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Retiring with Confidence

Recorded on May 4, 2022

I want to start by introducing our two panelists today. Justin Fellers is a senior retirement plan specialist who educates plan participants provides investment guidance and councils employees to make their desired retirement picture reality. Justin is a graduate of Texas A&M University where he achieved his MBA alongside Finance and Accounting concentrations, his studies inspired his decision to help others achieve their financial goals. Justin has spent the last five years Consulting individuals and families Nationwide on efficient and effective ways to achieve their financial goals. Nothing can provide you with investment advice relating to retirement wealth creation income generation and can analyze your portfolio to help you make informed investment decisions. Next we have Matt Anderson. Matt is a certified financial planner professional and accredited investment fiduciary map provides Investment Management financial planning explaining services to help his clients keep and grow their wealth my graduated from San Diego State University where he earned a Bachelor of Science in public administration and the SDSU executive financial planner Advanced certificate Matt also received a scholarship to attend Oxford University as a study abroad program and since. He has helped he has held a position at the University of California San Diego as an adjunct professor teaching a course on financial planning as well as investment Theory and financial markets.

So without further Ado, I’d like to kick things off by passing it over to Justin Fellers senior retirement plan specialist Justin over to you. Thanks, Devin. So thank you everyone for being here and let’s get started learning how to retire with confidence. So TCG, our mission statement here is to deliver long-term investment and Retirement Solutions that provide peace of mind. So we’re a fee only fiduciary firm with a staff of non-commissioned employees. So, who do we serve? Well, we have over different active plans. We have over four billion under management and over, plan participants and over a hundred employees. Our first topic today will be understanding TRS and the retirement income gap. So if you’ll notice here in come in retirement is very different for Texas teachers, and it is for their spouses and Neighbors. On the left we have Educators. So when we look at this pie, you see that the dark blue shaded area is going to be your TRS pension which makes up about or percent of your retirement income. That light gray area is going to be Social Security. This will vary depending on if you worked in the private sector or paid into Social Security somewhere and will be different for each individual but generally a smaller piece of the pie. And then the light blue area is going to be made up of your own savings that you’ve done outside of TRS. It’s Social Security on the right side. We have our neighbors if you’ll notice their light shaded area is also made up of their savings is a lot larger piece of the pie. Because they’re responsible for for saving into their k or other investment plan. And TR, I’m sorry Social Security. The like gray area is also a little bit larger because generally they have paid into social security throughout their working careers.

So, how does TRS work? How do you determine what you’re going to get in retirement? It’s a very simple formula with three inputs. You’ll see here. The first one is your years of service you take that and multiply it by the state factor of. % which is the same for everyone in the TRS system. No matter how many years you’ve been in there. You multiply that by the average of your three or five highest years of income multiplying those together gives you the maximum benefit that you can receive. So we have an example for you here in our example our educator. As a sixty thousand dollar average income and they have years of service. So if we take that years of service multiplied by the state Factor we get % which means we’re gonna get % of that $,. So we multiply those together comes with our maximum benefit of,. So on the right side here see we begin working in our careers over the years. We get our cost of living raises and our very last year working before retirement. Our check is based on $,. However, our first year in retirement is based on, you’ll notice that is a % net loss of growth income and that is the retirement income gap that we’re talking about. So now that we kind of know how TRS works and you know what you might receive in retirement from TRS. Let’s talk about how to get there. Most of you have probably heard of the rule of and everyone is the role of. I’ve heard, you know, some people talk about a rule of rule of and we’ll talk a little bit later about what a rule of might mean, but everyone is the rule of. What does that mean? It means that your age plus your years of service have to equal. So if you’re years old and you have years of service you meet the rule of. So not only do you have to meet the rule of, but some of you will also have another qualification. So there’s been changes to the TRS plan over the years and the resulted in these six different tiers. So if we look over to the left for Tears and if your current membership began prior to September 1st You had at least five years of service on August 1st. You’re gonna be tears one and two. And if you look under that, you notice you have to meet the rule of and have five years of service. That’s all that you have to do. Now. If you were years old and you have five years of service. You might not meet the rule of, but you can still retire at that point. So let’s move on to tears three and four. I remember membership again between September 1st and August 1st and he had at least five years of service on August 1st of. Same role of. However, you now have a minimum age requirement of as well. So we move on to Tiers and very similar. The dates are a little different though current membership began on or after September st,, or you did not have at least five years of service on August 1st. You still have to meet the rule of, but you have a minimum age requirement of. If you do not know what tier you are. This is demonstrated on your TRS statement. Those are sent out to you every year. However, you can log on to the website at trs. texas. gov pull up your statement and it will let you know. What tier you are.

