Seminar Goals 11/16/2016. Introductions

Transcription

1 Introductions Prince William County Public Schools Deborah Sparks, Director of Benefits & Retirement Services Kristin Brittigan, Benefits Specialist Retirement Services Virginia Retirement System (VRS) Stephanie Barkalow, Member Education and Outreach Counselor Lincoln Financial Kathleen Fox, Retirement Consultant Evette Caceres, Retirement Consultant Michael Knapp, Retirement Consultant Ernest Massenberg II, Retirement Consultant Liliana Zaraate, Retirement Consultant 1

2 Retirement With PWCS Virginia Retirement System (VRS) Lincoln Financial Retiree Health Insurance Sick Leave Conversion Retirement Opportunity Program (ROP) Sick and Annual Leave Payout 2

3 What Does It Mean to Be a Member of VRS? Plan 1 & Plan 2 Retirement Eligibility 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,

4 Plan

5 Reduced Unreduced 55 with at least five years of service 50 with at least 10 years of service 65 with at least five years of service 50 with at least 30 years of service Reduced 60 with at least five years of service Unreduced Age + Service Credit = 90 Social Security Normal Retirement Age with five years of service 5

6 Purchase of Prior Service Meet vesting requirement Increase benefit amount Meet eligibility for an unreduced retirement benefit Refunded service Military leave Sick leave conversion Other types of service 6

7 What Are My Retirement Options? Basic Benefit Survivor Option Partial Lump-sum Option Payment Advance Pension Option Highest maximum consistent benefit 7

8 Monthly benefit for the retiree Monthly benefit for the survivor upon retiree s death Receive an additional lump sum payment up to three times your yearly benefit Coordinates with Basic Benefit or Survivor Option 8

9 3 years 1 year 1 x Basic Benefit 2 years 2 x Basic Benefit 3 x Basic Benefit Working beyond unreduced retirement Balanced income during retirement when coordinated with Social Security 9

10 Social Security estimate requirements: Based on age for reduced VRS benefit Assumes no future income Dated within 12 months Not available under 50/10 Stand alone option 10

11 $56, years 57 years Basic Benefit Monthly benefit: $ 1, Advance Pension Option Benefit before age 62: $ 1, Benefit after age 62: $ Social Security at age 62: $ 1,

12 Action Plan Complete any purchase of prior service Run a retirement estimate in myvrs Consult a financial advisor What Else Do I Need to Think About for Retirement? Deferred Compensation Plan Health Insurance Health Insurance Credit Life Insurance 12

13 Deferred Retirement Savings Plans Consider catch-up provisions Research rollover options Take advantage of cash match Research distribution options Health Insurance Contact your employer about available health insurance plans 13

14 Health Insurance Credit Must pay a monthly health insurance premium Must have 15 years of service Teacher and School System Employees (Administrative) $

15 Basic Life Insurance Continues at no cost Natural and accelerated death benefit continue Begins to reduce at retirement Optional Life Insurance Convert at non-group rates or Continue coverage at active member group rates 15

16 What Happens if Things Don t Go as Planned? Disability Long Term Care Death in Service Return to Work Disability Retirement Basic Benefit or Survivor Option only 16

17 Commonwealth of Virginia Voluntary Group Long- Term Care Insurance Plan Eligibility requirements for some Available to family members No eligibility restrictions at retirement Death in Service Work Related: Monthly benefit and refund Non-Work Related (non-vested): Refund Non-Work Related (vested): Monthly benefit or refund 17

18 Order of Precedence Spouse Children Parents Executor Next of Kin 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 18

19 Action Plan Evaluate your long-term care needs Make sure your beneficiary designation is up to date Consider ramifications of working after retirement 19

20 Okay, we have VRS all figured out what do I do next? Retiree Health Insurance, Regulation Only Medical and Premier Dental insurance plans may be carried in to retirement. Retiree health insurance plan benefits are the same as those offered to active employees Eligible employees must: Be employed with PWCS for a minimum of ten (10) years. Be enrolled in PWCS group health insurance plan for a minimum of two (2) years prior to retirement. Meet the definition of a Virginia Retirement Services (VRS) retiree and have activated retirement. Be under Medicare eligible age (currently 65). Participation in the Retiree Health Plan may continue until the retiree reaches Medicare eligible age or cancels health insurance. View Regulation for updates and full Regulation 20

