1. The Mathematics of Retirement Planning Social Security Pensions Personal Investments Medicare

2. Social Security Social Security Benefits and Timing Medicare Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC2 How much will I get and when should I start taking it?

3. Social Security Benefits and Timing When to Start Collecting (Age 62 – FRA - 70 SSA Publication No. 05-10147) Full Retirement Age (FRA) SSA.Gov - Retirement Age Calculator How Your Benefit is Figured – SSA Publication No. 05-10070 Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC3

4. 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 NCMATYC4

5. 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 NCMATYC5

6. 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 NCMATYC6

7. 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 NCMATYC7

8. Medicare Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC8 Alphabet Soup When can I get it? What is the cost? What does it cover? Copays, Primary Care Recommendation, Allowable Expense, Fraud

9. 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 NCMATYC9

10. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC10 Part A - Hospital Part B - Medical Insurance Part C - Medicare Advantage Part D - Prescription Drug Coverage

11. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC11 Part A 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 care Nursing home careNursing home care (as long as custodial care isn't the only care you need)custodial care Hospice Home health services

12. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC12 Part B Medicare Part B (Medical Insurance) Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. 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. Preventive servicesPreventive 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. assignment

13. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC13 Part BPart B Cont. Part B covers things like: Clinical research Ambulance services Durable medical equipment (DME) Mental health Inpatient Outpatient Partial hospitalization Getting a second opinion before surgery Limited outpatient prescription drugs

14. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC14 Part 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 Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for- Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. 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.

15. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC15 Part D Medicare Prescription Drug Plan (Part D) 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.

16. Medicare PARTS A, B, C, and D Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC16 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. A drug in a lower tier will generally cost you less than a drug in a higher tier. In some cases, if your drug is on a higher tier and your prescriber thinks you need that drug instead of a similar drug on a lower tier, you or your prescriber can ask your plan for an exception to get a lower copayment.exception A Medicare drug plan can make some changes to its formulary during the year within guidelines set by Medicare. If the change involves a drug you’re currently taking, your plan must do one of these: Provide written notice to you at least 60 days prior to the date the change becomes effective. At the time you request a refill, provide written notice of the change and a 60-day supply of the drug under the same plan rules as before the change. Note Starting in December 2015, for your prescriptions to be covered by your Medicare drug plan, Medicare will make sure your prescribers are enrolled in Medicare or have an “opt-out” affidavit on file with Medicare. Contact your plan or your prescribers for more information.

17. Pensions Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC17 Defined Benefit Plan Cash Balance Plan

18. Pensions Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC18 Defined Benefit Plan - typically Years of Service X Percentage X Salary Base. You receive a set amount each month typically from an annuity purchased by the company or the company self Funds. The NC State Plan is self funded and is a defined benefit plan Plans not easily portable

19. Pensions Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC19 Cash Balance Plan- typically a company will put a percentage of your salary into an account (401K) as a match or just a gift. At retirement the amount in the fund must be managed by you. This is a fixed amount and when exhausted, there is no more. Highly portable to a new company. Limits liability of a company to current expense

20. NC State Pension Options Maximum AllowanceBasic benefit calculated under Retirement Formula Option 2:100% Joint and Survivor – Both receive reduced benefits for life Option 3:50% Joint and Survivor – you receive reduced benefits for life. At death your survivor receives ½ of your payments for life Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC20

21. NC State Pension Options Option 4: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 Is based on estimate you provide from SSA before retirement Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC21

22. 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 NCMATYC22

23. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Maximum Allowance$1000 monthly$0.00 Option 2$889.70 Monthly$889.70 Monthly Option 3$941.60 Monthly$470.80 Monthly Option 4$1402.84 up to $0.00 age 62 $767.84 thereafter Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC23

24. NC State Pension Options Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC24 Option 6 – 2Modified 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

25. NC State Pension Options Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC25 Option 6 – 3Modified 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

26. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Option 6 – 2$882.60 Monthly; if Beneficiary dies$882.60 before Retiree, Retiree receives $1000 monthly thereafter Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC26

27. NC State Pension Options Options: Payment OptionTo RetireeTo Retire Beneficiary Option 6-3$937.70 Monthly; if beneficiary dies$468.85 before Retiree, Retiree receive $1000 monthly thereafter Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC27

28. Personal Savings vs Pension Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC28 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

29. Personal Investments Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC29 Bonds Stocks Mutual Funds Rental Properties Antiques Art - Varies Franchise(s) Landscaping Consulting

30. Summary Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC30 Determine your needs in retirement and relating factors Identify an collect relative cost information Resolve potential conflicts with adjustments Plan what you will do in retirement Enjoy retirement – You earned it

31. Wilson B. Gräb Forsyth Tech CC 2015 NCMATYC31 Questions Thank You !!!!