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National Life Group ® is a trade name representing various affiliates, which offer a variety of financial service products. Form No. 11055(0712) Life Insurance.

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Presentation on theme: "National Life Group ® is a trade name representing various affiliates, which offer a variety of financial service products. Form No. 11055(0712) Life Insurance."— Presentation transcript:

1 National Life Group ® is a trade name representing various affiliates, which offer a variety of financial service products. Form No (0712) Life Insurance Company of the Southwest™ Oklahoma State Teachers Retirement System Are you saving enough for ALL your tomorrows? What’s YOUR Tomorrow?

2 You Can Work At Controlling Your Future Retirement Questions to Ask Now! Are you planning to live to 100? What percentage of your Final Salary will you be living on? Will you outlive your retirement money? Are you saving enough for all your tomorrows?

3 Longevity: Your Biggest Risk How many retirement years will you enjoy?* Age Life Expectancy (average) Example of a female who reaches a certain age… Then the average age she is expected to live * Based on information obtained from AnnuityAdvisors.com

4 Become Familiar with Your Teacher Retirement System Benefit How to determine your benefit Based on your age and years of service Determining total years of service Final compensation Payment options Source: Oklahoma Teachers Retirement System

5 How to Calculate Your Monthly Benefit Example: A participant, retiring at age 62 with 30 years of service, opted for high base remittance and electing the standard maximum option. Participants final years salary was $60,000 resulting in a final highest three year average salary of 58,000. Calculation: Source: Oklahoma Teachers Retirement System Service# YrsX2%XSalary/12=Monthly Benefit 7/83-6/9512X2%X$40,000/12=$800 7/95- 6/1318X2%X$58,000/12=$1,740 Totals30$2,540

6 Retirement Income Gap Can you live on a fraction of your final salary? $108,366* Income needed in 20 years $60,000 Begin Working Retire at 62 *Assumes a 3% inflation factor Source: Oklahoma Teachers Retirement System 49% reduction of income per month $30,840 Teacher Retirement Income

7 Now Is the Time to Plan & Save Will you outlive your retirement money? Know your retirement expenses –Don’t forget taxes and medical costs Identify your sources of income –You may not receive Social Security Bridge the retirement gap –Buy years of service –Explore saving options through your 403(b) and/or 457 plan –Create an income stream for life

8 Power of a Pre-Tax Savings Plan Pre-tax Savings Gives Lacy More Lacy wants to save $100 a month towards her retirement She needs help to understand the power of a pre-tax savings plan. Post-taxPre-tax Gross Income per Paycheck$4,500 Pre-tax contributions$0$ Standard tax deductions$686.33$653 Post-tax retirement contributions$100$0 Take-home pay$3, 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 Oklahoma claiming single and zero allowances. Source: TRAK Software

9 How Much Can Be Contributed? The Internal Revenue Code determines an individual's maximum amount that he or she can defer to the plan free of tax for the year. This may be limited by your employer’s plan provisions. If you contribute the maximum basic salary deferral limit, and your plan allows, you can qualify for both the catch-up provisions below. You have the potential to contribute up to $27,000 to your 403(b) plan during Basic salary deferral limit: $18,000 in (b) 15 years of service cap extension: You may be eligible to defer up to an additional $3,000. Age 50+ Catch-up: If 50 or older, you may be eligible to defer up to an additional $6,000 in Total 2015 contribution limit on combined employee/employer contributions: 100% of your includible compensation or $53,000, whichever is less.

10 How Loans Work Loans may be available if the plan permits. All loans from any retirement plan of the employer must be aggregated for purposes of determining the maximum amount of the loan. Loans can not exceed the lesser of: –$50,000 (reduced by the highest outstanding loan balance for the last 365 days ); or –50 percent of the present value of the participant’s non- forfeitable benefit under the plan. 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.

11 Distributions Generally, because 403(b) plans enjoy tax deferral, elective deferrals in the plan cannot be withdrawn until: –Age 59½ –Death of the participant –Total disability of the participant –On separation from service of the participant –As the result of a QDRO (Qualified Domestic Relations Order), or –As a qualified reservist distribution

12 Hardship Distributions Hardships…Only employee salary deferrals can be withdrawn, not interest or employer contributions. The IRS lists the following as qualifying hardships: –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 –Prevention of eviction from the participant’s principal residence or foreclosure on the mortgage of the participant’s principal residence

13 What Are Your Next Steps? How I Will Work with You Schedule a work-through to calculate your retirement benefit Determine your “retirement gap” and find ways to bridge that gap Explain your 403(b) plan and your savings options Address any other questions you may have

14 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 for your individual situation Information believed to be accurate as of July 2013.

15 For more information Life Insurance Company of the Southwest™


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