21 Sick Leave Conversion Eligible retirees may be able to use unused sick leave to offset the cost of health insurance upon retirement. Employees must meet the additional requirements below in addition to the requirements to participate in the Retiree Health Plan: Must be between the ages of 55 and Medicare eligible age Must meet the service requirements to participate in Retirement Opportunity Program (ROP) Must have a minimum of 125 days of accrued sick leave Retirement Opportunity Program (ROP) Requirements Must be a full time employee at time of retirement. Must have 17 years of full time VRS service or service with an accredited education institute. Must have ten (10) years of service with PWCS with the last seven (7) being consecutive. Employee must be in good standing prior to retirement. Age 55 or older. Not eligible for Disability Retirement. 21

22 ROP Continued Maximum duration of ROP participation is seven years, or until the participant reaches social security age, whichever comes first. ROP participants are eligible to start after a 30 day break in-service. The 30 day break in service must coincide with the normal contract period. ROP participants are required to work twenty (20) days or 10% of the last annual work or contract period that was completed prior to retirement, whichever is greater. ROP participants work the same number of hours as required for the position to which they were most recently assigned Example day employee = 25 x 7.5 = total hours ROP participants are paid 19% of their annual salary prior to retirement, paid out over 24 pay periods. The only exception may be the first year of ROP. Work assignments must be compatible with the participant s training, experience and qualifications. ROP continued Employee is encouraged to provide six (6) months notice of retirement Retirement other than July 1 st will result in a loss of one (1) year of ROP eligibility and participant will not be able to ROP until July 1 st following their retirement. Ceases to be eligible - Reaches age to receive full social security benefits - Completes seven years of service - Fails to perform work assignment or is no longer physically or mentally capable of performing work - Is determined to be ineffective by his/her supervising manager - Participant engages in conduct in violation of School Board Policies and Regulations 22

23 Sick Leave and Annual Leave Disbursement Sick leave is paid out after retirement at 10% of the employee s daily per diem. Sick Leave payout is taxable. Sick leave may be exchanged for reduced healthcare premiums (Sick Leave Conversion) is taxable at the 10% of the employee s daily per diem. Annual Leave is paid out at 100% of the employee s daily per diem. Annual leave payout is taxable. Payout Options (Regulation 545-1) -Lump sum payment. -Rollover to Lincoln Financial. -Combination of lump sum and rollover. Items To Consider: Have you updated your beneficiaries? Have you set a date for retirement? Have you written a will? Do you have a plan for after retirement? 23

24 Take charge of your retirement You can do it! Lincoln Financial Group Prince William County Schools Retirement Consultant Team November 15, 2016 Kathleen Fox, MBA, CRPC, CRPS Evette Caceres, CRPC LCN Take charge of your retirement LCN

25 Take charge of your retirement LCN Calculate your retirement living expenses LCN

26 Identify sources of income LCN What s the 4% rule? LCN

27 Apply the 4% rule to your retirement account balance LCN Identify opportunities to reduce expenses LCN

28 Reevaluate your current investment strategy LCN Reevaluate your current investment strategy LCN

29 Understand your distribution options and establish a withdrawal strategy LCN Understand your distribution options LCN

30 Understanding Social Security and Medicare LCN Understanding Social Security LCN

31 Understanding Medicare LCN Start your retirement-planning checklist LCN

32 LCN In summary LCN

33 Lincoln Financial can help LCN 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. LCN

34 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 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 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 LCN RETIREMENT PLAN SERVICES SAVVY SOCIAL SECURITY What Baby Boomers Need to Know to Potentially Maximize Retirement Income Liliana Zarate & Michael Knapp Retirement Consultants Lincoln Financial Group Products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Copyright 2013 Horsesmouth, LLC. All Rights Reserved LCN LCN Lincoln National Corporation 34

35 BABY BOOMERS WANT TO KNOW: Will Social Security be there for me? How much can I expect to receive? When should I apply for Social Security? LCN BABY BOOMER SOCIAL SECURITY QUESTION #1 Will Social Security be there for me? LCN

