Achieving Financial Success: Small Steps for a Bigger Retirement.

Achieving Financial Success:Small Steps for a Bigger Retirement

Who We Are

Client-Focused Company Personal Service Flexibility Customized Services Fee-based Services

Administrator and Investment Advisor for the Spring Branch ISD 457(b) and FICA Alternative Plans; Administrator for the SBISD 403(b) Plans

TRS PENSION & THE INCOME GAP

TRS Retirement vs. Corporate Retirement

• Income in retirement is very different for Texas teachers than it is for their spouses and neighbors (and financial advisors)

Teacher Neighbor TRS

Social Se-curitySavings

TRSSocial Se-curitySavings

Source: Region 10 Education Service Center

TRS Vesting

Vesting Schedule Yrs of Service Age 5 65 20 60 30 50

TRS Members after 9/1/2007 — Minimum age 60 to retire and receive unreduced benefits

UPDATE: Current Members as of 8/31/2014 — If you are not Vested (5 years) — Minimum age 62 to retire and receive unreduced benefits

TRS Retirement Formula

Years of Service (x) State Factor 2.3% (x) Average 3/5 Highest Years of Income

Years of Service: 30State Multiplier (2.3%): 69 %Average Income: $60,000Maximum Benefit: $41,400

Retirement Age: 60 Service: 30 Years Last Year / High 3 Yr. Salary: $60,000

(Full TRS benefit with 2.3 Multiplier with no survivor benefit)

$60,000

$41,400

31

Retire at Age 60

Gross Income

TRS Retirement Formula

The Target Savings Amount

Investment Needed to Replace Difference of$18,600 Annually

(TRS Benefit vs. Pre-Retirement Income):$300,224*

*Assumptions include a lump sum invested at 5% interest, with annual amount

paid at beginning of each year for 30 years. This rate is assumed for illustration

purposes only and is not guaranteed.

Taking Aim at the Target

Assumes an 6% annual return after fees and expenses for illustration purposes only, not guaranteed.

Age 20-60 Age 30-60 Age 40-60 Age 50-60$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,800.00

$2,000.00

Years of Savings

Monthly Contribution

40 $150.01

30 $297.39

20 $646.55

10 $1,822.87

Inflation vs. State Retirement Income• TRS does NOT have Cost of Living Adjustments

(COLA)• Inflation vs. TRS Income

• TRS @ 1.0% Growth• Inflation @ 3.0% Growth

Hypothetical illustration showing the potential growth of an employee’s TRS income at 1% as compared to the same income increased by an estimated 3% inflation growth.

Longevity Risk

History of Life Expectancy

0

20

40

60

80

100

-1500 -1000 -500 0 500 1000 1500 2000 2500

Date (-BC) (+AD)

Life

Exp

ecta

ncy

• How long will I need retirement income?

Source: Murray, Nick. “The Exponent of Life Expectancy “Financial Advisor magazine, Mar. 2007:p43.

Maximizing TRS

• Increase Salary — Good Luck!• Increase Years of Service Credits

– Work longer– Purchase Service Credits

• Types of Service Credits– Withdrawn, Out-of-State, Military,

Unreported or Substitute, etc.• Cost varies depending on type of service• Contact TRS for cost estimate

What Are These??? 403(b), 457, 401(k), IRA...

• Sections of the Internal Revenue Code that created different kinds of retirement plans

• They are like a Shield to protect your Investments from Taxes

• Don’t confuse the Shield with the Investments

Important Note: There is no total escape from taxes. No matter which plan you use, you will eventually pay some taxes. However, the impact of taxes is usually much less with a tax deferred plan.

Comparison: 403(b) & 457(b) PlansFeature 403(b) 457(b)

Individual vs. Group Plan Most have higher fees, pay commission/sales loads. Limited number

of no commission options

Low fees relative to most 403(b) plans; no commissions, full disclosure of fees

Penalty to withdraw fund (+ income tax)

10% (goes away at age 59½ or age 55 and retired)

None

Investment Options Fixed/Variable Interest Annuities or Mutual Funds/Custodial Accounts

Fixed Annuity or Self-Directed Mutual Funds

Access to Funds Termination of Employment, Death, Disability, Retirement, Age 59½ (even if

still employed), Hardship or Loans

Termination of Employment, Death, Disability, Retirement, Unforeseeable Emergency (no

access at age 59½ ) or Loans

Investment Committee/Advisor Oversight

No Yes

Contribution Limits (can contribute to both plans)

2015: $18,000; $24,000 age 50+ 2015: $18,000; $24,000 age 50+

Roth Accounts Allowed Yes Yes

Abuses in Educator Retirement Investments

• Excessive Hidden Fees

• Inappropriate Types of Investments

• Lack of Monitoring of Investments

Shadow Marketing

• SEC Snoozed as “Shadow Marketers” Skimmed Billions From Retirement Plans

– Forbes Magazine, Feb. 3rd, 2011, Author: Edward Siedle• Nationwide Financial Services and National Association of Counties

