Objective of this presentation To encourage you to consider practical future planning questions and begin (or continue) developing a plan for your future. 2

Disclaimer The information in this presentation is general and not intended as specific legal, tax or financial guidance. Please consult an expert for advice and guidance on your specific questions. 3

Outline Question Everything Retirement is a major life change Retirement can last a long time Key retirement milestones Income goals and needs Social Security Tax Reminders Medicare 4

Question Everything. 5

Future Planning is more than just financial planning. 6

Retirement Is a Major Life Change Mark and Claire Gibson 7

Retirement Is a Major Life Change Five Questions to Ask Five Years Before Retirement*: 1. What are your expectations? a. Where do you plan to live? b. What do you want to do? c. How will you pay for health care? 2. Will you have enough? 3. Are you invested properly? 4. Where will your retirement “paycheck” come from? 5. How does your home factor into your retirement? * 8

Retirement Is a Major Life Change Where will I live? Will I live in the country I’ve served? Will I return to the States? Do I own a home? Will I buy, build or rent a home? Will I live in a retirement community? Will I return to my community of origin? Will I live near a supporting church? Will I live near family? 9

Retirement Is a Major Life Change Will I have enough money? What will I do? Continue working in some capacity Pastor a church Volunteer Join a group such as Finishers Start or learn something new 10

Retirement Is a Major Life Change Who will be my friends? Special considerations: Aging parents Health care Depression Pass the baton Finish well Give yourself time 11

20–35 years If you are 55…80 If you are 60…82 If you are 65…84 Source: SSA Period Life Tables 6/27/2006 Retirement Can Last a Long Time 12 How long can you expect to live in retirement?

Key Retirement Milestones 55 59½ FRA (Full Retirement Age) 70½ 13

14 Income Goals and Needs Complete a Retirement Budget Worksheet

Income Goals and Needs Complete a Retirement Budget Worksheet Estimate your retirement savings goal How much can I save between now and retirement? What monthly contribution do I need to make to reach this goal? What other options do I have to minimize expenses or increase funding? 15

Income Goals and Needs General Rules of Thumb Need to replace 70% to 90% of final pay Social Security replaces 25%–40% Average individual Social Security benefit is about $14,000 per year Example: $50,000annual income x.80replacement value $40,000retirement income goal -$14,000less Social Security benefit $26,000income need 16

Income Goals and Needs 17 Income Sources Social Security Personal savings/investments Retirement plans/pensions Other

Income Goals and Needs Summary: Your retirement goals Age and health of you and your spouse Social Security benefit Spouse’s retirement income Your total assets and debts Prospects for continued earned income Housing provisions Family financial obligations Inflation Estate plans 18

Social Security Eligibility How benefits are calculated Early and full retirement age Average benefits 19

Social Security Who qualifies for Social Security benefits? To be qualified, you must be “insured for retirement,” meaning you or your spouse has 40 qualifying credits. 1 credit = 1 quarters of work covered by Social Security 40 credits = 40 quarters or 10 years of work covered by Social Security. 20

Social Security Benefits are based on: Age when benefits begin 35 highest years of earnings Average earnings are indexed for inflation Benefits are “weighted” so lower paid workers get a higher percentage of income replacement 21

Social Security When can you receive your full Social Security benefit? 22

Social Security You can retire “early” with a reduced benefit. Reduction is permanent and applies to a surviving spouse benefit. If earned income exceeds a specified limit (changes annually), you lose $1 for every $ 2 above that amount. (The limit is higher for the year you reach full retirement age. Once you reach full retirement age, the limit no longer applies.) Note for ministers: Housing counts toward the $14,640 earnings limit. The “break-even” point for total lifetime benefits is about 12 years. 23

Social Security Your monthly benefit can increase by 8% for each year you delay taking your benefit — up to age 70. This increase does NOT apply to a spousal benefit but DOES apply to widow(er) benefits. For someone taking their benefit at age 70, the “break-even” point for total life time benefits when compared to a full retirement age benefit is about 12½ years. 24

Tax Reminders... Retirement benefits from a denominational pension board can be designated as tax free Housing Allowance for “retired” ministers. As you approach retirement years, tax savings can become the primary advantage of increased contributions to your retirement account. 25

Tax Reminders... Employer contributions to your retirement do NOT count in the early retirement earnings limit. If total taxable income exceeds certain levels, some of the social security benefit may be subject to federal income tax. 26

Medicare What is Medicare? Part A: Basic hospital insurance Part B: Supplemental medical insurance Part D: Prescription drug coverage Part C: Medicare Advantage plans Medigap Plans 27

Medicare Enrollment Periods Initial Enrollment in the year you turn 65: ◦ The three months prior to your birthday month ◦ Your birthday month ◦ The three months after your birthday month Annual Enrollment: January through March each year Special Enrollment: you may delay enrollment if you are employed and covered by a group plan offered by your employer 28

Medicare Enrollment Penalty If you do not enroll in Medicare during your initial enrollment period, you may be penalized 10% for Part B each year you delay enrollment. Other penalties may apply to Part D delayed enrollment. You may be automatically enrolled in Part A and Part B when you turn 65 if you or your spouse collects Social Security. 29

Medicare Premiums Part A, $0 Part B, $ per month Part C, Varies widely based on your coverage selected Part D, $12 to $69 per month Varies based on your marital status and 1040 income If you are collecting Social Security payments, premiums are withheld from your payments. 30

Medicare Additional Resources Contact your State’s State Health Insurance assistance Program (SHIP) Forbes Mistakes to Avoid When Enrolling 31

Close There are many factors to consider as you approach retirement age. Question everything. Prepare as well as you can. Enjoy your retirement. 32