1. The Importance of Saving for Your Retirement
There
Every
Step
of the
Way
Your Goal = Comfortable Lifestyle During Retirement

2. The Importance of Saving for Your Retirement
But I have my TRS Retirement. That’s enough, right?
Not Necessarily

3. When am I eligible to retire
TRS – TIER 5
To be eligible for normal-age service retirement, you must meet one of the following conditions.
You are age 65 with at least five years of service credit, or
You are at least age 62, you meet the Rule of 80 (your age and years of service credit total at least 80), and you have at least five years of service credit.

4. The Retirement Gap
Loss of Income
Inflation
Life Expectancy

5. Loss of Income

6. Highest 5 year average Eligible Compensation Divided by 12
Service Credit
Service Credit is important because it is a key factor in calculating the amount of a monthly retirement annuity.
The basic formula is:
2.3%
Years of Service
Highest 5 year average Eligible Compensation Divided by 12
*the multiplier increased to 2.3% effective 9/1/2001

7. Let’s Calculate a Benefit
$45,000 - Average of Highest 5 Annual Salaries 26
Total Years of Service Credit
2.3%
59.8%
Total %
$45,000 Average Salary
59.8%
Total %
$26,910
Standard Annuity
$26,910 12
$2,242.50
Monthly Standard Annuity

8. Example: Retirement GAP

9. House Automobile Inflation Based on Typical Prices 1970 1980 2002
$25,000
1980
$64,000
2002
$175,000
2022*
$287,413
Automobile
1970
$3,400
1980
$6,910
2002
$26,400
2022*
$43,259
*American Fidelity Assurance Co., 2002
Assumes 2.5% Inflation Factor

10. Life Expectancy
In 2000, persons reaching age 65 had an average life expectancy of an additional 17.9 years*
ACLI: Retirement Action Agenda, 2000

11. When should you start saving?
Life Expectancy
You may be faced with...
Outliving your retirement income
When should you start saving?
NOW!

12. Don’t Wait! Time is Money.
Mary
$200 Monthly Contribution
From age 25 to 35 = 10 years
$200 x 12 = $2,400 per year
$2,400 x 10 years = $24,000
Andy
$200 Monthly Contribution
From age 35 to 65 = 30 years
$200 x 12 = $2,400 per year
$2,400 x 30 years = $72,000

13. Don’t Wait! Time is Money.
Annual Rate of Return = 8%
$365,000
Total Contribution: $24,000
Mary at age 65
$284,000
Total Contribution: $72,000
Andy at age 65

14. Don’t Wait! Time is Money.
Close the
Retirement GAP

15. Tax Sheltered Retirement Program
What is a 403(b) Tax Sheltered Annuity?
A 403(b) TSA is a special type of retirement savings for employees of certain tax exempt and educational organizations.
This is also known as a salary reduction plan because contributions are made through payroll deductions.

16. How Contributions to 403(b) Plans Work
All Contributions are deducted from your paycheck before income taxes are withheld
For the tax year in which you contribute, your income may fall in a lower tax bracket, resulting in lower taxes paid to the IRS.
Contributions grow tax free and any earnings are also tax deferred until they are withdrawn. You will usually be in a lower tax bracket at retirement.

17. 457 Plan
An employer sponsored plan that allows an employee to defer income on a pre-tax basis.
FFInvest 457(b) Deferred Compensation Plan
Voluntary salary reduction plan to defer current taxable income
Multiple investment options

18. 457 Plan Benefit responsive Withdrawals for*: Retirement
Separation from service
Certain unforeseeable emergencies
Death

19. Comparison Example: Two Employees
$2,000
Earning:
$400
Save or Invest:
25%
Tax Bracket:

20. Employee #1 After Tax Savings
$2,000
Gross Income:
$500 ($2000x25%)
Tax (25%)
$1,500
Take Home Pay:
$400
After Tax Savings
$1,100
Net After Savings:

21. Employee #2 457(b) Tax Sheltered
$2,000
Gross Income:
$400
457(b) Plan
$1,600
New Taxable Gross Income
$400 ( $1600x25%)
Tax (25%)
$1,200
Net After Savings:

22. Side by Side Comparison
Employee #1 - ATS
Employee #2 - TSA
$2,000
Gross Income:
$500 ($2000x25%)
Tax (Roth)(25%)
$1,500
Take Home Pay:
$400
After Tax Savings
$1,100
Net After Savings:
$2,000
Gross Income:
$400
457(b) Plan
$1,600
New Taxable Gross Income
$400 ( $1600x25%)
Tax (25%)
$1,200
Net After Savings:

23. Thank you! Ryan Hancock First Financial Group of America
Thank you!