– Nationwide disclosed on website it was paying NACo $7.3M in 2007 to push products

– Exec Dir said relationship went back to early 1980s• ING and NYSUT (teachers union)

– Marketing to 50,000 teachers making payments up to $3M to union• Nationwide Retirement Solutions (NRS) and Alabama state

employees association– 2010 NRS entered into settlement of $16M– Paid association $11.8M in fees and commissions, including trips

• CGU Life Insurance– $8.1M 2002 settlement in a class action involving 14,000 Texas teachers

Fee Comparison

Avg Ann Fees - 5 Yrs

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Annual Fees in One 403(b) RFP Process Conducted by TCG Consulting, LP (an affiliate of TCG Advisors, LP)

The Fee Effect

1 2 3 4 5 6$0.00

$10,000.00

$20,000.00

$30,000.00

$40,000.00

$50,000.00

$60,000.00

$70,000.00

$80,000.00

$90,000.00 Annual Fee Balance

1% $82,549.26

2% $73,599.44

3% $65,824.55

4% $59,057.63

5% $53,156.51

6% $48,000.00

Balance based on 6% earning net of fees with $200 monthly contributions for 20 years at the beginning of the month. Actual rate of return is not guaranteed and is for illustration purposes

only. Remember that all investing involves risk.

Excessive Fees 12b-1 Fee

Generally allows distributors to compensate broker/dealers and representatives for selling their funds. It also can be a charge to cover marketing and distribution costs of the investment.

Withdrawal Charge (a.k.a. Surrender Charge)

A fee charged by some annuities and funds when an investor takes money out of his or her account.

Mortality and Expense Fee (M&E) This applies to some types of annuities and covers

insurance related costs. Transfer Fee

This is an amount charged by a fund to transfer either within the fund family or to another company.

Excessive Fees

Expense Deductions Charges for investment management, administration

and distribution services. Management Fee

Also called the investment advisory fee, this represents the company’s cost for managing the money in the fund.

Wrap Account Fee Charged by some types of funds for fund management,

this is an annual percentage of the investor’s assets in the account.

Custodial Fee The charge for safekeeping or physically holding the

securities in the fund.

Possible Schemes

• Life Insurance as an Investment• Pension Maximization

– Taking the Standard Annuity and buying life insurance with the “savings”

– Insurance company may raise rates– Death benefit needed is usually much higher

• Annuity Riders• Take Lump Sum, Invest, and Beat the

State Retirement System

Partial Lump Sum Option (PLSO)

Possible Reasons to Do Poor Health Estate and Critical Need for

Heirs (e.g., disabled child) Other Estate Needs —

Guarantees money to heirs instead of reversion to retirement system at death

No Savings Going into Retirement

High Debt

Reasons Not to Do You will not be able to invest

the money and beat the Retirement System

Pay Actuarial Cost for funds; Usually have to earn minimum Net 11.00% if try to match State — Can you do this with no risk??

You have not planned for inflation and budget in retirement, so your income runs short later

You will be tempted (and give in) to spend the money you planned to save

PLSO: TRS allows you to receive 1, 2 or 3 years of your pension up front. Then reduces your monthly annuity by 10% per year received for the rest of your life.

Remember that all investing involves risk.

Fund A Fund B Fund C Fund D

Morningstar (Dec 2000) Forbes (Dec 2000) C A A+ D

US News & World Report (Dec 2000) 34 50 10 93

Wall Street Journal (Jan 2001) E C A B

BusinessWeek (Jan 2001) A No Rating B+ C

The Limits of Fund Rating Services

Morningstar: Five stars is highest rating; one star is lowest rating.US News & World Report: 100 is highest rating; 1 is lowest rating.

• Funds A, B, C, and D are actual funds. They are not identified because the purpose of this illustration is to emphasize that ratings, by themselves, do not provide enough information to make a sound investment decision.

23

IC1440.1


Equity Returns of Developed Markets

In US dollars.Source: MSCI developed markets country indices (net dividends) with at least twenty-five years of data. MSCI data copyright MSCI 2013, all rights reserved; see MSCI disclosure page for additional information. Indexes are not available for direct investment. Index performance does not reflect expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Annual Return (%)

24

DV1040.9

Highest Return

Lowest Return

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Belg. Austria UK H.K. H.K. H.K. Norway Switz. Spain Switz.

