National Life Insurance Company® Life Insurance of the Southwest® National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW), Addison, TX and their affiliates. Each company of NL Group is solely responsible for its own financial condition and contractual obligations. LSW is not an authorized insurer in New York and does not conduct insurance business in New York. CalSTRS Retirement System Overview Save for a better tomorrow LR#12998

© 2015 National Life Group® Retirement Realities

© 2015 National Life Group® Dream…

© 2015 National Life Group® Build towards your goals – Estimate your total retirement income Plan… Plan to live longer than you think Lifetime Income Savings Earnings Other Assets

© 2015 National Life Group® Foundation for district employees System provides benefits and services Unfunded liability and budget shortfalls creating harder look at programs Your State Pension Plan

© 2015 National Life Group® Determine Age Factor – Hired prior to Jan : use 60 Table – Hired after Jan : use 62 Table Multiply by Total Service Credit Multiply by Final Average Compensation – 60 member with 25+ service credit – use highest one year compensation – 62 member or member with less than 25 total service credits – use highest consecutive 3 year salary Divide Annual Payment by 12 to get Monthly Payment How to Calculate Your Pension Benefit Source: CalSTRS Handbook, 2013

© 2015 National Life Group® Benefit Calculation: Example 60 You’re averaging $59,825 per year You have 29 years of school service. Your pension: $2,891 per month Age Factor 2% Multiplied by YOS x 29 Equals Payout Factor 58% AFC Multiplied by $59,825 Equals Total Annual Benefit $34,698

© 2015 National Life Group® Payout Options Member only benefit – level payments for life 100% Beneficiary Option 75% Beneficiary Option 50% Beneficiary Option Compound Option – designate multiple beneficiaries to receive survivorship benefit

© 2015 National Life Group® Automatic benefit increase equal to 2% of initial benefit (non-compounded) If purchasing power of initial benefit falls below 85% of the initial benefit, a one year supplement will be paid. Payment Increases

© 2015 National Life Group® Act… All figures assume a 4% annual rate of return compounded monthly and do not include any matching contributions made by an employer which are available in some qualified retirement plans.

© 2015 National Life Group® – Buy years of service – Explore savings options through employer- sponsored plan – Create an income stream for life Act… Can you live on a fraction of your salary? Bridge the retirement gap

© 2015 National Life Group® Act… This hypothetical example is for illustrative purposes only. Taxes are deferred until monies are withdrawn from the plan. This example is based on a teacher in the state of California claiming single and zero allowances not considering state taxes. Source: TRAK Software

© 2015 National Life Group® How Much Can Be Contributed in 2015 ? 15 year catch-up may apply if plan document permits (restrictions apply) $18,000 Base $6,000 age 50+ catch-up

© 2015 National Life Group® Subject to plan approval Allow for access without a qualifying event Low cost with no credit approval Must be paid back in five years or less – Up to 25 years for primary home purchase Maximum loan amount subject to IRS guidelines 403(b) Loans

© 2015 National Life Group® Rule 1: Must be aggregated with all plans of the employer Rule 2: Cannot exceed the lesser of: 403(b) Loans – How Much Can Be Borrowed $50,000 Less any highest out- standing balance in last 12 months 50% of present value of participant’s non- forfeitable benefit under the plan* less any outstanding loan balance *This amount will not be violated if the loan does not exceed the lesser of (1) $10,000 or (2) 100% of his or her vested account balance. Note: IRS limits are for total maximum loans under the plan, carriers may limit the amount that may be borrowed from their individual policies

© 2015 National Life Group® 403(b) Hardship Distribution Only employee contributions may be withdrawn Maximum distribution limited to amount needed due to hardship and not available from other sources Contributions must stop for 6 months after hardship distribution Medical Expenses Funeral Expenses Tuition Expenses (next 12 months) Purchase Primary Residence Prevention of Eviction Foreclosure on Mortgage Casualty loss to employees primary residence not covered by insurance

© 2015 National Life Group® 403(b) Distributions Elective deferrals cannot be withdrawn until: Age 59 ½ Death Qualified Domestic Relations Order Total disability Separation from service Distributions prior to age 59 ½ may be subject to 10% IRS early distribution penalty.

© 2015 National Life Group® Follow your dreams Now is the time to put your retirement income strategy in place Experience the financial security for a retirement lifestyle you have always dreamed of Enjoy…

© 2015 National Life Group® This presentation represents our understanding of the tax code and state retirement plan You should always consult your tax professional or state retirement system about your individual situation Information believed to be accurate as of February 2015 Disclosure

© 2015 National Life Group®