Form No CA (0905) JL Waite Financial Group

Fewer than30 or 30 YearsMore Years Ageof Serviceof Service 501.1%1.3% 551.4% 1.6%** 602.0% 2.2%** 61½2.2%2.4% 632.4%2.4% Retirement Benefit Factors* Retirement Formula Years of Service x State Factor = % of Highest One Year Income if at least 25 years of credited service *Hire date after July 1, **With early retirement reductions.

Plan Example (2.4 Percent) A member, age 63, retiring with 30 years of service and compensation of $70,000, would receive a retirement benefit computed : (.024 x 30 x $70,000) = $50,400 ÷ 12 = $4,200 per month. + longevity bonus* *Estimate of retired teacher in CA.

Plan MemberSpouse Unmodified$4,425$0 100%$3,713$3,713 75%$3,885$2,914 50%$4,108$2,054 CalSTRS Retirement Options Based on… 63 yr old with 30 yrs of service and $70,000 salary

Income Gap $70,000 Begin Working Retire at 63 28% Net Loss of Spendable Income $50,400 Teacher Retirement Income

Income Gap $126,428* Income needed in 20 years $70,000 Begin Working Retire at 63 *Assumes a 3% inflation factor 28% Net Loss of Spendable income $50,400 Teacher Retirement Income

Retirement Program Enacted by Congress 403(b) One of the most effective financial planning tools available today.

Why People Do Not Participate in a 403(b) Lack of Understanding. Viewed As A Cost Rather Than A Benefit. Belief That The Money Will Not Be Accessible.

Taxes and the Discounted Dollar Gross? — Taxes: 28%? Net$250

Taxes and the Discounted Dollar Gross$347 — Taxes: 28%$97 Net$250

Taxes and the Discounted Dollar Over 20 years assuming a 6% rate of return, the accounts grew to… Taxable $113,911 Tax-Deferred $158,109 The Tax-Deferred account has over $44,000 more than the Taxable account, over a 38% increase.

A Special Feature of the 403(b) Program Loans Accessible Prior to Retirement Tax and Penalty Free* 2% Net Interest Cost** Five-Year Payback (Monthly) or, up to 30-year if primary residence *Non-payment may result in a tax liability. **On Traditional Fixed Annuities.

Meet Your Financial Objectives With a 403(b) Pay Off Debt Buy Back Years of Service Home Purchase College Education Pre-Tax Contribution Emergency Fund Bridge The Retirement Gap

Bridging the Income Gap Begin Working Retire at 63 $70,000 $50,400 Teacher Retirement Income 403(b) Income

Three Obstacles to Financial Security TAXES, INTEREST, and DEBT How much of your money goes toward one, two, or all three of these areas, hindering your progress to achieve financial security?

How to Get Out of Debt Using Your 403b

Month 0 DebtsBalancePaymentRateTerm (1) Credit Card$2,200$66/m16.8%45 months (2) Credit Card1,35038/m19.8%46 months (3) Auto #17,200240/m12.6%36 months (4) Auto #22,600226/m10.75%12 months $13,350$572/m Assets 403(b):$3,500 + $50 per month

Month 1 (1) Credit Card$2,164$66/m16.8%44 months (2) Credit Card1,33240/m19.8%45 months (3) Auto #17,035240/m12.6%35 months (5) 403(b) Loan2,56352/m2%60 months Totals$13,094$398/m Assets 403(b):$3,806 + $291 per month DebtsBalancePaymentRateTerm

Month 4 (1) Credit Card$2,056$66/m16.8%40 months (3) Auto #16,531240/m12.6%31 months (4) Auto #20000 (5) 403(b) Loan3,72779/m2%60 months Totals$12,314$385/m Assets 403(b):$4,751 + $308 per month DebtsBalancePaymentRateTerm

Month 11 (2) Credit Card0000 (3) Auto #1$5,293$240/m12.6%24 months (4) Auto #20000 (5) 403(b) Loan5,123122/m2%60 months Totals$10,416$362/m Assets 403(b):$7,181 + $340 per month DebtsBalancePaymentRateTerm

Month 19 (1) Credit Card0000 (2) Credit Card0000 (4) Auto #20000 (5) 403(b) Loan$8,241$231/m2% Totals$8,241$231/m Assets 403(b):$10,378 + $522 per month DebtsBalancePaymentRateTerm

Let’s Take a Look After 19 Months Before Total Debt13,350 Payment572 Average Interest13.4% Total 403(b)3,500 Contribution50

Let’s Take a Look After 19 Months BeforeNow Total Debt13,3508,241 [403(b)] Payment Average Interest13.4%2% [Net] Total 403(b)3,50010,378 Contribution50522

Let’s Take a Look After 60 Months Before Total Debt13,350 Payment572 Average Interest13.4% Total 403(b)3,500 Contribution50 Add to Take-Home0

Let’s Take a Look After 60 Months BeforeNow Total Debt13,3500 Payment5580 Average Interest13.4%0 Total 403(b)3,50036,003 Contribution50833 Add to Take-Home024 + All Raises

How to Maximize Your Pension Benefits

Plan MemberSpouse Unmodified$4,425$0 100%$3,713$3,713 75%$3,885$2,914 50%$4,108$2,054 CalSTRS Retirement Options Most educators choose the 100% option. In this example, $3,713 would go to the member, and $3,713 would go to the spouse in the event of the member’s death

Plan MemberSpouse Unmodified$4,425$0 100%$3,713$3,713 75%$3,885$2,914 50%$4,108$2,054 CalSTRS Retirement Options With proper planning, you could choose a higher pension option. By choosing this higher option, your household will receive more than $150,000 in additional income over 25 years.

Plan MemberSpouse Unmodified$4,425$0 100%$3,713$3,713 75%$3,885$2,914 50%$4,108$2,054 Spousal Loss of Income The challenge with the member choosing the higher pension option is the spouse’s loss of income. In this example, $3,713 - $2,054 is $1,659 monthly loss of income. Solution: a $330,000 side fund could bridge this short fall. $330,000 invested at 6% yields $19,800 annually / 12 = $1,650 of monthly income for the surviving spouse.

Benefits of Pension Maximization Maximize your retirement income. Provide continued income to your beneficiary. Receive raises on higher pension options. Maintain control over your retirement dollars instead of STRS having control. Cash availability for other contingencies. Provide a legacy to your estate

There have been two 40% losses in the stock market in the last 10 years… CAN YOU AFFORD A THIRD?

$2.3 Trillion Lost in Retirement Savings Plans in 2008! YOU have a choice of a safe and secure place to save for retirement that provide guarantees from loss of principal and earned interest.

How TCG can Assist YOU? Analyze and advise you on which CalSTRS option is best for you. Validate if your investment portfolio allocation is commensurate with your age and lifestyle? Implement a debt reduction strategy utilizing your 403b. Validate your retirement income needs, and implement a proactive plan to reach your retirement goals. Review and analyze your need for a living will and trust to create tax intelligent strategies to shelter your estate.

CalSTRS Loan Program 3% Down (80/17) 3% down payment – only 1% needs to be your funds the remaining can be gifted by a family member FREE float down to lower rate – if CalSTRS lowers rates during the 45 day lock period, you get the lower rate The 17% 2nd has a deferred for 5 years, this enables you to qualify for a larger home

Questions and Support Call or Jim Waite JL Waite Financial Group (c) (f)