44.25Belg. 67.76

Sing. Switz. Austral. Austria Sweden Austria Can. Spain 49.36

H.K. J apan Norway Sweden US Belg.53.63 103.91 10.29 49.52 32.29 116.70 23.57 44.12 40.05 44.25 67.75 99.40 5.85 1.68 16.55 64.53 71.52 28.31 49.36 41.20 -29.21 87.07 33.75 1.36 39.55Den. Ger. H.K. Austral. Switz. Sing. J apan US Sweden Italy Italy Sweden Can. Austria Austral. Ger. Belg. J apan Sing. Ger. Switz. Austral. Den. UK Den.52.67 46.26 9.18 33.64 17.23 67.97 21.44 37.14 37.21 35.48 52.52 79.74 5.34 -5.65 -1.34 63.80 43.53 25.52 46.71 35.21 -30.49 76.43 30.73 -2.56 31.27

Sweden Norway Austria US US Switz. Sweden Sweden H.K. Den. Spain J apan Den. Belg. Norway Spain Norway Austria Norway Norway US Sing. H.K. Switz. Sing.48.33 45.53 6.33 30.07 6.39 45.79 18.34 33.36 33.08 34.52 49.90 61.53 3.44 -10.89 -7.26 58.46 38.39 24.64 45.12 31.43 -37.57 73.96 23.23 -6.77 30.96

Norway Den. Norway Sing. Sing. Norway Neth. Spain Norway US France H.K. Norway Spain Italy Austria Sweden Den. Can. Spain Sweden Sing. Norway Ger.42.40 43.94 0.65 24.96 6.28 42.04 11.70 29.83 28.63 33.38 41.54 59.52 -0.89 -11.36 -7.33 56.96 36.28 24.50 29.57 -40.60 64.16 22.14 -10.01 30.90

France Sing. Den. France France Sweden Italy Neth. Can. Spain US Can. Italy Norway J apan Can. Italy Norway Den. 38.77

Sing. France H.K. Can. Belg. H.K.37.87 42.26 -0.91 17.83 2.81 36.99 11.56 27.71 28.54 25.41 30.14 53.74 -1.33 -12.22 -10.28 54.60 32.49 24.26 38.77 28.35 -43.27 60.15 20.45 -10.62 28.27

Austral. France US Neth. Neth. Ger. Belg. Belg. Neth. Ger. Ger. Norway Neth. US Switz. Austral. Den. Switz. Belg. Austral. Can. Belg. J apan Austral. Austria36.40 36.15 -3.15 17.80 2.30 35.64 8.24 25.88 27.51 24.57 29.43 31.70 -4.09 -12.39 -10.31 49.46 30.82 16.33 36.66 28.34 -45.51 57.49 15.44 -10.95 25.90J apan Neth. Neth. Den. Belg. Neth. Sing. H.K. UK Neth. Switz. France France UK Sing. Den. Austral. Austral. Austria

36.54Den. Ger. Can. US Neth. Austral.

35.39 35.79 -3.19 16.56 -1.47 35.28 6.68 22.57 27.42 23.77 23.53 29.27 -4.31 -14.05 -11.05 49.25 30.34 16.02 36.54 25.59 -45.87 56.18 14.77 -12.12 22.07Sing. Sweden Switz. UK UK Austral. Austral. UK US UK Neth. US Austral. Den. Can. Norway Spain Sing. Ger. Spain Sing. Spain Austral. Spain Sweden33.32 31.79 -6.23 16.02 -3.65 35.17 5.40 21.27 23.24 22.62 23.23 21.92 -9.95 -14.81 -13.19 48.11 28.93 14.37 35.99 23.95 -47.35 43.48 14.52 -12.28 21.97H.K. US Ger. Switz. Ger. Den. Ger. Den. Den. Belg. UK Ger. UK H.K. Belg. France H.K. Neth. Neth. Den. UK Switz. Can. France28.12 30.01 -9.36 15.77 -10.27 32.81 4.66 18.78 21.79 13.55 17.80 20.04 -11.53 -18.61 -14.97 40.22 24.98 13.85 20.59 -47.56 43.30 11.79 -12.71 21.29Ger. Switz. Belg. Spain Austria Spain Den. Can. France Sweden Sweden Austral. Austria Can. UK H.K. Sing. Sweden France Neth. Austria Norway J apan Neth.20.60 26.21 -10.98 15.63 -10.65 29.78 3.77 18.31 21.20 12.92 13.96 17.62 -11.96 -20.44 -15.23 38.10 22.27 10.31 13.24 -48.22 43.20 10.95 -14.33 20.59Can. Can. Sing. Sweden Austral. Italy Switz. Ger. Austral. Can. Den. UK US Switz. Spain Italy Can. Ger. Neth.

31.38UK UK Neth. Austria Sweden Switz.

17.07 24.30 -11.66 14.42 -10.82 28.53 3.54 16.41 16.49 12.80 8.99 12.45 -12.84 -21.38 -15.29 37.83 22.20 9.92 31.38 8.36 -48.34 42.25 9.88 -15.98 20.35US UK Can. Belg. Can. Austria US France Ger. France Austral. Den. H.K. Neth. Den. Sing. UK France Austral.