36 OASDI TRUST FUND STILL GROWING Trust Fund balance on 12/31/14: $2.789 trillion 2015 results Total income: $920 billion Total expenditures: $897 billion Net increase in assets: $ 23 billion Trust fund balance on 12/31/15 $2.812 trillion Source: Social Security Administration, Office of the Chief Actuary LCN LONG-TERM PROJECTION Without reform, benefits fall to 79% in 2034 OASDI Income, Cost and Expenditures as Percentages of Taxable Payroll [Under Intermediate Assumptions] Cost: Scheduled and payable benefits Cost: Scheduled but not fully payable benefits Income Payable benefits as percent of scheduled benefits: : 100% 2034: 79% 2089: 73% Expenditures: Payable benefits = income after trust fund exhaustion in 2034 Source: 2014 OASDI Trustees Report LCN

37 BABY BOOMER SOCIAL SECURITY QUESTION #2 How much can I expect to receive? LCN FULL RETIREMENT AGE (FRA) Year of Birth Full Retirement Age and 2 months and 4 months and 6 months and 8 months and 10 months 1960 and later 67 LCN

38 YOUR BENEFIT WILL DEPEND ON: How much you earned over your working career The age at which you apply for benefits LCN HOW SOCIAL SECURITY BENEFITS ARE CALCULATED At age 62, each year s earnings are tallied up and indexed for inflation Highest 35 years of earnings are averaged (AIME) AIME is divided by three bend points to determine your primary insurance amount (PIA). This is the amount you'll receive at full retirement age. Benefit is increased each year by cost-of-living adjustments (COLAs) LCN

39 SOCIAL SECURITY OFFERS INCOME YOU CAN T OUTLIVE If your monthly benefit is $2,000 today and you live: 10 more years $302, more years you'll receive a total of $666,456 in lifetime benefits 30 more years $1,141,276 Assumes 2.7% annual cost-of-living adjustments LCN HOW TO ESTIMATE YOUR SOCIAL SECURITY BENEFITS Obtain your annual Social Security statement at OR Go to click on Estimate Your Retirement Benefits OR Use one of the calculators on the SSA website: LCN

40 BABY BOOMER SOCIAL SECURITY QUESTION #3 When should I apply for benefits? When should I apply for benefits? LCN WHAT IF YOU APPLY FOR EARLY BENEFITS You will receive a percentage of your PIA Apply at age If FRA = 66 If FRA = % 70% % 75% % 80% % 86.7% % 93.3% % LCN

41 WHAT IF YOU APPLY AFTER FRA? You will earn 8% annual delayed credits Apply at age Benefit will be % of PIA if FRA = 66 Benefit will be % of PIA if FRA = % 93.3% % 100% % 108% % 116% % 124% LCN WHY DELAY BENEFITS? MORE INCOME LATER ON Benefit at age If claim at 62 If claim at $2,492 $4, $2,847 $5, $3,253 $5, $3,716 $6, $4,246 $7, $4,851 $8, $5,542 $9,754 Assumes PIA at 66 = $2,685 and 2.7% annual COLAs LCN

42 BABY BOOMER SOCIAL SECURITY QUESTION #4 How can I maximize my benefits? LCN SPOUSAL BENEFITS Spousal benefit = 1/2 the primary worker's PIA if started at full retirement age Example: John's PIA is $2,000 Jane's PIA is $800 If Jane applies at FRA, her benefit will be $1,000 (50% of John s PIA) LCN

43 RULES FOR SPOUSAL BENEFITS Primary worker must have filed for benefits Spouse must be at least 62 for reduced benefit or 66 for full benefit No delayed credits on spousal benefits after 66 LCN DIVORCED-SPOUSE BENEFITS Same as spousal benefits if: Marriage lasted 10 years or more Person receiving divorced-spouse benefit is currently unmarried The ex-spouse is at least age 62 If divorce was more than two years ago ex-spouse does not need to have filed for benefits LCN

44 RULES FOR DIVORCED-SPOUSE BENEFITS More than one ex-spouse can receive benefits on the same worker's record Benefits paid to one ex-spouse do not affect those paid to the worker, the current spouse, or other exspouses The worker will not be notified that the ex-spouse has applied for benefits Divorced-spouse benefits stop upon remarriage of spouse collecting benefits (not upon remarriage of primary worker spouse) LCN SOCIAL SECURITY IS TOO IMPORTANT FOR GUESSWORK Let us help you protect your nest egg and maximize your income in retirement. LCN

45 IMPORTANT DISCLOSURES Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2014 Lincoln National Corporation 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. LCN