So now that we’ve talked about how much you might get in retirement what you have to do the qualified to get there. Now that we’ve made it to that point what we’ve talked about so far in the amount of dollars that you might receive based on that, example is going to be the standard annuity payment. Now some of you when retirement comes are gonna want to add a beneficiary option onto that payment because you may have a spouse significant other or loved one that you want to make sure you can provide for. So if you’ll notice there’s five different options here. There’s really only two choices. So if we look at options one two, and five you’ll notice those are all joint Survivor options. That means that you can add one other individual onto your payment and if you you’ll receive that payment and then if you pass away that payment will go on to that individual for the remainder of their life. So if you choose the option one, which the majority of people choose what that means is your benefit will be reduced by about eight to thirteen percent. But if something happens to you that full payment will go on to that beneficiary for the remainder of their life. The % and % are the same examples. It’s just they will receive either or percent of that payment if something were to happen to you going forward. Options three and four a little bit different. These are gonna be months period certain for either or months. What does that mean? What that means is you retire and you take your payment you’ll notice that these reductions are typically quite a bit less. You will receive that payment every single month, but if something was to happen to you within that month time frame. Let’s say you retire and you get months of payments. more payments will go on to be paid to your beneficiary, but it will stop at that point option four is basically just going to be the same thing but months or years those payments will continue for months, but we’ll stop at that point. So whenever you go to choose this payment at retirement. Some of you may also have the option to do what’s called a partial lump sum and this is where that rule of comes in if you meet the rule of and there’s an option for you to take either one two or three years of payments up front. There’s a few reasons that you might want to do this but there’s many reasons not to do this and the majority of time. It’s not a good idea to do however a few reasons you might want to do this. Maybe you’re in poor health and you know, you worry about you passing away soon. And those payments are just gonna stop. This could be a reason to take the parcelum sum. Maybe you have a state needs or a critical need for your heirs. Like I disabled child. Maybe you have other estate needs you want to guarantee money to your heirs. Other than just a one joint Survivor, or maybe you have no savings going into retirement. You might have a lot of debt it really high interest it could make sense to do this, but generally it is not make sense.

And here’s some of the reasons why: Number one, you’re not going to be able to invest that money and beat the TRS retirement system. Generally, you’re gonna have to earn a return of % annually to match this and you do that with no risk. Absolutely not there’s not an advisor out there that can get you % with no risk. Maybe you haven’t planned for inflation or you haven’t budgeted properly and maybe you’re really good health and you’re gonna live for a really long time and you’re worried about running out of money before you get there. Your TRS pension is a guaranteed payment for the rest of your life. So you need to take that into consideration and lastly. You might be tempted to give in and spend the money. It’s easy for all of us to burn a hole in our pockets and want to save and we see that money sitting there. So now that we’ve talked about how you get to TRS retirement how much you might get what the options are. We’ve talked about that retirement income gap.

