1. Prince William County Public Schools Office of Benefits & Retirement Services PREPARING FOR RETIREMENT

2. Introduction PWCS Deborah Sparks, Director of Benefits & Retirement Services Susan Golladay, Benefits Specialist Virginia Retirement System (VRS) Audrey Macklin, Member Outreach Counselor Lincoln Financial Steve Singer, Certified Financial Planner

3. Outcomes Required Planning Steps Toward Retirement Knowledge of: – Virginia Retirement System – Supplemental Retirement – Retirement Opportunity Program – Retiree Health

5. What Does It Mean to Be a Member of VRS? Retirement Plans Retirement Plans Retirement Eligibility Retirement Eligibility

6. VRS Plan 1: your membership date is before July 1, 2010 and you were vested as of January 1, 2013 VRS Plan 2: your membership date is before July 1, 2010 and you weren’t vested as of January 1, 2013 or your membership date is on or after July 1, 2010 but before January 1, 2014 Hybrid Retirement Plan: your membership date is on or after January 1, 2014 or you opted into the hybrid plan during the opt in period

7. Defined Benefit Plan Defined Contribution Plan provides a monthly benefit funded by you and your employer primarily funded by you balance based on contributions, investment results and associated fees

8. Age Service Credit AFC Plan 1 36 Plan 2 & Hybrid 60

9. Reduced 55 with at least five years of service 50 with at least 10 years of service Unreduced VRS Plan 1 Members 65 with at least five years of service 50 with at least 30 years of service

10. Reduced Unreduced 60 with at least five years of service Age + Service Credit = 90 Social Security Normal Retirement Age with five years of service VRS Plan 2 & Hybrid Members

11. Meet vesting requirement Increase benefit amount Meet eligibility for an unreduced retirement benefit Purchase of Prior Service

12. What Are My Retirement Options? Basic Benefit Basic Benefit Survivor Option Survivor Option Advance Pension Option Advance Pension Option Partial Lump-sum Option Partial Lump-sum Option Payment Payment Distribution Options Distribution Options

13. Highest maximum consistent benefit

14. Monthly benefit for the retiree Monthly benefit for the survivor upon retiree’s death

15. Receive an additional lump sum payment up to three times your yearly benefit Coordinates with Basic Benefit or Survivor Option

16. Working beyond unreduced retirement 1 year 1 x Basic Benefit 2 x Basic Benefit 3 x Basic Benefit 2 years 3 years

17. Balanced income during retirement when coordinated with Social Security

18. Social Security estimate requirements: Based on age for reduced VRS benefit Assumes no future income Dated within 12 months

19. Not available under 50/10 Stand alone option

20. Defined Contribution Distribution Options: Total or partial lump-sum Annuity payments Periodic payments Partial lump-sum with remainder as periodic payment or annuity Rollover to other qualified plan HYBRID RETIREMENT PLAN

21. Age Service Credit AFC $56,000 24 years 57 years

22. Advance Pension Option Basic Benefit Monthly benefit: $ 1,241.41 Benefit before age 62: $ 1,977.61 Benefit after age 62: $777.61 Social Security at age 62: $ 1,200.00

23. Partial Lump-sum Option Payment Basic Benefit without the PLOP Monthly benefit: $ 2,459.33 Monthly benefit: $2,256.50 One year PLOP: $29,511.96

24. Run an estimate 12-18 months before retirement Use myVRS to compare options myVRS myVRS

25. Complete any purchase of prior service Run a retirement estimate in myVRS Consult a financial advisor Action Plan

26. What Else Do I Need to Health Insurance Health Insurance Life Insurance Life Insurance Health Insurance Credit Health Insurance Credit

27. Health Insurance Check with your employer concerning cost and eligibility

28. Must pay a monthly health insurance premium Health Insurance Credit Must have 15 years of service Your employer must participate in this program

29. Begins to reduce at retirement Basic Life Insurance Continues at no cost

30. Continue coverage at active member group rates Optional Life Insurance

31. Research health insurance costs Evaluate your life insurance needs Action Plan

32. What Happens if Things Disability/VSDP/VLDP Disability/VSDP/VLDP Death in Service Death in Service Return to Work Return to Work

33. Disability Retirement Basic Benefit or Survivor Option only

34. VLDP, VSDP Or Employer Comparable Plan Short-term disability Long-term disability

35. Death in Service Non-Work Related (non-vested): Refund Work Related: Monthly benefit and refund Non-Work Related (vested): Monthly benefit or refund

36. Order of Precedence Spouse Children Parents Executor Next of Kin

37. Return to Work Full-time VRS-covered position benefit stops Part-time position with the same employer – break in service required Part-time position with a different employer – no break in service required

38. Make sure your beneficiary designation is up to date Consider ramifications of working after retirement Action Plan

40. Take charge of your retirement You can do it! Steven M. Singer CERTIFIED FINANCIAL PLANNER ™ November 10, 2014

41. Take charge of your retirement

43. Agenda

46. Step 1: Calculate your retirement living expenses

47. Step 2: What’s the 4% rule?

48. Step 3: Identify other sources of income

49. Step 4: Identify opportunities to reduce expenses

50. Step 5: Reevaluate your current investment strategy

51. Step 6: Understand your distribution options and establish a withdrawal strategy

52. Reevaluate your current investment strategy

53. Understand your distribution options

54. Establish a withdrawal strategy

55. Understanding Social Security and Medicare

56. Understanding Social Security

57. Understanding Medicare

58. Step 7: Start your retirement-planning checklist

60. In summary

61. Challenge Yourself

62. What’s next?

63. In summary

64. Lincoln Financial can help

65. Important disclosures Mutual funds and variable annuities are sold by prospectus. Investors are advised to carefully consider the investment objectives, risks, and charges and expenses of a mutual fund, and in the case of a variable annuity, the variable contract and its underlying investment options. To obtain a mutual fund or variable annuity prospectus that contains this and other information call: 800-4LINCOLN. Read the prospectus carefully before investing or sending money.

