accrued Interest: $13,102.05 | Balance: $27,102.05 |
| Year: 22* | Contributions: $16,000.00* | Accrued Interest: $14,376.33 | Balance: $30,376.33 |
| Year: 23* | Contributions: $18,000.00* | Accrued Interest: $15,800.51 | Balance: $33,800.51 |
| Year: 24* | Contributions: $20,000.00* | Accrued Interest: $17,381.40 | Balance: $37,381.40 |
| Year: 25* | Contributions: $22,000.00* | Accrued Interest: $19,126.16 | Balance: $41,126.16 |
| Year: 26* | Contributions: $24,000.00* | Accrued Interest: $21,042.31 | Balance: $45,042.31 |
| Year: 28 | Contributions: $25,000.00 | Accrued Interest: $23,120.35 | Balance: $48,120.35 |
| Year: 29 | Contributions: $26,000.00 | Accrued Interest: $25,339.59 | Balance: $51,339.59 |
| Year: 30 | Contributions: $27,000.00 | Accrued Interest: $27,706.15 | Balance: $54,706.15 |
| Year: 31 | Contributions: $28,000.00 | Accrued Interest: $30,226.78 | Balance: $58,226.78 |
| Year: 32 | Contributions: $29,000.00 | Accrued Interest: $32,908.54 | Balance: $61,908.54 |
| Year: 33 | Contributions: $30,000.00 | Accrued Interest: $35,758.79 | Balance: $65,758.79 |
| Year: 34 | Contributions: $31,000.00 | Accrued Interest: $38,785.25 | Balance: $69,785.25 |
| Year: 35 | Contributions: $32,000.00 | Accrued Interest: $41,995.98 | Balance: $73,995.98 |
| Year: 36 | Contributions: $33,000.00 | Accrued Interest: $45,399.41 | Balance: $78,399.41 |
| Year: 37 | Contributions: $34,000.00 | Accrued Interest: $49,004.37 | Balance: $83,004.37 |
| Year: 38 | Contributions: $35,000.00 | Accrued Interest: $52,820.08 | Balance: $87,820.08 |
| Year: 39 | Contributions: $36,000.00 | Accrued Interest: $56,856.17 | Balance: $92,856.17 |
| Year: 40 | Contributions: $37,000.00 | Accrued Interest: $61,122.74 | Balance: $98,122.74 |
| Year: 41 | Contributions: $38,000.00 | Accrued Interest: $65,630.34 | Balance: $103,630.34 |
| Year: 42 | Contributions: $39,000.00 | Accrued Interest: $70,389.99 | Balance: $109,389.99 |
| Year: 43 | Contributions: $40,000.00 | Accrued Interest: $75,413.24 | Balance: $115,413.24 |
A worker with max contributions for 40 years would have achieved the following result.
| Year: 40 | Contributions: $40,000.00 | Accrued Interest: $70,870.11 | Balance: $110,870.11 |
Therefore, the man who took a $5,000 draw at year 20 could either quit after investment year 40 with an account balance of $98,122.74 or work an additional two years to bring his account up to an equivalent level. This simulation assumed that the worker did not replace these missing contributions. A $98,122.74 account will generate $367.96 in monthly interest payments. Comparatively, the $110,870.11 account generates $415.76 monthly. This represents a potential loss of $47.80 in monthly benefits. However, if this man had needed to borrow $5,000 against his credit card in order to support his unemployment period, the finance charges alone could have amounted to over $3,000. This provision would at least provide a person with some protection from having to make unwise financial decisions in a time of great need. While the account balance does not reflect a savings, account balances never reflect the true meaning of goodwill. The savings in trauma and heartache that this provision will create cannot be measured in dollars and cents.
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