Let’s talk about what tools you have at your disposal for closing that Gap. So we first have our employer sponsored plans at the districts, which are the b in the b. Which we’ll talk a little bit more about in a moment. Then we have our individual plans the traditional and Roth IRA. We have our regular savings checkings and brokerage accounts, which are going to be our after-tex savings or Investments. So at a school district, you generally have the option of a voluntary retirement plan of the b or the b. If you’ll notice those are just IRS codes K as a larger number. It came out a lot later. So a lot of people don’t really know about it. Now the first question I normally get is why do I have two plans? Well, we know that ks were created for those in the private sector like me B’s were created for nonprofit organizations in s were created for governmental employers. So when you work for a school district, you’re kind of a hybrid nonprofit governmental agency. So that’s why you have two plans. The next question I normally get is well, which plan is better than the other. Neither plan is better than the other someone tells you that they’re probably just trying to sell you their plan because they get a commission or something but they’re both just retirement Vehicles. What’s most important you are what are the fees that you’re paying in this plan? What are the returns you’re getting in the level of service that is being provided. So while there’s mainly similarities there are a few differences. Let’s go over those. if you’ll notice at the top the there’s low fees in the plan relative to the b plan because there’s no commissions and there’s a full disclosure of fees. For the b a lot of those do have higher fees the majority of them do charge commissions or sales loads and there is a limited number of no commission options. Next on the items here. We have our penalty to withdraw funds. So if you’ll notice the does not have that. What does that mean? Well, if you leave your employer and you want to take funds out of the account if you have a b a k or an IRA, there is a % penalty until you reach the age and a half or and retire for those plans. The does not have this penalty it any age depending on how old you are. This could be very important. Next we have the investment options. The b is going to be very similar to a k. It’s going to be made up of self-directed mutual funds. There’s Target date funds and there’s also risk-based portfolios that are already created for you that is made up of those mutual funds. For the b these Investments are generally going to be fixed variable annuities. There are some mutual fund options, but they are limited. Access to funds you’ll see is virtually the same terminate employment death disability retirement age and a half. Even if you’re still employed. Or if we have a hardship or an unforeseen emergency, you also can loan yourself funds from these plans while you’re still working % of your account value if you need to. Next we have investment committee and advisor oversight. What does that mean? We see that the it says yes. Well the is a fiduciary plan. So there was an investment committee that is made up of superintendence CFOs of districts in your area. They meet on a quarterly basis with us and look at the fees of the plan look to see how the Investments are performing if they’re not performing properly. They will be replaced with other Investments that are so you have someone looking out for you on this plan before B does not have this just means that you really got to do your dude diligence when you’re going through all the investment vendors that are available to you and make sure that they are looking out for your best interests or just really up to you to determine you know, what are those fees? What are the investment Returns? What is the services that I’m getting and lastly contribution moments. They’re the same you can contribute up to, per year in each of these plans at the same time. Or if you’re over, per year in each of these plans. So if you’re over, you could essentially defer, of income by maxing out both of these plants. All right.

So now let’s talk about some retirement options and concerns. So congratulations you’re retired. Now. What do you do or what are your options? Well, you really have four options. You can leave your funds in your b your. No, you need to grow just as they’re invested. You can roll them over to an IRA. Maybe you go to work somewhere else and you might want to move that plan to your new employers retirement plan or your last option is to take it and that just means you can take a distribution from the account and put it into your checking account or wherever you want. If you do that, however, there will be a % IRS with holding on those distributions to be aware ofBecause I mean you owe % but that standard amount will be withheld and when you file your taxes before April th, you will settle up at that point. Now there’s also a lot of different investment providers out there that they want your money and they want to take care of it for you because they make income off of that. So there’s insurance agents. There’s broker dealers. There’s also registered investment advisors like us at tcg. Richard investment advisors are fiduciaries. So we have a legal obligation to do what’s in your best interest. No one is gonna look out for your money and your finances better than yourself. So what is the next best thing have someone that’s obligated to do so, that’s what fiduciary meansSo, you know, do you research and find someone you can trust you can go to brokercheck.finra.org and look up the advisor that you’re working with and see if they have the appropriate licenses to be giving you that advice don’t provide you with your investment advisor disclosure that’s public information. They should be able to provide you. Also you Google the firm in the individual. I know some of you could have part-time jobs being a social media detective. Well use those skills when it comes to this and look up those individuals in the firms that you’re working with and learn about their products and services and fees because a lot of it is on the website.

