1. The Mathematics of Retirement Planning AMATYC Conference New Orleans, LA November 20, 2015

2. The Mathematics of Retirement - Three Legged Stool Pension Social Security & Medicare Personal Investments Balancing to meet your needs

3. What Are the Big Questions? When can I start to draw Social Security and how much will I get ? Will Medicare cover all my Health Insurance ? What Pension decisions should I make ? Will I have enough to live comfortably?

4. US Department of Labor – www.dol.gov/ebsa Wilson B. Gräb Forsyth Tech CC 2015 AMATYC4 Taking The Mystery Out of Retirement Planning Chapter 1 Tracking Down Todays Money Chapter 2 Tracking Down Future Money – At Retirement Chapter 3 Tracking Down Future Expenses Chapter 4 Comparing Income and Expenses Chapter 5 Making Your Money Last Chapter 6 Tracking Down Help for retirement

5. Social Security Benefits and Timing Social Security – Retirement Benefits SSA Publication No. 05-10035 Wilson B. Gräb Forsyth Tech CC 2015 AMATYC5 When to Start Collecting (Age 62 or FRA or Age - 70 SSA Publication No. 05-10147) How Your Benefit is Figured – SSA Publication No. 05-10070

6. Social Security Benefits and Timing Wilson B. Gräb Forsyth Tech CC 2015 AMATYC6 Age to receive full Social Security benefits Year of birth Full retirement age 1943-1954 66 1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 and later 67 NOTE: People born on January 1 of any year should refer to the previous year.

7. Social Security Benefits and Timing Full Retirement Age (FRA) – SSA.Gov - Retirement Age Calculator Wilson B. Gräb Forsyth Tech CC 2015 AMATYC7

8. When to Start Collecting (Age 62 - 70) Sample ChartMonthly AgeAmountAgeAmount 62$75066$1000 63$80067$1080 64$86668$1160 65$93369$1240 66$100070$1320 Wilson B. Gräb Forsyth Tech CC 2015 AMATYC8

9. When to Start Collecting (Age 62 - 70) Considerations 1.Health situation 2.Family Health History 3.Financial Position 4.Post Working Plans 5.Spouse Plans 6.Other Interests 7.Charitable Work 8.Professional Societies 9.Economy Wilson B. Gräb Forsyth Tech CC 2015 AMATYC9

10. When to Start Collecting (Age 62 – 70) Age 62 vs FRA (66) Let X = Years X($750) = $1000(X – 4) $750X = $1000X - $4000 -$250X = -$4000 X = 16 Years Wilson B. Gräb Forsyth Tech CC 2015 AMATYC10

11. When to Start Collecting (Age 62 – 70) Age 66 vs 70 Let X = Years X($1000) = $1320(X – 4) $1000X = $1320X - $5280 -$320X = -$5280 X = 16.5 Years Wilson B. Gräb Forsyth Tech CC 2015 AMATYC11

12. Full Retirement Age (FRA) SSA.Gov - Retirement Age Calculator The Full Retirement Age Is Increasing Full retirement age (also called "normal retirement age") had been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959. The 1983 Social Security Amendments included a provision for raising the full retirement age beginning with people born in 1938 or later. The Congress cited improvements in the health of older people and increases in average life expectancy as primary reasons for increasing the normal retirement age.1983 Social Security Amendments Note: If you were born on January 1st of any year you should refer to the previous year. Wilson B. Gräb Forsyth Tech CC 2015 AMATYC12

13. Medicare www.medicare.gov Medicare does not start until age 65 Medicare is our country’s health insurance program for people age 65 or older. Certain people younger than age 65 can qualify for Medicare, too, including those who have disabilities and those who have permanent kidney failure. The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care. Wilson B. Gräb Forsyth Tech CC 2015 AMATYC13

14. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part A - Hospital Part B - Medical Insurance Part C - Medicare Advantage Part D - Prescription Drug Coverage 14

15. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Medicare Part A (Hospital Insurance) Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Hospital care Skilled nursing facility careSkilled nursing facility care - Nursing home care (as long as custodial care isn't the only care you need)Nursing home care custodial care Hospice Home health services 15

16. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Medicare Part B (Medical Insurance) Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. 16

17. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part B covers 2 types of services Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice. Preventative Services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best. You pay nothing for most preventive services if you get the services from a health care provider who accepts assignment. 17

18. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part B covers things like: Clinical Research Ambulance Services Durable Medical Equipment Mental health Inpatient Out Patient Partial Hospitalization Getting Second Opinion Before Surgery Limited Outpatient Prescription Drugs 18

19. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part C A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include: HMO - Health Maintenance Organizations, PPO - Preferred Provider Organizations, PFS - Private Fee-for-Service Plans, SNP - Special Needs Plans, and MMSA - Medicare Medical Savings Account Plans. 19

20. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part C – Cont’d If you're enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and aren't paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage. 20

21. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part D Medicare Prescription Drug Plan Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans. 21

22. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Part D What drug plans cover Each Medicare Prescription Drug Plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost. 22

23. Pension Options Usually a monthly amount with several option. Some plans will offer a Lump Sum Settlement Maximum Allowance You get it all, survivor gets $0 Option A:100% Joint and Survivor – Both receive reduced benefits for life Option B50% Joint and Survivor – you receive reduced benefits for life. At depth your survivor receives ½ of your payments for life Wilson B. Gräb Forsyth Tech CC 2015 AMATYC23