66. Important disclosures Variable annuities are long-term investment products designed particularly for retirement purposes and are subject to market fluctuation, investment risk and possible loss of principal. Variable annuities contain both investment and insurance components, and have fees and charges, including mortality and expense, administrative and advisory fees. Optional features are available for an additional charge. The annuity’s value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals of earnings are taxable as ordinary income and, if taken prior to age 59½, may be subject to a 10% federal tax penalty. Withdrawals will reduce the death benefit and cash surrender value. There is no additional tax-deferral benefit for an annuity contract purchased in an IRA or other tax-qualified plan. Variable annuities sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. For all other states, variable annuities are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claims-paying ability of the appropriate issuing company. The mutual fund-based programs include certain services provided by Lincoln Financial Advisors Corp. (LFA), a broker/ dealer (member FINRA) and an affiliate of Lincoln Financial Group, 1300 S. Clinton St., Fort Wayne, IN 46802. Unaffiliated broker/dealers also may provide services to customers. Lincoln Financial Group ® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. ©2012 Lincoln National Corporation LincolnFinancial.com Login: Employer Retirement Plans Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. 8/12 Z01 Order code: DC-DOIT-PPT001

67. Items to Consider: Have you Written a Will? Have you Updated your Beneficiaries? Have a Set Your Retirement Date? Have a Positive Attitude about Retirement!

68. Current Resources for Retirement Calculate What you Expect to Receive each Month. – Social Security; – Retirement; – 403(b) Annuity; – Retirement Opportunity Plan (ROP). Take 10% Away as a Cushion. Take 90% and Make it Your Monthly Budget. See if you Can Live Within this Budget for 12 Months.

69. Retirement Opportunity Program (ROP Employee is Full-time at Time of Retirement Employee Must Have 17 Years of Full-time VRS Service or Service with a Accredited Education Institution 10 Years of Service with PWCS, with the Last 7 Being Consecutive Employee Must be in Good Standing Prior to Retirement Age 55 or older Employee not Eligible for Disability Retirement

70. ROP Cont’d Retirement other than July 1 will result in the loss of one year of ROP (i.e., retirement on September 1 would make ROP effective the following July 1) Employee is Encouraged to Provide 6 Months Notice Work Assignments are Compatible to Position Prior to Retirement Number of Days Work are Equivalent to 20 days or 10% of your contract

71. ROP Cont’d ROP Participants are Required to Work the Same Number of Hours as Required for the Position to Which most Recently Assigned – Example: 223 Employee = 22 days x 7.5 hours = 165 hours Paid 19% of Their Contract Prior to Retirement paid out over 24 Pay Periods Maximum Amount of ROP Time is Seven Years or Until Participant Reaches Social Security Age, Whichever Comes First

72. ROP Cont’d Cease to Be Eligible – Fails to Perform Work Assignment – No Longer Physically or Mentally Capable – Reaches Age to Receive Full Social Security Benefits – Completes Seven Years of Service – Supervising Director/Principal/Supervisor Recommends Participant be Deemed Ineligible due to Poor Performance – Participant Engages in Conduct in Violation of School Board Policies

73. Retiree Health Insurance Same Health Plans as Offered to Current Employees Employee Must be ROP Eligible to Use Sick Leave To Offset Cost of Retiree Medical Employee is Between the Ages of 50 and 65 Retiree Health Continues Until Retiree Becomes Medicare Eligible or Cancels Health Coverage

74. Retiree Health Insurance Cont’d Employee Must be Enrolled in PWCS Group Health Plan for a Minimum of Two (2)Years prior to retirement Employee Must Be Employed With PWCS For a Minimum of Ten (10) Years View Regulation 545-1 for changes

75. Retiree Health Insurance Sick Leave Exchanged To Defray Health Cost Sick Leave Days ExchangedEmployer Contribution* 125 Days25 Percent 175 Days50 Percent 225 Days75 Percent 275 Days100 Percent * Percent of Employer Contribution for Active Employees

76. Sick Leave & Annual Leave Sick Leave is Paid out at Retirement at 10% of Employee’s Daily Per Diem Sick Leave Paid out is Taxable Sick Leave Exchanged for Retiree Health Premiums is Taxable at the 10% of the Employee’s Daily Per Diem Annual Leave is Paid out at 100% of Value Annual Leave Payout is Taxable at 100%

77. SICK LEAVE & ANNUAL LEAVE PAYOUT Payout Options (Regulation 545-1) – Lump Sum Payment – Supplemental Retirement Rollover  Direct leave payout into the PWCS Supplemental Retirement Plan (Lincoln Financial) – Combination Lump Sum and Rollover  Direct portion as lump sum payout and roll a portion into your PWCS Supplement Retirement Plan

78. Retirement Other Financial Vehicles You have Available: – Savings Accounts – Individual Retirement Accounts (IRA’s) – Other Employer 403(b) or 401(k) Plans – Investments Stocks and Bonds Mutual Funds

79. Enjoy Our Hope is That You have Found This Information Helpful and Useful as You Maneuver your Way to Retirement. Enjoy!