Next this is very important is to understand the fees no matter who you work with. You should be able to ask them frankly. What am I being charged for this and what are you getting paid for this? If they can’t give you a clear example as to what that is. That’s a red flag. Here’s some of those fees to look out for and I’m not saying that fees are bad because you’re not gonna be able to work with any advisor without paying some sort of fee. But those fees need to be reasonable for the services that you’re being provided. So some of them have upfront sales charges or commissions. I’m a them have rapid counter management fees which just means they’re charging a fee on the overall investments in the account. If your account grows that’s good for you. And for who’s managing the the funds and if the account goes down that’s bad for you. It’s also bad for them. Okay, well be one fees which are fees that could be used to cover marketing and distribution costs of the Investments. There’s also withdrawal charges which you may have heard as a surrender charge. These are generally charged by annuities and funds when investor takes money out of his or her account before the contract expire. So that is something to be aware of when you’re investing some of the annuity products will have contracts associated with them. Then there’s more totality in expense phase that generally are also associated with annuities and cover insurance for letting calls. So watch out for your best interest. Look for those excessive hidden fees. Don’t be afraid to ask. There’s also lots of different inappropriate types of Investments, you know, you want to make sure you’re working with this monitoring those Investments. Here’s someone offer you to purchase life insurance as an investment and guys life insurance is there to protect your life. It’s generally not gonna be the best investment option to grow well for provide retirement income. pension maximization. So what this says is, you know, we talked about that annuity payment that you can get from TRS. Well, if you don’t have that beneficiary on there some advisors might tell you don’t have the beneficiary, you know, buy some insurance with the rest. However the amount of money that you get paid from TRS. Would take hundreds of thousands of dollars to be able to purchase something like that. And there’s a annuity Riders on the insurance contract those are additional fees as well. And then like we talked about earlier investing the lump sum trying to beat the TRS system. Remember you have to have % return with no risk to be able to do that not happening. And then lastly Shadow marketing and endorsements. These are just things that you want to make sure that you’re looking out forso one thing that I want to leave you with for the TRS portion is if you don’t remember anything else always remember that your TRS annuity is never reduced by Social Security. However, if you are eligible for Social Security, it may be reduced if you are taking a government pension like TRS now there are some Provisions that discuss how much that Social Security can be reduced. If you are eligible to take one of those benefits. However, it takes a lot of time to cover that we’re covering a lot of material in this and it’s really a unique one-on-one situation. So if you have social security questions a recommend scheduling appointment with one of us so we can look at your social security statement with you and discuss your individual situation.

So without further Ado, I’m going to pass it over to my colleague Matt Anderson for developing a retirement income. Plan in Justin. That was some remarkable information. I appreciate everybody having me on the call today as was previously mentioned. I am a certified financial planner and investment fiduciary. I’m also in enrolled agent. And for those of you who don’t know what that means. And enrolled agent is the highest honor given by the IRS to represent clients in front of them and let me tell you what a privilege that is over the course of my career and working with TCG. My role is to help clients in your stage of Life what I mean by that is this for everybody on the call today. You were going to experience either in the near term or soon to be term here. The big transition in life and that transition is going from the accumulation phase of life. to the distribution phaseWhat I mean by that is our whole lives. We work up the corporate ladders or work up the you know, the school districts. We save our money we buy homes. We have children we get married. We have we buy boats, whatever it might be, right. We are accumulating assets and as such we tend to invest certain ways whether it’s in your b or outside accounts. We tend to be more growth focused as we accumulate assets. some point in our life we have to make that decision of: Have we accumulated enough assets? To now turn on our distribution strategy and what should a distribution strategy be? Where do we start?

First let’s look at what we have. You know as Justin mentioned for a lot of us on the call today, we have a large portion of our income in retirement that will be provided through the TRS system. However, there is a gap right and those gaps might be filled by Social Security. They might be filled by rental real estate income. They might be filled by your other savings accounts like b or IRAs. Also, we need to look at in that distribution phase. What do we owe? Right? What’s our balance sheet now? I’m not asking everybody to go back here and you know become economics wizards, but a simple balance sheet is something very important that every family should sit down and look atAnd a balance sheet is essentially this if you have more an assets than you do in liabilities you have net worth. So let’s look at all the things we own houses retirement accounts bank accounts Etc. What is our net worth? And what is that income gap now? I recognize that can be a lot harder to do than is to sayso why don’t we plan? Why don’t we make these adjustments? And a lot of times we think it’s too difficult. We don’t know where to be. Maybe some of us feel we don’t have the knowledge to come up with that plan on our own. It might not seem that important to you. Maybe you know, you feel you have enough in guaranteed income sources. We don’t have enough discipline or we procrastinate right? And I want everybody on the call to remember these three important things when it comes to building a retirement income plan.

