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Form No. 4923-CA (0905)

JL Waite Financial Group. Form No. 4923-CA (0905). Retirement Benefit Factors*. Fewer than 30 or 30 Years More Years Age of Service of Service 50 1.1% 1.3% 55 1.4% 1.6%** 60 2.0% 2.2%** 61½ 2.2% 2.4% 63 2.4% 2.4%. Retirement Formula

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Form No. 4923-CA (0905)

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  1. JL Waite Financial Group Form No. 4923-CA (0905)

  2. Retirement Benefit Factors* Fewer than 30 or 30 Years More Years Age of Service of Service 50 1.1% 1.3% 55 1.4% 1.6%** 60 2.0% 2.2%** 61½ 2.2% 2.4% 63 2.4% 2.4% Retirement Formula Years of Service x State Factor = % of Highest One Year Income if at least 25 years of credited service *Hire date after July 1, 1980. **With early retirement reductions.

  3. Plan Example(2.4 Percent) A member, age 63, retiring with 30 years of service and compensation of $70,000, would receive a retirement benefit computed : (.024 x 30 x $70,000) = $50,400 ÷ 12 = $4,200 per month. + longevity bonus* *Estimate of retired teacher in CA.

  4. CalSTRS Retirement Options Plan Member Spouse Unmodified $4,425 $0 100% $3,713 $3,713 75% $3,885 $2,914 50% $4,108 $2,054 Based on… 63 yr old with 30 yrs of service and $70,000 salary

  5. Income Gap $70,000 28% Net Loss of Spendable Income $50,400 Teacher Retirement Income Begin Working Retire at 63

  6. Income Gap $126,428* Income needed in 20 years $70,000 28% Net Loss of Spendable income $50,400 Teacher Retirement Income Begin Working Retire at 63 *Assumes a 3% inflation factor

  7. Retirement Program Enacted by Congress 403(b) One of the most effective financial planning tools available today.

  8. Why People Do Not Participate in a 403(b) Lack of Understanding. Viewed As A Cost Rather Than A Benefit. Belief That The Money Will Not Be Accessible.

  9. Taxes and the Discounted Dollar Gross ? — Taxes: 28% ? Net $250

  10. Taxes and the Discounted Dollar Gross $347 — Taxes: 28% $97 Net $250

  11. Taxes and the Discounted Dollar Over 20 years assuming a 6% rate of return, the accounts grew to… Taxable $113,911 Tax-Deferred $158,109 The Tax-Deferred account has over $44,000 more than the Taxable account, over a 38% increase.

  12. A Special Feature of the 403(b) Program Loans Accessible Prior to Retirement Tax and Penalty Free* 2% Net Interest Cost** Five-Year Payback (Monthly) or, up to 30-year if primary residence * Non-payment may result in a tax liability. ** On Traditional Fixed Annuities.

  13. Meet Your Financial Objectives With a 403(b) Pay Off Debt Buy Back Years of Service Home Purchase College Education Pre-Tax Contribution Emergency Fund Bridge The Retirement Gap

  14. Bridging the Income Gap $70,000 403(b) Income $50,400 Teacher Retirement Income Begin Working Retire at 63

  15. Three Obstacles to Financial Security TAXES, INTEREST, and DEBT How much of your money goes toward one, two, or all three of these areas, hindering your progress to achieve financial security?

  16. How to Get Out of Debt Using Your 403b

  17. Month 0 Debts Balance Payment Rate Term (1) Credit Card $ 2,200 $ 66/m 16.8% 45 months (2) Credit Card 1,350 38/m 19.8% 46 months (3) Auto #1 7,200 240/m 12.6% 36 months (4) Auto #2 2,600 226/m 10.75% 12 months $ 13,350 $ 572/m Assets 403(b): $3,500 + $50 per month

  18. Month 1 Debts Balance Payment Rate Term (1) Credit Card $ 2,164 $ 66/m 16.8% 44 months (2) Credit Card 1,332 40/m 19.8% 45 months (3) Auto #1 7,035 240/m 12.6% 35 months (5) 403(b) Loan 2,563 52/m 2% 60 months Totals $ 13,094 $ 398/m Assets 403(b): $3,806 + $291 per month

  19. Month 4 Debts Balance Payment Rate Term (1) Credit Card $ 2,056 $ 66/m 16.8% 40 months (3) Auto #1 6,531 240/m 12.6% 31 months (4) Auto #2 0 0 0 0 (5) 403(b) Loan 3,727 79/m 2% 60 months Totals $ 12,314 $ 385/m Assets 403(b): $4,751 + $308 per month

