CalSTRS Retirement Check-Upresources.calstrs.com/.../CalSTRSRetirementCheckup.pdf•...
Transcript of CalSTRS Retirement Check-Upresources.calstrs.com/.../CalSTRSRetirementCheckup.pdf•...
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CalSTRS Retirement Check-Up
Welcome and please sign in
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CalSTRS is with you throughout your
career and retirement.
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• CalSTRS hybrid
• Retirement basics
• Preparing for retirement
• Retirement resources
Discussion Topics
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Hybrid Retirement System
• Defined Benefit Program
• Defined Benefit
Supplement Program
• CalSTRS Pension2®
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Partners in Your Retirement
CalSTRS • Defined Benefit • Defined Benefit Supplement • Survivor benefits • Disability benefits • One-time death benefit • CalSTRS Pension2®
• 403bCompare.com
Submit Retirement Application
Employer • Determine salary and pay rate • Health and employee benefits • Retirement incentives • Report contract and earnings to
CalSTRS • Resolve service credit issues • Sick leave balance • Reduced Workload Program
Resign/retire from district
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Your Benefits
Three programs:
• Defined Benefit Program • Defined Benefit Supplement Program • CalSTRS Pension2
Three benefits:
• Retirement • Disability • Survivor
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• Member contributions 8.15 percent for fiscal year 2014-2015 Increasing to 10.25 percent for 2% at 60 members and 9.205
percent for 2% at 62 members by 2016-17
• Employer contributions 8.88 percent for fiscal year 2014-2015 Increasing to 19.1% by 2020-21
• The state of California also contributes Increasing to 6.328% by 2016-17, plus 2.5% for purchasing
power protection
Contributions
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Defined Benefit Power
Once vested, provides a secure, stable retirement income for life regardless
of your contributions.
The amount contributed is fixed, but the benefit is not.
Funds are finite.
Defined Benefit Plans
Public and corporate pensions
• Risk free
• Guaranteed for life
• Based on a formula not your contributions
Defined Contribution Plans 403(b), 457, 401(K)
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Defined Benefit Formula
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• Maximum per school year is 1.000
• Track service credit in your
Retirement Progress Report
• Unused sick leave converts to service credit •
• Purchase additional service credit
Service Credit
The number of full and partial years you paid into CalSTRS
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Purchasing Service Credit
Types of Service Credit you may be able to purchase:
• Redeposit
• Permissive
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Purchasing Service Credit – Redeposit
Redepositing allows you to restore the service credit represented by refunded contributions
• Refunded contributions
• Dissolution of marriage
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• Non-member service
• Out-of-state service
• Sabbatical
• Maternity/paternity leave
• Family care and medical leave
Purchasing Service Credit – Permissive
Remember the sooner the better!
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Defined Benefit Formula
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Age Factor
A percentage determined by your age at retirement.
•Highest age factor possible is 2.4 percent
CalSTRS 2% at 60
CalSTRS 2% at 62
•Career factor – increase of 0.2 percent with 30 or more years of service credit*
*For CalSTRS 2% at 60 members only
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55½ 1.460 1.660 58½ 1.820 2.020
61½+ 2.200 2.400
Fewer than 30 years Age 30 years
or more
30 years of service credit increases age factor by 0.2 percent to a maximum of 2.4 percent
Career Factor
*For CalSTRS 2% at 60 members only
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Defined Benefit Formula
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Final Compensation CalSTRS 2% at 60
• Fewer than 25 years of service credit – 36 consecutive months
• 25 years or more of service credit – 12 consecutive months
CalSTRS 2% at 62
• Any amount of service credit – 36 consecutive months
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• Highest possible monthly benefit
• Monthly benefit for your lifetime only
• Annual 2% non-compounded increases
Member-Only Benefit
Your benefit before any deductions
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Work longer
-- Make a
purchase --
Convert unused sick
leave
Have more birthdays
-or- 30 years of
service credit
Increase salary Get the highest benefit
Increase Your Retirement Benefit
Increase any part of the formula to get more money!