There are three categories of retirement income. Your must-have you’re looking to have and your love to have. Your must have income needs are what? Your mortgage or a roof over your head. Your health care food on the table Etc. Right what I always recommend is look at everything that you have. Look at your TRS run the calculations to see what you can expect. Look at Social Security. Look at your savings. Figure out and then I’m sorry. Take a step back figure out. What are your must have income needs in retirement those items that I had listed. And if your TRS if your Social Security if your rental real estate income, if you were quote unquote guaranteed sources of income cover those must-have needs great. If they don’t it’s time to plan now, we take it a step further. What are your like to have? Well, you’re like to have income needs are essentially your standard of living today. Right? All those must have income needs plus, you know travel plus, you know car ownership, you know doing the things that you like to do giving to grandchildren whatever it might be you’re like to have income is essentially your standard of living today. Again, look at your guaranteed income sources, do they cover that or is there a Gap?And lastly is your love to have right a lot of us might have you know Legacy planning needs where we want to leave behind for our beneficiaries. Some of us might want to leave the school system and go into starting a business and we know that that requires Capital what it figure out what those love to have income needs are for yourself and let’s figure out if there’s a gap that needs to be filled. soOnce we’ve determined that once we’ve said, okay, I know what my must-have income is might you know what that color figure is and I’ve got it covered. I know what my like to have income needed and my love to have and maybe there’s a small Gap there utilizing some of the other things that you have done or will do over the course between now and retirement like investing in your or B and others. How do we invest in there to make sure that we can accumulate up to that number? We need to then distribute the proper amount of income. We need to be aggressive. Are we fine being conservative investors?It’s a good question to ask yourself. So we need to look at a couple variables when choosing the investment types for any type of plan. Are we Diversified right and diversification? Does that mean buying, you know, two stocks in the same segment of the marketplace diversification means spreading your money out amongst a lot of different Investments. What’s our allocation? What’s the proper mix of stocks and bonds in real estate and and so on? But our risk tolerance again. I think would be an understatement to say that wasn’t a wild year but saw, you know, there are swings in the market. They’re very very common. So what’s our tolerance for that kind of ups and downs in the marketplace? Going to the withdraw radio portfolio again. That is that income gap. We’ve determined of our must-have like to have love to have income that there is an income gap. What is that Gap?A typical withdrawal rate that we would say is a conservative amount is % which means on every,, you know, you can have, of income. It’s not as simple as that. There’s a lot of that goes into it, but give yourself an idea of how much I need to pull and what does that dollar amount that I need to have in there to make that happen? So why don’t we take a look at a couple different investment types?

First off cash, right cash is King. Many of you maybe have heard of Dave Ramsey is something that we you know talk about with our clients all the time, too. You have to have emergency funds right? You always have to have cash things come up in life, you know you a busted Tire a medical emergency something, you know, something always comes up where you have to have cash. But is cash a good long-term investment. Probably not. You know some of the advantages sure are you know, it’s safe. It’s in my bank. I can get it whenever I want it. It doesn’t go up and down. But the risks there are inflation many you’ve probably been watching the news, you know, but stimulus packages and such. There’s probably some inflations, you know risk in the next and say to years and if we have a fixed rate on cash, which is essentially zero today and inflation is a three percent how much have we made on a yearly basis? We’ve lost three percent. Purchasing power is a very real thing. And unlike days of old when most people retired at and life expectancy was. We were living longer and healthier throughout our retirement. Which makes cash a little less attractive as a long-term savings vehicle. And bonds many of you on the call today have probably started to look into this. Why because we’re told that as we get closer to that distribution phase of life and away from the accumulation phase. We need to take risk off the table need to be more conservative as they say and a lot of times what people will do is they will transition fromStock Investments or high growth Investments to more conservative fixed income Investments. So what is a bond? Actually bond is debt. You’re loaning your money to a municipality a government agency a corporation Etc. And in return they’re going to pay you an interest rate. I always use the example of it’s like a credit card and reverse right? You become the bank and someone else’s borrowing from you. So you have a lot less of that ups and downs a lot less volatility, right? Then the stock market very easy to understand a lot of them are backed by, you know, good entities like strong companies or governments. What are some of the disadvantages there too? Well. Just like cash. The fixed income markets are the interest rates are pretty low right now. So we’re not getting a lot of yield based on your retirement income gap. Is one or two or three percent enough growth that you might be able to get a bonds today to reach that goal. Maybe maybe not. If not, we have to look at, you know, making the right mix within your Investments to achieve a higher rate of return.

For stocks come into play. We all know what the stock market is. We’ve been inundated with it. Obviously for the whole, you know, year, you know, some of the advantages of stocks are they are somewhat easy understand and I always like to point this out because the stock market can be a scary place. If you own one share of Apple stock. You own the company. You are the owner of Apple. You are a very very very small owner. But you are an owner. When you buy that one share of Apple you are buying it. With the belief that company is going to continue to grow and grow and grow and you will be rewarded if the company does not grow if the company does poorly you as the owner. Take on that risk of going negative with with the company. So unlike a bond, which is your loaning your money to an entity of some sort for a interest in return with a stock you own this company like owning a house or owning physical gold. It’s an equity investment. The advantages there are over long periods of time the stock market has always outperformed the fixed income markets always outperformed cash. Because as you’ve heard this many times with risk comes reward, it’s a matter of managing that risk as root for you for everybody individually to hit whatever Target return we need to hit on a year by year basis to reach your goal. So finding that right combination of stocks to bonds to real estate is important. Now, how do we boss have we buy bonds? There’s many different ways to do that inside your ‘s bs. They have you’re gonna find things like mutual funds. Exchange traded funds or what’s called ETFs. You can buy these inside of annuities, which you’ll probably run across many times in your life. Especially we need to your distribution phase of life. There’s a lot of different ways to buy these it’s not as you know, it’s not as risky as just buying one stock or one Bond.

