1. Texas Retirement System Overview
Save for
a better
Texas Retirement System Overview
tomorrow
LR#13160

2. Retirement Realities

3. Dream…

4. Plan… Build towards your goals Plan to live longer than you think
Estimate your total retirement income
Lifetime Income
Savings
Earnings
Other Assets
Plan to live longer than you think
There are more than
53,000
Centenarians
In the United States
Source: Centurians: National Awarness Project.

5. Your Retirement System
Tier 1 & 2
Regular Retirement at
Age 65 with 5 years of service
Age plus years of service equals 80
Tier 3
Regular Retirement at
Age 65 with 5 years of service
At least age 60 and age plus years of service equal 80
Tier 4
Regular Retirement at
Age 65 with 5 years of service
Age plus years of service equal 80 and at least age 55 and have at least 20 years of service
Tier 5 & 6
Regular Retirement at
Age 65 with 5 years of service
At least age 62 and age plus years of service equal 80
Source: TRS Handbook, 2013

6. Calculating Your Pension Benefit
Service Factor X Years of Service Final Average Monthly Salary = Monthly Retirement Benefit
All Tiers – 2.3%%
Year of service are for each school year you work at least 90 days
Tier 1, 4 & 6 – Average of highest three annual salaries
Tier 2, 3 & 5 – Average of highest five annual salaries
Source: TRS Handbook 2013

7. How to Calculate Your Monthly Benefit
Sample Calculation
Tier 2 member, retiring at age 62 with 30 years of service
Service Factor %
Years of Service X
Final Average Monthly Salary X $4,708
Monthly Retirement Benefit $3,248
(Explain Example)
Your results will be different. You can get the information you need for your calculation on the retirement website. I will be happy to help you calculate your monthly payout according to the options you select to match your situation.
Source: TRS Handbook 2013

8. Retirement Income Gap $108,366* Income needed in 20 years $60,000
35% Net Loss of
Spendable income
This is the scary slide that answers the question of how much more the cost of your retirement will go up, as your paycheck goes down in retirement! You just saw the variables in how your retirement benefit is calculated, but there will be a gap between the money you are bringing home today from your paycheck and the money you will bring home from your retirement benefit check. That gap may be bigger than you think.
(Explain Example)
$38,976
Retirement Income
Begin
Working
Retire
at 62
*Assumes a 3% inflation factor
Source: TRS Retirement Handbook

9. Payout Options Options based on which tier you are a member of
All classes offer
Life only
Life with survivorship options
See TRS site for full details
Source: ERS Retirement Handbook

10. Act… Can you live on a fraction of your salary?
Bridge the retirement gap
Buy years of service
Explore savings options through employer sponsored plan
Create an income stream for life

11. 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.

12. Act… Pre-tax Savings Gives Lacey More
Lacey want to save $200 a month towards her retirement.
She needs help to understand the power of a pre-tax savings plan.
Post Tax
Pre-Tax
Gross Income per Paycheck
$4,500
Pre-tax contribution $0
$266.66
Standard tax deductions
$686.33
$619.67
Post Tax retirement contribution
$200
Take home pay
$3,613.67
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 your State claiming single and zero allowances not considering state taxes. Source: TRAK Software

13. How Much Can Be Contributed in 2015?
$6,000 age 50+ catch-up
$18,000 Base
15 year catch-up may apply if plan document permits (restrictions apply) 13

14. 403(b) Distributions Elective deferrals cannot be withdrawn until:
Age 59 ½
Separation from service
Death
Qualified Domestic Relations Order
Total disability
Distributions prior to age 59 ½ may be subject to 10% IRS early distribution penalty.

15. 403(b) Loans 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 15

16. $50,000 403(b) Loans – How Much Can Be Borrowed
Rule 1: Must be aggregated with all plans of the employer
Rule 2: Cannot exceed the lesser of:
$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 16

17. 403(b) 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
The only needs that qualify for a hardship are:
Medical expenses of the participant, participant’s spouse, or dependent,
Purchase of the participant’s principal residence,
Tuition and related expenses for the next 12 months at a postsecondary institution for the participant, participant’s spouse, or dependant, or
Funeral expenses, or
Prevention of eviction from the participant’s principal residence or foreclosure on the mortgage of the participant’s principal residence
Only employee contributions may be withdrawn
Maximum distribution limited to amount needed due to hardship
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

18. Enjoy… 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

19. Disclosure
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 April

20. (Please conclude by delivering this very important message)
As you can see, we have quite a story but the great thing is it’s a simple one….
The National Life Group is a national company comprised of passionate people who care about the needs of their customers.  While we represent different products, different issuing companies, and operate across all the geographies and cultures of the U.S., we are at the core a single company that has delivered on its promises for 166 years.