30.86Italy Sweden Den. UK Den. Norway

14.61 21.87 -13.00 13.77 -12.15 28.09 1.13 14.12 13.58 11.94 6.07 12.06 -14.74 -22.10 -16.03 37.60 19.57 9.88 30.86 6.06 -49.86 36.57 8.76 -16.02 18.65Neth. Italy France Can. Sweden J apan UK Austral. Italy Norway J apan Neth. Ger. France H.K. J apan France Belg. UK

30.61US Italy France Ger. H.K. US

14.19 19.42 -13.83 11.08 -14.41 25.48 -1.63 11.19 12.59 6.24 5.05 6.88 -15.59 -22.36 -17.79 35.91 18.48 9.05 30.61 5.44 -49.98 31.83 8.44 -16.02 15.33Spain Belg. Spain J apan J apan UK Can. Sing. Belg. Austria Austria Spain Spain Ger. Neth. Belg. Ger. H.K. H.K.

30.35Switz. Austral. Italy Neth. France UK

13.53 17.29 -13.85 8.92 -21.45 24.44 -3.04 6.45 12.03 1.57 0.35 4.83 -15.86 -22.39 -20.83 35.33 16.17 8.40 30.35 5.29 -50.67 26.57 1.74 -16.87 15.25Italy Spain Austral. Ger. Spain Belg. Spain Norway Austria Austral. H.K. Italy Belg. Sing. France Switz. J apan UK Switz.

27.40Austria H.K. US Belg. Sing. Italy

11.46 9.76 -17.54 8.16 -21.87 23.51 -4.80 6.02 4.51 -10.44 -2.90 -0.26 -16.85 -23.42 -21.18 34.08 15.86 7.35 27.40 2.17 -51.21 26.25 -0.42 -17.92 12.48Switz. Austral. Italy Italy Italy France France Italy Switz. H.K. Can. Switz. Sweden Italy US UK Switz. US Can.

17.80Sweden Norway Switz. France Ger. Can.

6.18 9.30 -19.19 -1.82 -22.22 20.90 -5.18 1.05 2.28 -23.29 -6.14 -7.02 -21.29 -26.59 -23.09 32.06 14.96 5.14 17.80 0.62 -64.24 25.31 -4.11 -18.08 9.09UK H.K. Sweden Austria Norway Can. Austria J apan Sing. J apan Sing. Austria Sing. Sweden Sweden US Neth. Spain US

14.67Belg. Belg. Ger. Italy Italy J apan

5.95 8.39 -20.99 -12.23 -22.29 17.58 -6.28 0.69 -6.86 -23.67 -12.88 -9.11 -27.72 -27.18 -30.49 28.41 12.24 4.41 14.67 -2.73 -66.48 25.15 -15.01 -23.18 8.18Austria J apan J apan Norway Den. US H.K. Austria J apan Sing. Norway Belg. J apan J apan Ger. Neth. US Italy J apan

6.24J apan Austria J apan Spain Austria Spain

0.57 1.71 -36.10 -15.50 -28.25 9.15 -28.90 -4.72 -15.50 -30.05 -30.06 -14.26 -28.16 -29.40 -33.18 28.09 10.14 1.90 6.24 -4.23 -68.41 6.25 -21.95 -36.43 3.00

France 34.48Italy

32.49

Sweden 43.39

Key to Success: Diversification


Source: Determinants of Portfolio Performance (Brinson, Hood, Beebower, 1986)

SOCIAL SECURITY ISSUES

Remember your TRS Annuity is never reduced by Social Security!



Social Security Considerations

• 2 Regulations• Government Pension Offset (GPO)

– Applies to member’s SPOUSAL Social Security benefits

– (SSA Pub No. 05-1007)• Windfall Elimination Provision (WEP)

– Applies to member’s OWN Social Security benefits– (SSA Pub No. 05-10045)

• www.ssa.gov– Periodically bills are filed to repeal GPO and WEP

at Federal level — very costly to repeal

Government Pension Offset: SPOUSAL BENEFIT

• You are eligible for your spouse’s benefit if you retire from an SS-covered and TRS-covered position

• The “LOOP-HOLE” closed July 1, 2004• Old Law: You were employed by an SS-

covered District on your last day of employment

• Current Law: You have to be employed by an SS-covered District for your last 60 months to be eligible

• This law uses a two-thirds offset rule• Two-thirds of your TRS Annuity benefit will

be subtracted from your spousal SS benefit

GPO Example: SPOUSAL BENEFIT

TRS Pension — $2,100 Spousal SS Benefit —

$1,000 Subtract 2/3 of TRS

benefit from eligible SS benefit

SS Benefit $1,000— (2/3 of $2,100) - $1,400= - $ 400

TRS Member is not eligible for spousal benefit, but receives full TRS annuity

TRS Pension — $2,100 Spousal SS Benefit —

$1,600 Subtract 2/3 of TRS benefit

from eligible SS benefit SS Benefit $1,600— (2/3 of $2,100) - $1,400= $ 200

TRS Member is eligible for spousal benefit of $200 plus full TRS annuity

Windfall Elimination Provision: YOUR BENEFIT• Does NOT reduce TRS Pension

Benefit• Effects employees who are eligible

for their OWN government/state pension and Social Security

• Uses a factor to calculate your SS benefit income based on ‘Years of Substantial Earnings’