  20. Month 11 Debts Balance Payment Rate Term (2) Credit Card 0 0 0 0 (3) Auto #1 $ 5,293 $ 240/m 12.6% 24 months (4) Auto #2 0 0 0 0 (5) 403(b) Loan 5,123 122/m 2% 60 months Totals $ 10,416 $ 362/m Assets 403(b): $7,181 + $340 per month

  21. Month 19 Debts Balance Payment Rate Term (1) Credit Card 0 0 0 0 (2) Credit Card 0 0 0 0 (4) Auto #2 0 0 0 0 (5) 403(b) Loan $ 8,241 $ 231/m 2% Totals $ 8,241 $ 231/m Assets 403(b): $10,378 + $522 per month

  22. Let’s Take a Look After 19 Months Before Total Debt 13,350 Payment 572 Average Interest 13.4% Total 403(b) 3,500 Contribution 50

  23. Let’s Take a Look After 19 Months Before Now Total Debt 13,350 8,241 [403(b)] Payment 558 231 Average Interest 13.4% 2% [Net] Total 403(b) 3,500 10,378 Contribution 50 522

  24. Let’s Take a Look After 60 Months Before Total Debt 13,350 Payment 572 Average Interest 13.4% Total 403(b) 3,500 Contribution 50 Add to Take-Home 0

  25. Let’s Take a Look After 60 Months Before Now Total Debt 13,350 0 Payment 558 0 Average Interest 13.4% 0 Total 403(b) 3,500 36,003 Contribution 50 833 Add to Take-Home 0 24 + All Raises

  26. How to Maximize Your Pension Benefits

  27. CalSTRS Retirement Options Plan Member Spouse Unmodified $4,425 $0 100% $3,713 $3,713 75% $3,885 $2,914 50% $4,108 $2,054 Most educators choose the 100% option. In this example, $3,713 would go to the member, and $3,713 would go to the spouse in the event of the member’s death

  28. CalSTRS Retirement Options Plan Member Spouse Unmodified $4,425 $0 100% $3,713 $3,713 75% $3,885 $2,914 50% $4,108 $2,054 With proper planning, you could choose a higher pension option. By choosing this higher option, your household will receive more than $150,000 in additional income over 25 years.

  29. Spousal Loss of Income Plan Member Spouse Unmodified $4,425 $0 100% $3,713 $3,713 75% $3,885 $2,914 50% $4,108 $2,054 The challenge with the member choosing the higher pension option is the spouse’s loss of income. In this example, $3,713 - $2,054 is $1,659 monthly loss of income. Solution: a $330,000 side fund could bridge this short fall. $330,000 invested at 6% yields $19,800 annually / 12 = $1,650 of monthly income for the surviving spouse.

  30. Benefits of Pension Maximization • Maximize your retirement income. • Provide continued income to your beneficiary. • Receive raises on higher pension options. • Maintain control over your retirement dollars instead of STRS having control. • Cash availability for other contingencies. • Provide a legacy to your estate

  31. There have been two 40% losses in the stock market in the last 10 years… CAN YOU AFFORD A THIRD?

  32. $2.3 Trillion Lost in Retirement Savings Plans in 2008! YOU have a choice of a safe and secure place to save for retirement that provide guarantees from loss of principal and earned interest.

  33. How TCG can Assist YOU? • Analyze and advise you on which CalSTRS option is best for you. • Validate if your investment portfolio allocation is commensurate with your age and lifestyle? • Implement a debt reduction strategy utilizing your 403b. • Validate your retirement income needs, and implement a proactive plan to reach your retirement goals. • Review and analyze your need for a living will and trust to create tax intelligent strategies to shelter your estate.

  34. CalSTRS Loan Program • 3% Down (80/17) • 3% down payment – only 1% needs to be your funds the remaining can be gifted by a family member • FREE float down to lower rate – if CalSTRS lowers rates during the 45 day lock period, you get the lower rate • The 17% 2nd has a deferred for 5 years, this enables you to qualify for a larger home

  35. Questions and SupportCall 661-979-0945 or 800-566-4047 Jim Waite JL Waite Financial Group 661-979-0945 (c) 589-5268 (f) jlwaite@gmail.com www.jlwaite.com

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