24. NC State Pension Options Option C:Social Security Leveling – If retiring prior to age 62 – you receive larger monthly benefits until you reach age 62 At age 62, your monthly benefits would be reduced to less that what you would otherwise be entitled to receive Your SS and TSERS should be approximately the same amount as the inflated payment you receive before age 62 Actual amount from TSERS I based on estimate you provide from SSA before retirement Wilson B. Gräb Forsyth Tech CC 2015 AMATYC24

25. NC State Pension Options Computation of Benefits Annual Benefit = 1.82% X Average Final Compensation X Years and Months of Service Average Final Compensation = average salary during your four highest paid years in a row. Wilson B. Gräb Forsyth Tech CC 2015 AMATYC25

26. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Maximum Allowance$1000 monthly$0.00 Option A$889.70 Monthly$889.70 Monthly Option B$941.60 Monthly$470.80 Monthly Option C$1402.84 up to $0.00 age 62 $767.84 thereafter Wilson B. Gräb Forsyth Tech CC 2015 AMATYC26

27. NC State Pension Options Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Option DModified Joint and Survivor Combination Maximum Allowance and Option 2 Receive reduced monthly payments for life After you die, your monthly survivor beneficiary receives the same amount monthly for life If your beneficiary dies before you do, your monthly payments are increased to the amount payable under the maximum allowance 27

28. NC State Pension Options Wilson B. Gräb Forsyth Tech CC 2015 AMATYC Option EModified Joint and Survivor Combination Maximum Allowance and Option 3 Receive reduced monthly payments for life After you die, ½ of your payment continues to your monthly survivor beneficiary for life If your beneficiary dies before you do, your monthly payments are increased to the amount payable under the maximum allowance 28

29. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Option D$882.60 Monthly; if Beneficiary dies$882.60 before Retiree, Retiree receives $1000 monthly thereafter Wilson B. Gräb Forsyth Tech CC 2015 AMATYC29

30. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Option E$937.70 Monthly; if beneficiary dies$468.85 before Retiree, Retiree receive $1000 monthly thereafter Wilson B. Gräb Forsyth Tech CC 2015 AMATYC30

31. Personal Savings Plan Analysis Traditional Vs Roth Working Career Traditional Roth Years Worked 3030. Salary Earned$2,024,721$2,024,721 Amount to Fund W/ Growth$250,721$250,721 Taxes Paid$475,809$519,000 Wilson B. Gräb Forsyth Tech CC 2015 AMATYC31

32. Personal Savings Plan Analysis Traditional Vs Roth Retirement – 20 Years Traditional Roth Social Security$20,000$20,000 Pension $47,376$47,376 IRA Withdrawals$5000$5000 Taxes Paid Over 20 Years$358,458$336,880 IRA Net After 20 Years$395,668$333,458 Taxes Due IRA @ Death$245,587$0 Total Taxes Paid$1,079,855$852,458 Tax Savings$227,396 Wilson B. Gräb Forsyth Tech CC 2015 AMATYC32

33. Summary Wilson B. Gräb Forsyth Tech CC 2015 AMATYC33 Plan Early and Stay The Course Know your current Expenses - Medical What do you want to do in Retirement Plan for your estate and a part of the process – Last Will and Testament, Guardianship of Minor Children, Disposition of Body, Health Care Power of Attorney, Living Will, durable Financial Power of Attorney, Listing of Non-Retirement Assets

34. Personal Savings vs Pension Wilson B. Gräb Forsyth Tech CC 2015 AMATYC YearsSalary6% Contribution Interest Rate Compounded Amount Stock Mutual Fund Annually 12% 5%AnnuallyMonthlyAnnually 30 $ 37,467.11 $ 2,248.035% $ 9,715.84 $ 10,043.61 $ 67,350.70 29 $ 37,841.78 $ 2,270.515% $ 9,345.71 $ 9,650.31 $ 60,735.90 28 $ 38,220.20 $ 2,293.215% $ 8,989.69 $ 9,272.42 $ 54,770.76 27 $ 38,602.40 $ 2,316.145% $ 8,647.22 $ 8,909.33 $ 49,391.49 26 $ 38,988.42 $ 2,339.315% $ 8,317.80 $ 8,560.45 $ 44,540.54 25 $ 39,378.31 $ 2,362.705% $ 8,000.94 $ 8,225.24 $ 40,166.02 24 $ 39,772.09 $ 2,386.335% $ 7,696.14 $ 7,903.15 $ 36,221.15 5 $ 48,049.02 $ 2,882.945% $ 3,679.44 $ 3,699.85 $ 5,080.73 4 $ 48,529.51 $ 2,911.775% $ 3,539.28 $ 3,554.97 $ 4,581.73 3 $ 49,014.80 $ 2,940.895% $ 3,404.45 $ 3,415.76 $ 4,131.74 2 $ 49,504.95 $ 2,970.305% $ 3,274.75 $ 3,282.00 $ 3,725.94 1 $ 50,000.00 $ 3,000.005% $ 3,150.00 $ 3,153.49 $ 3,360.00 $ 78,197.36 $ 175,503.32 $ 179,108.28 $ 654,901.64 Pension Average Basis $ 49,262.32 $ 65,490.16 Annual Pension $ 22,168.04 Payback 3.53 34