New Beginnings Your Future Starts Now

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1 New Beginnings Your Future Starts Now Welcome. Please sign in.

2 Objectives CalSTRS hybrid system Defined Benefit Program CalSTRS Pension2 Protecting your loved ones Defined Benefit Supplement Other considerations Join us online

3 Hybrid Retirement System Defined Benefit Program Defined Benefit Supplement CalSTRS Pension2

4 Partners in Your Retirement CalSTRS Employer Defined Benefit pension Determine salary and pay rate Defined Benefit Supplement Health and employee benefits Survivor benefits Retirement incentives Disability benefits Report contract and earnings One-time death benefit Resolve service credit issues CalSTRS Pension2 Sick leave balance 403bCompare.com Reduced Workload Program Submit Retirement Application Resign/retire from district

5 Defined Benefit Power Defined Benefit Plans Public and Corporate Pensions Defined Contributions Plans 403(b), 457(b), 401(k) Risk free Guaranteed for life Based on a formula not your contributions Contributions are flexible Guaranteed return option or aggressive options tied to the market Distributions based on your ending balance

6 Defined Benefit Formula Service Credit Age Factor Final Compensation X X = Member-Only Benefit CalSTRS 2% at 62: hired on or after Jan. 1, 2013 You can retire at age 55 with at least 5 years of service credit.

7 Service Credit The number of full and partial years you paid into CalSTRS Maximum per school year is Service Credit Track service credit on your Retirement Progress Report Unused sick leave converts to service credit Purchase additional service credit

8 Purchasing Service Credit Permissive Non-member service Out-of-state service Sabbatical Maternity/paternity leave Family care and medical leave Cheaper to buy now than later

9 Age Factor Age Factor A percentage determined by your age at the time of retirement and your benefit structure. For CalSTRS 2% at 62: Highest age factor is 2.4 percent at age 65.

10 Age Factor Example If Jonathan s birthday is in March and he retires at the end of the school year in June: Age at Retirement Age Factor 55 and 3 months and 3 months

11 Final Compensation Final Compensation Highest three consecutive school years

12 Member-Only Benefit Service Credit Age Factor Final Compensation X X = Member-Only Benefit Highest possible monthly benefit Monthly benefit for your lifetime only Annual 2% benefit increases, not compounded

13 Defined Benefit Retirement Percentage Service Credit Age Factor X = Percentage of Average Monthly Income A CalSTRS retirement benefit typically covers about 50 percent of average monthly income. Financial experts believe that you will need percent to maintain your current standard of living.

14 Defined Benefit Percentage Example Service Credit Age Factor Percentage of Average Monthly income If Jonathan retires at age 55 and 3 months: % If Jonathan retires at age 60 an 3 months: %

15 What Is Your Gap? Retirement goal Defined Benefit percentage Service credit Age factor

16 How Do You Fill Your Gap? Extend your career Purchase service credit, if you re eligible to do so Invest in CalSTRS Pension2

17 Fill Your Gap With CalSTRS Pension2 Tax-deferred retirement savings Objective advice and services at no additional cost CalSTRS Easy Choice Portfolios Pension2.com

18 Fill Your Gap With Pension2 What plans Pension2 offers How tax-deferred plans work What investment choices are available How to determine an investment strategy How to enroll in Pension2

19 What Does Pension2 Offer? Plans Tax-Deferred Contributions Earnings Penalty-Free Distributions 403(b) Yes Tax-deferred After 59½ 457(b) Yes Tax-deferred At any age* *On separating from employment

20 How Do Tax-Deferred Plans Work? Pre-tax deduction reduces taxable income Contribution $25 $50 $75 $100 Reduces take-home pay by $18.75 $37.50 $56.25 $75 *Assumes 25% federal marginal income tax rate.

21 Small Investments Add Up $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $100/month $200/month $500/month 15 Years of Conribution 30 Years of Contributions * For illustration only. Assumes annual yield of 7 percent, not including fees, taxes or expenses. Investing involves risk, including the risk of loss of principal. CalSTRS Pension2 does not guarantee any rate of return on investment.

22 Annual Contribution Limits 2014 Contribution Limits The advantage of enrolling in a 403(b) or 457(b) plan Plan Maximum Contribution Age 50+ Catch-Up Contribution 403(b) $17,500 $5, (b) $17,500 $5,500 Total $35,000 $11,000

23 What Investment Options Are Available? Pension2 offers two investment strategies. Election A Easy Choice Portfolios Investment strategies based on: Projected retirement Risk tolerance Election B Build Your Own Portfolio Choose from about 20 professionally selected core funds

24 How Do You Determine Your Strategy? Do you prefer to keep things simple? Comfortable knowing investment managers are assisting you? Do you track economic trends? Keep a watchful eye on your portfolio? Enjoy making asset adjustments and trades on your own? Select Election A Select Election B

25 Pension2 Low Costs Low fees and expenses No commissioned sales representatives No surrender charges

26 Enrolling Is Easy 1. Go to Pension2.com. 2. Click Enroll Now. 3. Obtain a Salary Reduction Agreement form at 403bCompare.com or from your payroll office. 4. Fill in contribution amount. 5. Select CalSTRS Pension2 as vendor. 6. Start saving! Call us at for assistance

27 More Retirement Savings With Pension2 Options for smarter retirement savings: Roll over other supplemental savings plans into Pension2: 403(b), 457(b), traditional IRA, 401(k), Defined Benefit Supplement funds. Compare plans at 403bCompare.com. Purchase additional service credit by rolling over your Pension2 funds.

28 403bCompare.com Search for your district Compare rates and fees Browse glossary Educate yourself Find your district s Salary Reduction Agreement form

29 Choosing an Option Secure a lifetime benefit for your loved ones Will reduce your retirement benefit You may pre-elect an option when you are eligible to retire Advantages Disadvantages

30 Survivor Benefits Coverage B Choices based on survivor s eligibility Refund of your account Monthly benefit One-time death benefit* Active: $24,652 Retired: $6,163 *Submit your Recipient Designation form online using mycalstrs.

31 Disability Benefit Must be vested 5 years or 1 year if victim of unlawful act Disability permanent or expected to last at least 12 continuous months Application and evaluation process Up to 5 months for a decision Additional benefits for eligible dependents

32 Defined Benefit Supplement Account Provides supplemental income to your Defined Benefit pension Earns guaranteed interest rate Payout choices at retirement based on account balance Find account balance on your Retirement Progress Report and your mycalstrs account

33 Build Your Defined Benefit Supplement Account Earnings in excess of one year of service credit Extra duties such as coaching, band, journalism, taking on additional classes 8 percent member contributions 8 percent employer contributions Compounded interest (3.55% in )

34 Other Considerations Social Security offsets Medicare Tax considerations Health care benefits your employer

35 CalSTRS.com Member information Estimate calculators Forms and publications Planning resources

36 mycalstrs Secure messaging Retirement Progress Report Address change Beneficiary elections

37 Plan Funding New funding plan Funding outlook Know your benefits Ask Jack E-newsletters Join the conversation

38 Educational Videos Understanding the Formula The Gap Refund Consider the Consequences Defined Benefit Supplement Disability benefits Survivor benefits Social Security

39 Benefits Counseling Interactive sessions Local offices Over the phone

40 Your CalSTRS Resources

41 Thank you for attending!

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