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One-year highest final compensation
Career factor
Longevity bonus
BENEFIT ENHANCEMENTS
AHEAD
Remember: Benefit enhancements are only available to CalSTRS 2% at 60 members
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One-Year Highest Final Compensation*
BENEFIT ENHANCEMENTS
AHEAD
• 25 years of service credit
Use your ONE highest year of salary as final compensation
*For CalSTRS 2% at 60 members only
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Career Factor
BENEFIT ENHANCEMENTS
AHEAD
• 30+ years of service credit
Increases age factor by 0.2 percent to a maximum of 2.4 percent.
*For CalSTRS 2% at 60 members only
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Longevity Bonus
BENEFIT ENHANCEMENTS
AHEAD
• 30+ years of service credit by December 31, 2010
Number of Years
Monthly Bonus
30 $200 31 $300 32 $400
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Earned • Unused sick leave, in excess of .200 service credit Purchased • Nonqualified service credit (“air time”) Other • Unpurchased Local Service credit • Retirement Incentive credit
Types of Service Credit that do not qualify for benefit enhancements:
Service Credit – Limitations
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• 61 1/2 year old career educator
• Olivia’s husband, Steve, is 62
• Mortgage is paid in full
• Set on retiring this year
Olivia
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Olivia’s Retirement Formula
Olivia has 30.800 years of service credit and 65 days of unused sick leave.
30.800
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How will Olivia’s unused sick leave increase her total service credit at retirement?
182
Contract Days
65 Unused
sick leave days
.357 Service Credit
Increase* ÷ =
*Only 0.2 of converted sick leave can be used to reach a
retirement milestone
Olivia’s Service Credit Conversion
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Olivia has 30.800 years of service credit plus .357 of converted unused sick leave Service Credit
for a total of 31.157 years.
Olivia’s Retirement Formula
31.157
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31.157
Olivia is 61 1/2 years old. Her age factor is 2.2%. However…
2.2%
Olivia’s Retirement Formula
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31.157
Olivia qualifies for the career factor because she has over 30 years of service credit, bringing
her age factor to the maximum of 2.4%.
2.4%
Olivia’s Retirement Formula
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31.157
Olivia has well over 25 years of service credit and is eligible to use her annual highest compensation for 12 consecutive months.
Olivia’s highest salary is $65,000/12 months = $5,416 for her final compensation amount.
2.4%
Olivia’s Retirement Formula
$5,416
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31.157
Olivia’s total Member-Only Benefit before bonuses is $4,050 or approximately 75% of her final
compensation.
2.4%
Olivia’s Retirement Formula
$5,416 $4,050
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$4,350
Final Member-Only
Benefit +
Olivia’s total service credit of 31.157 qualifies her for a longevity bonus of $300 bringing her Member-Only Benefit to
$4,350 or approximately 80% of final compensation.
*Must have reached 30 years of service credit by December 31, 2010.
Olivia’s Final Retirement Formula
= Longevity Bonus*
$300
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Defined Benefit Supplement Program
• Provides supplemental income to regular Defined Benefit pension
• Based on amount of money in account and your age at retirement
• Income guaranteed for life
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Building Your Defined Benefit Supplement Account
• A quarter of 8 percent member contributions went to Defined Benefit Supplement*
• On earnings in excess of 1.000 year of service credit 8 percent member contributions 8 percent employer contributions
• Compounded interest (3.55% in 2014–2015)
*Ended on December 31, 2010
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• Lump-sum payment
and/or
• Monthly annuity payment, if your balance is at least $3,500
You may receive the contributions and interest in your Defined Benefit Supplement account as a:
Check your Retirement Progress Report for account balances
Defined Benefit Supplement Choices
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• How will I choose to receive my Defined Benefit Supplement?
• Should I elect an
option?