So, as we talk about the stock market as we talk about what it means to own. stockslet’s see what the Market’s doing. Well again, as I mentioned was quite a remarkable year. Um after plunging % from the peak of the market all the way to the bottom of the mark in the first quarter the market had its fastest Rebound in history. It was a wild year a large part of this obviously had to do with you know, the government intervention fiscal monetary policy. But a big component too was investors staying the course. Right for those investors who had a solid plan a solid structure and stayed through that. They were handsomely rewarded. So the idea there is for those investors who got shook by the market who made bad decisions based on short-term, you know, what was happening short term, they were affected. So keep that in mind when you build a long-term plan now, For from an earnings perspective there seems to be a strong balance coming. I think a lot of that is the idea that as we get back to a sense of normal vaccine roll-outs people traveling again restaurants and things opening up people will start spending money. The general consensus out. There is that we could see % growth in the economy this year. I think that’s a little high but you know just to give you an idea of what’s expected. It’s not completely unreasonable, but we’re just a little bit more, you know, pessimistic on on the earnings growth. Now for bonds or fixed income. We all know that rates are low. I’m sure many of you have CDs at the bank that have matured many you have high yield money markets at the bank that have done nothing but go down for the last months and paid very little to nothing. It’s hard to generate income right now. butwhile the you know, while the long-term rates will remain low there is still opportunity and remember because the bond market is very different than the stock market. Think of a seesaw that we all wrote on we were little kids or maybe a lot of your students right on today as one goes up the other tends to go down and vice versa. So Actually, you might say Matt wouldn’t the safest thing be to just buy % government bonds, and I never have to worry about the stock market. And my answer to you would be it’s what seem that way. It’s not the case. Actually owning a portfolio that is % government bonds in % stocks is actually less risky. And the reason being is in times like this sometimes bonds are down in value. They’re not as attractive and during that period of time look what happens to the stock market. So again, every one of you will just want to look at your own scenario to determine what is that proper mix of sosome of the takeaways of that would beyou know times of stress like often lead investors to focus way too intently on the short run right? We’re looking at the stock market on a day by day basis. We’re opening up our accounts for the bees and you know, it’s really important that after we have a year like that that we revisit. Your portfolio revisit your investing principles make sure that the structure you have in place to reach that retirement income goal still makes sense for you and staying or getting invested is key. From a bond side from a fixed income side. We do still see value in having a core Bond portfolio or position in your portfolio mainly for diversification. And as I had mentioned before having the right mix of stocks and bonds will actually reduce risk and generate additional return. So when you start when you go out there you say Okay, Matt. I’ve got my must-have income need my like to have my love to have I recognize I’ve got x amount of years before I’m ready to pull the trigger and believe me. I recognize that retirement means different things to different people some of you might want to go start a business some of you might want to change professions. Some of you might want to sit on the porch drink lemonade. Everybody has their own retirement plan. But whatever that plan is. Starting now is the best thing to do and what you should do is work with someone that is looking over your plan at least on a quarterly basis.

As we saw as I just mentioned in the stock market went down % or % in one quarter. Probably a good time to sit in and review your plan, right?Look for an unbiased recommendation right try to steer clear from product sales. Now I’m not saying anything bad about those you work in the industry, but just be aware that there are products out there that are not sold for your best interest. Make sure that the compensation is in line with what you’re trying to achieve. Try to access, you know, the lowest fee that you can I could show you chart after chart after chart that shows the lower fee that you pay on a yearly basis the better your investment return and the better your chances of reaching your retirement goals. And work with someone who you know does the the due diligence right? Someone who sophisticated who knows the marketplace who knows taxation who knows Financial Planning and who can put together this structure for your retirement income. We always recommend working with you know, those companies that work by committee, you know working at a partnership a team approach. You want to have a team behind you. I always use this term that. Once you retire your business or your job becomes managing your wealth. Because as the paychecks turn off we need to manage that income coming in. If you’re gonna hire the right staff to help you with that. You’re going to be all the more successful. And to Justin’s point, we believe very strongly in this make sure who you work with is a fiduciary and is working in your best interest. Thank you everyone. I look forward to the questions that are going to come. I’m gonna pass it back over to Devon.

