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Michigan Public School Employees Retirement System (retirement)

What’s YOUR Tomorrow?. Michigan Public School Employees Retirement System (retirement). Are you saving enough for ALL your tomorrows?. You Can Work At Controlling Your Future. Retirement Questions to Ask Now! Are you planning to live to 100?

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Michigan Public School Employees Retirement System (retirement)

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  1. What’s YOURTomorrow? Michigan Public School Employees Retirement System (retirement) Are you saving enough for ALL your tomorrows?

  2. You Can Work At Controlling Your Future Retirement Questions to Ask Now! • Are you planning to live to 100? • What percentage of your Final Salary will you be living on? • Will you outlive your retirement money? • Are you saving enough for all your tomorrows?

  3. Longevity: Your Biggest RiskHow many retirement years will you enjoy?* Example of a female who reaches a certain age… Then the average age she is expected to live * Based on information obtained from AnnuityAdvisors.com

  4. Become Familiar with Your retirement BenefitHow to determine your retirement Pension • Minimum age and service requirements • Annual benefit based on final average compensation multiplied by a pension factor times years of service • Survivorship options • Service credits affects pension eligibility Source: retirement Handbook

  5. Adding to Your Service Credit Source: retirement Handbook

  6. Retirement Income GapCan you live on a fraction of your final salary? $63,213* Income needed in 20 years $35,000 54.9% Net Loss of Spendable income $15,765 Teacher Retirement Income Begin Working Retire at 60 *Assumes a 3% inflation factor Source: retirement Handbook

  7. Now Is the Time to Plan & Save Will you outlive your retirement money? • Know your retirement expenses • Don’t forget taxes and medical costs • Identify your sources of income • You may not receive Social Security • Bridge the retirement gap • Buy years of service • Explore saving options through your 403(b) and/or 457 plan • Create an income stream for life

  8. Power of a Pre-Tax Savings Plan Pre-tax Savings Gives Lacy More Lacy wants to save $100 a month towards her retirement She needs help to understand the power of a pre-tax savings plan. This hypothetical example is for illustrative purposes only. Taxes are deferred until monies are withdrawn from the plan. This example is based on a teacher in the state of Michigan claiming single and zero allowances. Source: TRAK Software

  9. How Much Can Be Contributed? • The Internal Revenue Code determines an individual's maximum amount that he or she can defer to the plan free of tax for the year. This may be limited by your employer’s plan provisions. • If you contribute the maximum basic salary deferral limit, and your plan allows, you can qualify for both the catch-up provisions below. You have the potential to contribute up to $26,000 to your 403(b) plan during 2014. • Basic salary deferral limit: $17,500 in 2014. • 403(b) 15 years of service cap extension: You may be eligible to defer up to an additional $3,000. • Age 50+ Catch-up: If 50 or older, you may be eligible to defer up to an additional $5,500 in 2014. • Total 2014 contribution limit on combinedemployee/employer contributions: 100% of yourincludible compensation or $52,000, whichever is less.

  10. How Loans Work Loans may be available if the plan permits. All loans from any retirement plan of the employer must be aggregated for purposes of determining the maximum amount of the loan. Loans can not exceed the lesser of: • $50,000 (reduced by the highest outstanding loan balance for the last 365 days); or • 50 percent of the present value of the participant’s non-forfeitable benefit under the plan. This amount will not be violated if the loan does not exceed the lesser of (1) $10,000 or (2) 100% of his or her vested account balance.

  11. Distributions Generally, because 403(b) plans enjoy tax deferral, elective deferrals in the plan cannot be withdrawn until: • Age 59½ • Death of the participant • Total disability of the participant • On separation from service of the participant • As the result of a QDRO (Qualified Domestic Relations Order), or • As a qualified reservist distribution

  12. Hardship Distributions Hardships…Only employee salary deferrals can be withdrawn, not interestor employer contributions. The IRS lists the following as qualifying hardships: • Medical expenses of the participant, participant’s spouse, or dependent • Purchase of the participant’s principal residence • Tuition and related expenses for the next 12 months at a postsecondary institution for the participant, participant’s spouse, or dependant • Prevention of eviction from the participant’s principal residence or foreclosure on the mortgage of the participant’s principal residence

  13. What Are Your Next Steps?How I Will Work with You • Schedule a work-through to calculate your retirement benefit • Determine your “retirement gap” and find ways to bridge that gap • Explain your 403(b) plan and your savings options • Address any other questions you may have

  14. Disclosure • This presentation represents our understanding of the tax code and state retirement plan. • You should always consult your tax professional or state retirement system for your individual situation • Information believed to be accurate as of July 2013.

  15. For more information Email: Life Insurance Company of the Southwest™

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