You will make two decisions before you retire with CalSTRS
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100% Beneficiary Option
75% Beneficiary Option
50% Beneficiary Option
Compound Option
Benefit Options
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If your option beneficiary dies before you, your
pension goes back to the
Member-Only Benefit amount*
“Pop-up”
*Based on the option you choose and your age and the age of your
beneficiary
Your pension is reduced* when you choose an
option
Options have a “Pop-up” Feature
*If your beneficiary dies before you retire, your retirement benefit may be
permanently reduced
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Olivia’s Option Choices
Olivia’s Member-Only
Benefit
Option Choice
Olivia’s Modified Benefit
Steve’s Beneficiary
Income (if Olivia dies)
Olivia’s “pop-up” Benefit
(if Steve dies)
$4,350 100% $3,730 $3,730 $4,350
$4,350 75% $3,885 $2,914 $4,350
$4,350 50% $4,076 $2,038 $4,350
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Preparing for Retirement
STEP 1
STEP 2
STEP 3
STEP 4 Create a
preretirement plan
Know your retirement
income goal
Consider the gaps in your
plan
Create a post-
retirement plan
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• When do you want to retire?
• Gather all information needed for the plan
• Discuss your plan with your family
STEP 1
Create a pre-
retirement plan
STEP 1
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• Know your retirement
income goal
STEP 2 Consider all sources of income available to you in retirement:
• CalSTRS monthly retirement benefit
• CalSTRS Pension2® and other tax- deferred accounts
• Other investments, including insurance
• Social Security through prior employment or spouse
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STEP 3
Consider the gaps in your
plan • What percent of your working income will come from CalSTRS?
• Is there a gap between what you will receive and what you need?
• How will you pay for health care in retirement?
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Does Olivia have a “gap”?
Olivia’s Retirement Goal is 90% of her
working income.
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80% 3%
1% 1%
CalSTRS retirement benefit (80%)
Deferred compensation (3%)
Defined Benefit Supplement (1%)
Reduced living expenses (1%)
“Gap”
5%
Olivia’s “Gap”
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How to Bridge the “Gap”
Purchase additional service credit
Work additional years
Work in retirement
Begin or increase contributions to deferred compensation account such as CalSTRS Pension2®
Build Defined Benefit Supplement Account by working additional duties
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After reviewing her preretirement plan,
Olivia plans to postpone retirement
for two years to reach her 90% goal.
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Create a post-
retirement plan
STEP 4
• Identify your definition of retirement success
• Identify retirement risks
• Plan to preserve, protect and manage income
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Postretirement Benefits
• Annual benefit adjustment
• Purchasing power protection
Consider Direct
Deposit
Quickest possible access to your monthly retirement payment.
Retirement and Beyond
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Zero earnings limit/separation-from-service requirement for 180 days after retirement
Earnings Limitations
After Retirement
2015–2016 earnings limit is $40,321
Cannot contribute to Cash Balance
No limit if work outside of California public schools
Earnings limit is set each July 1
Retirement and Beyond
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Do you have a will or trust?
Five Important
Questions to Consider
Do you have a health care power of attorney?
Do you have a financial power of attorney?
Have you designated a beneficiary?
Do you have health care coverage?
Retirement and Beyond
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6 Months
Submit your application
- No earlier than 6 months prior to retirement
- Submit online – through myCalSTRS account
1 Year
Attend a CalSTRS and Your
Retirement Group Session
Retirement
Receive your initial benefit payment
- 30 to 45 days after your retirement date
Preretirement Timeline
Research your retirement decisions – read the CalSTRS publication: Your Retirement
Guide
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Your CalSTRS Resources
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CalSTRS.com
• Member information
• Estimate calculators
• Forms and
publications
• Planning resources
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my CalSTRS
• Secure messaging
• Annual statements
• Address change
• Beneficiary designation
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Plan Funding
• New funding plan
• Funding outlook
• Know your benefits
• Ask Jack
• E-newsletters
• Join the
conversation
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Educational Videos • Understanding the
Formula • The Gap • Refund – Consider the
Consequences • Defined Benefit
Supplement • Disability benefits • Survivor benefits • Social Security • Pension2
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Benefits Counseling
• Interactive sessions
• Local offices
• Over the phone
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Welcome to Retirement
Pop. 230,278 CalSTRS Retired Members
Thank You for attending