• Different than ‘Service Credits’ under SS

Windfall Elimination Provision: YOUR BENEFIT

Year Substantial earnings1968–1971 $1,9501972 $2,2501973 $2,7001974 $3,3001975 $3,5251976 $3,8251977 $4,1251978 $4,4251979 $4,7251980 $5,1001981 $5,5501982 $6,0751983 $6,6751984 $7,050 1985 $7,425

1986 $7,8751987 $8,1751988 $8,4001989 $8,9251990 $9,5251991 $9,9001992 $10,3501993 $10,7251994 $11,2501995 $11,3251996 $11,6251997 $12,1501998 $12,6751999 $13,4252000 $14,1752001 $14,9252002 $15,750

2003 $16,1252004 $16,2752005 $16,7252006 $17,4752007 $18,1502008 $18,9752009 $19,8002010 $19,8002011 $19,8002012 $20,4752013 $21,0752014 $21,7502015 $22,050

Years of substantialearnings Percentage30 or more 90 percent29 - 85 percent28 - 80 percent27 - 75 percent26 - 70 percent25 - 65 percent24 - 60 percent23 - 55 percent22 - 50 percent21 - 45 percent20 or less 40 percent*

*Actual Reduction cannot be greater than 50% and maximum amount of reduction is $413 for 2015

Your Earnings Record

Hypothetical earnings record.

IMPORTANT TRS RULESYOU NEED TO KNOW

Normal Retirement Age and COLIs

• All New Members on or after 9/1/2014Minimum unreduced retirement age to 62

– Still have to meet Rule of 80 and at least 5 years of service

– Early Retirement Reduction — 5% per year before age 62

• All Vested Members (5 years of service) as of 8/31/2014 are exempt from this rule

• Cost of Living Increases (COLI) to RetireesLesser of 3% or $100 for retirees who retired on or before

8/31/2004Only if TRS is actuarially sound

Member Contributions

• State — 6.8%Must stay at 6.8% or District and

Member rates drop• Members

7.2% 9/1/20157.7% 9/1/2016+.65% TRS Care

• Districts —1.5%

TRS Computation Year & PLSO

• 9/1 – 8/31 for All Districts and All Positions

• Year of Service = 90 Work Days in a School YearException in Year of Retirement — 1

Semester in School Year• Partial Lump Sum (PLSO) Eligibility

5 Year Average — Rule of 903 Year Average — Rule of 80

Return to Work After Retirement

• Return to Work in TRS Covered Position with No Penalty If Retire and Out of TRS Covered Work for 12

Consecutive Months from Retirement Date Surcharge for Hiring Retirees Still Must be Paid

• Can also return to work and not lose annuity if work ½ time But will result in your having to re-start the 12

month waiting period to qualify for the permanent 12 month exception

Return to Work

• Old Exceptions No Longer Apply

– One-half time or less– Substitute– Substitutes + One-half time– 6 Month Exception– Acute Shortage Area– Principal or Assistant Principal– Bus Driver

Types of Service Credits

• Contact TRS for Actual Cost• Withdrawn Service

Cost: Amount withdrawn plus 8% annual interest• Unreported & Substitute Service

Cost: Actuarial cost• Military Service

Purchase up to 5 years Cost basis dependent on when military time was

served (+) 8% annual interest • Out of State Service

Cost: Actuarial cost

Out-of-State Service Purchase• May purchase 1 year of service credit for

each year earned under TRS — up to 15 yearsIf the service used will also be used for a pension

in another retirement system, then the service purchase is limited to 5 years

• Estimated cost can be obtained by going to your MyTRS account

Compensation in Last Year of Employment• New Rule 2016• In the year you retire, if you are on a July 1

contract year, you may be able to get the greater of– Your compensation from July 1 – June 30; or– Your compensation from September 1 – August 31– Thus, you may be able to retire June 30 without

“truncating” your final year of compensation• Rule is complex and requires some analysis or

contact TRS• See New TRS Handbook as of 1/1/2016 page 24

Is TRS Stable and Safe?Yes

System is over 80% funded* System is actuarially sound* System is mandated and governed by the Texas

Constitution* TRS is also the most efficient system for providing

pension benefits**

*Per the TRS Comprehensive Annual Report August 31, 2013**Per TRS publication “A Great Value for All Texans”