All right, everybody. Now we’re at the point where we’ll take some questions from you. We’re seeing a lot of good questions come in the chat and we appreciate all of them. Remember that you can still submit questions by using the Q&A button there at the bottom of your screen. I’m going to look through these right here and get to our first question. All right. First up. How much is the feed is set an appointment to review TRS and Social Security? That’s a great question and we are here to help you for no fee. So if you want to schedule one of these appointments with matter eye there’s no fee to do. So we are salaried employees and our goal is to help you figure out what you need for retirement. So no fee. All right. Another question over here if I have a b from a previous District that I have not been able to contribute to since I’ve been at this district. Is there a way to switch the funds to a or even an IRA?Yes, so if you have funds from a previous district and you have left that District that means you have separated from service and that qualifies you to roll those funds over to another employer plan and Ira or to take a distribution. To expand on that a little bit more. Can you transfer a to an IRA at any time or do you have to be age and a half to transfer?If you are still working for your employer where you have the, you can not roll those funds out until you hit that age of and a half. But at that point you can take those funds and roll them over to an IRA. He stated in the presentation that the retirement formula uses the highest three to five years of your salary what determines if it’s three years or five years. That’s a great question and your tier will determine whether you are three or five years whenever you look at your statement your TRS statement that they send you every year or you can get from TRS dot Texas dot gov you will have demonstrated on there either three or five salaries. If you see three, you’ll know your three and if you see five you will know that you’re five.

Here’s a great question. Is it too late to start a plan? Even if I’m only going to work one more year?It’s a great question and absolutely not it’s never too late to start saving. We all first want to get that plan together. So you want to work with someone and determine you know what your actual needs are but doing that will help you determine what you need to save over that next year so you can have a higher probability of reaching your retirement income goals. All right. We just got another question in here that we get a lot. Can we roll a four or three B into a b since there is no penalty. That’s a great question. And while you were working for your employer that offers both the b and b. You cannot roll them over into each other, of course until you reach that and a half age. However, whenever you separate from service at that point you’re able to roll those funds over in either plan to any of the other plan types because you’ve met one of the qualifications of being able to roll funds over which is that separation of service. Matt here’s a great tax question for you our TRS distributions taxable as income. Answer your question. Yes. Think of your TRS pension as a continuate continuation of your job. So just as you pay on your paycheck now any pension would be taxable to you? And so you should look at what are the tax termifications of that income and plan accordingly.

All right. We got another question in here. Is there a minimum to start a b and can we change the contribution amount after it has started? Another great question and your employer sponsored plans the and the b you can start stop or change contributions at any time does not have to be when you enroll in benefits or even if you get started when you enroll in benefits, you can change that contribution amount three months later as you choose up down or completely stop it. All right.

Here’s another good one. Is it too late to roll to a from a b or b to an IRA? I will be next week. It’s not too late to do that. In fact, if you were still working and you want to roll those funds over to an IRA, you will have to be and a half before you can do that. However, there are some things to consider because those are different plan types when we’re talking about your employer sponsored plans. Those have different options in an IRA such as you’re able to take a loan from it while you’re still working. So there’s things like that to consider that would help you determine if that’s a good idea or not. That’s something that we can help you with and speaking of that while we still got our information up on the screen here. I just wanted to say for those of you that have specific questions related to TRS Social Security the b. You would want to scan that top bar code which is gonna be mine or use the information undermine under Justin Fellers. If you have questions about estate planning tax planning or those types of situations, you would want to start with Matt Anderson and his information. I’m just sifting through the questions here. Keep them coming. We really appreciate all of the interests. And and the question you guys are sending our way again. Just want to remind you that if we do not get to your question here in the live session a representative is going to follow up with you specifically and answer your questions for you. So I am going to answer a couple more here for us.

