Yasuko Shirakawa, PHR, SHRM-CP Office of Human Resources Retirement planning Yasuko Shirakawa, PHR, SHRM-CP Office of Human Resources

Questions to ask yourself: RETIREMENT PLANNING Questions to ask yourself: When will you retire? Where will you live? Lifestyle choices Will you travel? Your health Do you plan to work part time? Picture what you want out of retirement and how you plan on getting there

Most of us picture our retirement to look like this: RETIREMENT PLANNING Most of us picture our retirement to look like this:

RETIREMENT PLANNING Not this:

Retirement planning basics Early planning stages Workshop agenda Retirement planning basics Early planning stages CSU benefits and programs Program advantages Important goals CalPERS Retirement Program How does it work? How to calculate your retirement benefit Other considerations Questions and Answers

Retirement planning basics Typical retirement income sources for CSU employees: CalPERS Retirement pension CSU Voluntary Retirement Savings – 403(b), 401(k), and 457 plans IRA and Roth IRA Social Security benefits Miscellaneous – assets/property, inheritance, military or other retirement pensions

Voluntary retirement savings plans: Early planning stages Voluntary retirement savings plans: 401(k) /457 Savings Plus Program - State 403(b) Tax-Sheltered Annuity Program - CSU IRA or Roth IRA plans Advantages: Pre-tax savings reduce taxable income during years of highest earning potential Convenient payroll deduction Compound interest Asset allocation Inflation protection

Other employer benefits: Early Planning stages Other employer benefits: CalPERS Long-term Care (LTC) program ScholarShare 529 College Savings plan EAP/MetLaw Pre-paid Legal Plan Health Care Reimbursement Account (HCRA)/Dependent Care Reimbursement Account (DCRA)

Early Planning stages Advantages: Long-term Care plan- lower premium if enrollment is at a younger age; inflation protection College savings for future expenditures Legal benefits, estate and tax planning Pay for certain costs with pre-tax dollars, reducing taxable income

Set a goal and work on it over time! Early Planning stages Other important goals: Pay off debt – mortgage, student loans, credit cards, car payments Reduce new debt Plan for future expenditures Create an emergency fund Set a goal and work on it over time!

CalPERS Retirement Program Defined benefit retirement plan – retirement income that you cannot outlive Funded by: Member contributions Employer contributions Investment earnings Total CalPERS Market Value as of 1/10/17 $305.85 Billion

CalPERS Retirement Program CalPERS Eligibility Permanent and temporary employees Full-time appointment for more than 6 months Part-time appointment for more than 1 year 5 years PERS full-time service to be fully vested Employee contribution (5% or 6.75% of adjusted gross) Employer contribution is set annually by CalPERS based on annual actuarial valuations Currently FY employer contribution is 25.15% of gross pay

CalPERS Retirement Program Benefits based on members' years of service, age, and final compensation Membership is mandatory for eligible CSU employees Most CSU members are eligible to retire at minimum age 50 with 5 years of service credit* *Minimum retirement age 52 if you became a member on or after 1/1/2013 2% at 62 minimum retirement age is 52

CalPERS Retirement Program Retirement Categories (excluding Unit 8): State Miscellaneous Tier 1 – 2% at 55 CSU members hired prior to 1/15/2011 1 year highest compensation State Miscellaneous Tier 1 – 2% at 60 CSU members hired on or after 1/15/2011 36 months average compensation State Miscellaneous Tier 1 – 2% at 62* CSU members hired on or after 1/1/2013 Consecutive 36 months average compensation subject to cap

CalPERS Retirement Program How retirement benefits are calculated: Service Credit x Benefit Factor x Final Compensation* = Unmodified Allowance ($Pension Amount) *Highest average pay rate during any consecutive 1-year or 3-year period, dependent on retirement formula Service credit accumulates on a fiscal year basis from July 1 through June 30.

CalPERS Retirement Program Example: Employee works FT for 27 years = 27 years of service credit Retirement Category = 2% at 55 Employee retires at age 60; Benefit Factor = 2.314% Highest final compensation (annual salary) = $50,000 27 x 2.314% = 62.478% 62.478% x $50,000 = $31,239 annual unmodified allowance

Other considerations: Retirement planning Other considerations: $31,239 benefit estimate is present value Less after inflation Will this provide the retirement lifestyle you want? What other sources of income will you have? Be smart – pay yourself first to ensure a comfortable retirement!

Voluntary retirement savings program CSU Tax-Sheltered Annuity (TSA) 403(b) Program Employer-sponsored plan for CSU employees Pre-tax payroll deductions Fidelity Investments Fixed plan administrative fee of $46 per year New investment options Dedicated campus representative Fidelity NetBenefits: www.netbenefits.com/calstate

www.calpers.ca.gov

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View, print and save CalPERS Annual Member Statements back to 2005 Create a retirement estimate Apply for service retirement View current CalPERS service credit, health plan, address on file, covered dependents and eligible appointments Order and download publications Send a secure message to the CalPERS Member Contact Center

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