Long-Term Care Insurance

• Paying for 2 Households? • Trend has moved from Nursing Home

to In-Home care• Can be a Tremendous Drain on

Assets• Insurance is a Transfer of Risk

– Only purchase what you need– Avoid “Cadillac” policies– Do your research — new types of

policies

YOUR DISTRICT’S SUPPLEMENTAL RETIREMENT SAVINGS PLANS

Spring Branch ISD 457 Plan Investments• 15+ Mutual Funds: Choose own allocation

– High Quality, No-Load and Load-Waived – Low Cost Funds

• 6 Model Portfolios — No Additional Fees– Signature Portfolio– Preservation– Conservative– Moderately Conservative– Growth– Aggressive Growth


Portfolio Allocation

The Capital Preservation Portfolio is for those individuals who do not wish to assume much risk and are adverse to the ups and downs of the equity (stock) market. Target Allocation: 50% Fixed Income/Bonds, 50% Stable Value; Targeted Age Range: 55+

The Conservative Portfolio is for those individuals who are adverse to risk but want a little exposure for growth to offset the effects of inflation. Target Allocation: 25% Stocks, 75% Fixed Income/Bonds; Targeted Age Range: 50-55

The Moderately Conservative Portfolio is for those individuals who are conservative, but want and are willing to accept some market risk in return for growth with income.Target Allocation: 50% Stocks, 50% Fixed Income/Bonds; Targeted Age Range: 40-50

The Growth Portfolio is for those individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market.Target Allocation: 75% Stocks, 25% Fixed Income/Bonds; Targeted Age Range: 30-50

Your Allocation should adjust as you get closer to Retirement

Fixed IncomeStocks

100% Fixed

75% Fixed

50% Fixed

25% Fixed

100% Stocks

50% Stocks

75% Stocks

25% Stocks

The Aggressive Growth Portfolio is for individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market. They have time to recover from a potential loss if a long-term down-trending market occurs. This investor is seeking above average returns.Target Allocation: 100% Stocks; Targeted Age Range: 20-45


The Signature Portfolio is the default investment for the Plan. The targeted investment risk is moderate.Target Allocation: 60% Stocks, 40% Fixed Income/Bonds; Targeted Age Range: All

60% Stocks

40% Fixed

403(b) Tax-Deferred Savings Plan Third Party Administrator is JEM Resource Partners Voluntary, pretax deferrals from paycheck

Governmental equivalent to 401(k) Can conduct all business (enroll, make changes, obtain

approval for distributions): www.jemtpa.com Call (800) 943-9179 or email [email protected]

Choose from Vendors that meet 2 criteria On TRS Approved List Meet District Rules

Must agree to terms of 403(b) Written Plan Must provide data to TPA electronically

Spring Branch ISD 403(b) Plan

http://www.jemtpa.org/

mailto:[email protected]

4 Easy Steps to Start Saving

1. Decide how much to save from each paycheck

2. Determine your risk tolerance (See Risk Assessment )

3. Decide which retirement savings plan (403(b), 457, or both) will help meet your retirement goals

4. Enroll in a plan

a) Go to www.jemtpa.com

b) Contact a JEM representative for help


http://www.jemtpa.com/

Other Spring Branch ISD Retirement Plans

457(b) FICA Alternative Plan Employees not covered by TRS Employee contributes mandatory 7.5% of pay to plan in lieu of Social Security Employee contributions and earnings are always 100% vested

403(b) Match Plan Frozen 7/31/2012 Vesting of district contributions and earnings graded over 5 years (100% vested

after 5 years of employment) Loans available

Accumulated Leave At retirement, payment for local sick leave is made to the 457(b) Plan if you are

both over age 55 when payment is made and the amount is over $5,000 If payment exceeds the 457 Plan contribution limit, remainder is paid to

Employer Paid 403(b) Plan


WHAT CAN I DO TO PREPARE?

TRS Annuity Options

Standard Annuity Maximum benefit for retiree’s life only

Option 1: 100% Joint Survivor Reduced annuity, payable for retiree’s life with continuous payments for

beneficiary’s life. If beneficiary pre-deceases, retiree’s annuity is increased to standard annuity amount

Most common, typically 8-13% reduction from Standard Annuity Option 2: 50% Joint Survivor

Reductions range from 4-8% based on same age beneficiary Option 3: 60 Month Period Certain

Reduced annuity, payable for retiree’s life with annuity payments guaranteed for a minimum of 60 months

If retiree dies before 60th payment, beneficiary will receive the remaining payments

Typically 1-2% reduction from Standard Annuity Option 4: 120 Month Period Certain

Typically 1-4% reduction from Standard Annuity Option 5: 75% Joint Survivor

Reductions range from 6-12% based on same age beneficiary

TRS-Care

• EligibilityCannot be eligible for ERS, UT or A&M System

health benefit CoverageMust take TRS retirement and have at least 10

years service credits; and either» Up to 5 years of military service credit

Rule of 80; or30 or more years of service Individuals retiring on or after 9/1/2014