Let’s see. There’s a good question. My spouse had a b with a former employer justOkay. Yeah, my my spouse had it b with the former employer. Can we roll that money into a b another great question. And yes, since it is a former employer that means that they have separated from service. So they’re eligible to roll those funds over into any of the other plan types whether that’s a k or IRA. Here’s another great question. If you want to do a Roth, is it subject to the required income limitation as a Roth IRA?That’s a great question and it is not. No, thank you. Just I jump in their note to answer question. It is not subject to that. It’s a great planning tool for those who maybe have join incomes that exceed the threshold to leverage that Roth within the another great planning tools. For those of you who are looking to contribute to both four or three be and has Justin had mentioned before maybe a good tax planning strategies to look at partially doing broth and partially doing it. And I see a couple questions over here asking about the presentation or coming in late. Just want to again remind you guys that the presentation is being recorded and is going to be available to you. Once we wrap things up over here. Let’s see. We probably have time for one or two more questions. Let’s see.

Here’s a good question. I’ve been told that the rule of does not apply to people over. Is that true?Yes, that is a great question. So while everyone is supposed to meet the rule of, if you are years old and you have five years of service. You wouldn’t meet the rule of, but you are still eligible to retire and collect your pension. And here’s another good one. Can I begin to develop a retirement income plan why I’m still several years from retirement. That’s a great question. And in fact the earlier you start the better, I would recommend it, you know starting today. So yes anytime is is a good time to start giving yourself plenty of time to plan would be very productive. Awesome. Thanks for that that answer there Matt here is a pretty commonly asked question. I worked as a substitute teacher for four years. But now I’m a full-time teacher does my time as a sub count towards TRS?Well, that’s a really good question and it could so you can’t you do have the ability to purchase TRS years. There are some stipulations with that. But if you substituted for days in a school year you could be eligible to purchase those years. One thing I would tell you about that is if that does pertain to you the longer you wait to purchase those years the more expensive it becomes so I highly recommend reaching out to TRS as soon as possible to get that cost estimate. There’s also other ways that you might be able to purchase years. Maybe you were in the military or you work for a governmental employer or something like that. Those years sometimes can be transferred or allow you to purchase year. So if those apply to you again, it becomes more more expensive each year. You don’t do it. So reach out immediately to get a quote for that and there are many ways to be able toPay for that because it can be costly you can use your retirement plans and things like that. So don’t feel like oh, I’ve already waited years. It’s gonna be way too expensive for me. There are a lot of options to be able to do that. So make sure if it applies to you that you reach out and find out quick. Let’s see. Just a couple more questions here. These are probably some of our most popular questions first gonna be how do we start a or b? Do you reach out to our employers or do we reach out to TCG? There’s a great question and that’s what we’re here to do. So we are your plan administrator at tcg. It’s just means we handle your distributions your contributions sign off on transfers and things like that, but you would reach out to us and we can help you get that set up. You can also visit the website at tcgservices. com. Find your employer see what’s available and enroll directly through the website. But we’re always available to help we can do that for you if you want to set an appointment or reach out to us. And lastly if I’m currently enrolled in a four or three B plan. Can I enroll in a b as well? That’s another great question. And yes, you can so you are able to have a b and a not only can you have both and contribute to both but you can Max both out to those contribution limits. Not only that I’ve gotten questions before about oh, well, I already have the b or the and I actually want to go with the other plan. No problem. Now, I know we talked about earlier that you cannot transition those plans to the other plan while you’re still working for that employer. However, if you see that one might be more beneficial for you than the other you can stop contributions to one of those plans and start contributions to the other. Great. Well, you know, we’re still having a flood of questions come in and again, I just want to remind you guys that we will answer all of those questions individually via email after the webinar is over. I just want to remind you again that you know, one of the best ways to get tailored in specific advice to your situation is going to be using the QR code here on this page and scheduling a meeting with Justin Fellers or Matt Anderson, you know, if you’re questions pertain more towards TRS Social Security b and those accounts rolling them over what you’re allowed to do with those we encourage you to schedule an appointment with Justin if you’re, you know, looking for tax questions estate planning or any broader questions like that. Matt. Anderson is gonna be a great resource for you. And again we encourage you use that QR code there on the screen and schedule a meeting with them at your convenience.

Lastly we just want to thank you guys again for taking the time out of your days this afternoon to sit and chat with us. We know that your time is important and you know, we don’t want to waste it but we really do feel that, you know, Financial education is extremely important and you know, the sooner that you start tackling these questions and working towards your retirement the better. So again, thank you guys for coming today, and if we didn’t get your question answered, we’ll follow up with you tomorrow over the next couple of days.

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