– Minimum age of 62 for TRS-Care 2 & 3– Grandfathering — If met rule of 70 or had at least 25

years of service on or before 8/31/2014

Electing TRS-Care

• Form 700A will be in your Retirement Packet from TRS

• A good rule: Always elect TRS-Care for you and your spouse if you are eligible• You can cancel later• If you will be covered by other health care you

can waive TRS-Care and will be allowed back in later — but only have a 30-day window to do so if your other coverage ends

• Submit form to TRS within 90 days of your retirement date

TRS-Care Options

• Options and premiums are complex• Vary greatly with whether you are covered

by Medicare or not• Review the TRS-Care Group Plan Booklet

carefully; call TRS-Care for help if you have questions

• Healthcare in retirement is very difficult to get no matter what the cost– This could be the most important

“homework assignment” you ever complete

Insurance Protection

Insurance Needs

Near Retirement 5+ Years

Disability Protection

Need Decreases if Vested in TRS

Group Policy — Very important

Life InsuranceTERM —

Decreasing Need, Analyze TRS

Annuity Options

GROUP/INDV TERMIncome

Replacement, College Funding,

Goals

Umbrella Coverage YES YES

Why You Should Move Retirement Accounts to Your IRA

When You Can

• Individual Retirement Accounts – You control your account — your

employer/Board control 403(b), 457 and other retirement plans

• Will they always make good decisions?– IRAs have much greater investment

flexibility• You can buy individual bonds, CDs, any

mutual fund you want, individual company stocks and many more kinds of investments

• Retirement plans are largely limited to mutual funds

– Both due to laws/regulations and administrative ease


Portfolio Allocation

Risk

Retu

rn

The Capital Preservation Portfolio is for those individuals who do not wish to assume much risk and are adverse to the ups and downs of the equity (stock) market. Target Allocation: 50% Bonds, 50% Stable ValueTargeted Age Range 55+

The Conservative Portfolio is for those individuals who are adverse to risk but want a little exposure for growth to offset the effects of inflation. Target Allocation: 25% Equities, 75% BondsTargeted Age Range 50-55

The Moderately Conservative Portfolio is for those individuals who are conservative but want and are willing to accept some market risk in return for growth with income.Target Allocation: 50% Equities, 50% BondsTargeted Age Range 40-50

The Growth Portfolio is for those individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market.Target Allocation: 75% Equities, 25% BondsTargeted Age Range 30-50

Your Allocation should adjust as you get closer to

Retirement

Fixed IncomeStock/Equities

100% Fixed

75% Fixed

50% Fixed

25% Fixed

100% Stock

50% Stock

75% Stock

25% Stock

The Aggressive Growth Portfolio is for individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market. They have time to recover from a potential loss if a long-term down-trending market occurs. This investor is seeking above average returns.Target Allocation: 100% EquitiesTargeted Age Range 20-45


Fixed Annuity

• Guaranteed by Issuing Company• Surrender Penalty• Distribution Options (KNOW how and

when you can get your money out)• Typically Marketed/Sold by Salesman

that are compensated by receiving a commission

• Lacks diversification


Variable Annuity

• May have high expenses — M&E as well as high management fees

• Surrender Charges– Be careful to avoid new penalties if close

to retirement• Marketed by commissioned

Salesmen


Mutual Funds

• Variety — too many choices• Load and No-Load Funds• Management Fees• Sales Charges

– A Shares– B Shares– C Shares– M Shares


TRS Death Benefits — One of these Options• Must have active TRS service in year Member

dies• Receive One of the following Options • Greater of:

– 2 x annual rate of compensation for the school year of death; or \

– 2 x creditable compensation in the preceding school year

– Up to maximum of $80,000 • With 5 or More Years of Service:

– 60 monthly payments equal to your standard annuity without reduction for age; OR

– Option 1 Lifetime Annuity as of the month prior to Death

TRS Death Benefits — One of these Options• An amount equal to the accumulated Member

contributions in TRS account• $2,500 lump sum payment plus a monthly

payment:– To a beneficiary spouse, $250 per month for life

beginning at later of spouse reaching age 65 or the Member's death

– To a beneficiary spouse who has one or more minor children, $350 per month, continuing until the youngest child reaches age 18. At age 65, the beneficiary spouse would again begin receiving $250 per month for life

– To minor children beneficiaries, $350 per month with two or more children less than age 18, or $250 per month with only one child under age 18

– To a dependent parent beneficiary, $250 per month for life at the later of when the dependent parent reaches age 65 or the Member’s death

TRS Death Benefits — One of these Options• Additional $160,000 if die due to physical assault

in job• If not active member, still receive benefits listed if

– Member’s death occurs during a time when they were eligible to retire or would become eligible to retire without further service before the 5th anniversary of their last day of service as a member;

– Member’s absence from service was because of sickness, accident, or other cause TRS determines involuntary

– Member’s absence from service was in furtherance of the objectives or welfare of the public school system; or

– Member’s death occurred on or after Jan. 1, 2007, while performing qualified military service

• If do not meet any of these, then the beneficiary of a TRS Member is entitled to a return of the Member’s accumulated contributions

Levels of Care

• Tiers of Coverage — 1, 2 and 3– TRS-Care 1 — basic catastrophic coverage– TRS-Care 2 — comprehensive plan– TRS-Care 3 — comprehensive plan

» Lower deductible than TRS-Care 2 • Age 65+

– Above Options OR– Aetna Medicare Advantage Plans 2 & 3– Express Scripts Plans 2 & 3

• Make certain you understand whether to accept or deny coverage

Retirement Checklist

• Become educated– Consult handbook, online tools & videos or visit counselor

• Contact TRS 6 months prior to retirement date to submit a request for an estimate and packet– TRS Form 18– Verify & complete any service purchase options

• Complete documents and submit copies of birth records for you and beneficiary– TRS Form 30

• Retirement Date• Payment Options• Beneficiary Designation

Retirement Checklist

• Evaluate TRS-Care Options• Terminate employment by effective

date• Collect Pension

– 1st payment is due the 1st business day of the month following first calendar month of retirement

– Example: May 31st retirement, June wait, July 1st (or first business day) check arrives.

Steps to Success

• Know your goals!– How much will I need?– Who do I need to provide for?

• Spouse, Children, Parents, Charities, etc.– Any other quantifiable goals?

• Choose portfolio allocation designed to achieve investment return needed– Only take the risk you need to meet the goal

• Monitor your investments — are they performing? • Choose investments to meet goals!• Retirement planning is a process not an event!


THANK YOU900 South Capital of Texas Highway, Suite #350Austin, Texas 78746(800) [email protected] and [email protected] Mike Cochran, [email protected] Scott Hauptmann, [email protected] Jamail, CFP®, [email protected]



IMPORTANT DISCLOSURES

TCG Advisors, LP is a registered investment advisor regulated by the U.S. Securities and Exchange Commission (SEC), subject to the Rules and Regulations of the Investment Advisor Act of 1940. Registration does not imply a certain level of skill or training. TCG Advisors, LP is a part of TCG Group Holdings, LLP. TCG Group Holdings, LLP, owns and operates several other entities which provide various services to employers across the U.S. Those affiliates (wholly‐owned subsidiaries of TCG Group Holdings, LLP) sometimes provide services to TCG Advisors’ Clients. These affiliates are Total Compensation Group Consulting, LP; TCG Administrators, LP (f/k/a JEM Resource Partners, LP); TCG Benefits (f/k/a The Paragon Group, LP; Paragon National, LP; and Paragon Benefits, LP, collectively). The business activities of these companies are discussed in its ADV Part IIA. TCG Advisors is located in Austin, Texas, and a copy of its Form ADV Part II is available upon request.

This presentation is not authorized for use as an offer of sale or a solicitation of an offer to purchase investments in any of the plans discussed or an affiliated entity. An investment in the plans carries the potential for loss. This presentation is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, or as an offer to provide advisory or other services in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.Past performance may not be indicative of any future results. No current or prospective client should assume that the future performance of any investment or investment strategy referenced directly or indirectly in this report will perform in the same manner in the future. Different types of investments and investment strategies involve varying degrees of risk—all investing involves risk—and may experience positive or negative growth. Nothing in this presentation should be construed as guaranteeing any investment performance.

IMPORTANT DISCLOSURES CONT.

An investment in the plans discussed will involve a significant degree of risk, and there can be no assurance that the investment objectives will be achieved or that an investment therein will be profitable. The hypothetical performance presented herein reflects the reinvestment of dividends and other earnings, the deduction of all management fees, performance-based allocations, brokerage fees and other expenses applicable to the Fund. Investors will experience individual returns that vary materially from those illustrated in this presentation depending on various factors, including but not limited to, the timing of their investment, the level of fees, and the effects of additions and withdrawals from their capital accounts. Certain of the performance information presented herein are unaudited estimates based upon the information available to the Firm as of the date hereof, and are subject to subsequent revision as a result of the Fund’s audit. Past performance is not necessarily indicative of the future performance or the profitability of an investment in a plan. An investment in a plan will be subject to a wide variety of risks and considerations as detailed in the offering documents. The information set forth herein will be qualified in its entirety by the information set forth in the offering documents.

This presentation includes forward-looking statements. All statements that are not historical facts are forward-looking statements, including any statements that relate to future market conditions, results, operations, strategies or other future conditions or developments and any statements regarding objectives, opportunities, positioning or prospects. Forward-looking statements are necessarily based upon speculation, expectations, estimates and assumptions that are inherently unreliable and subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are not a promise or guaranty about future events.

IMPORTANT DISCLOSURES CONT.

The projections or other information generated herein regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There are frequently substantial differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.

Achieving Financial Success: Small Steps for a Bigger Retirement.

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