CUPA HR Lone StarChapter MeetingNovember 5, 2010Developing an Effective Retirement Strategy For Administrators and Employees

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WHAT’S YOUR VISION OF RETIREMENT?Enjoying a comfortable and potentially rewarding retirement will depend on:• Good health• Relationships with family and friends• Having enough money

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RETIREMENT ISN’T AN END IT’S A BEGINNING• Maybe it’s time to “retire” the term since you won’t retire your lifestyle• The only thing that changes is where your money comes from

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OBJECTIVE OF TODAY’S SEMINARHow to move successfully from working for your money to having it work for you

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GENERALLY THESE WILL BE YOUR MAIN SOURCES OF RETIREMENT INCOME:

Personal Savings

Employer Pension

Employment Social Security

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HERE’S AN EXAMPLE OF WHERE YOUR RETIREMENT INCOME MAY COME FROM

RIGHT NOW EARLY RETIREMENT YEARS

LATER RETIREMENT YEARS

SOURCE: TIAA-CREF

EMPLOYMENT

PERSONAL SAVINGS

SOCIAL SECURITY

EMPLOYER PENSION(incl. TIAA-CREF)

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0

10

20

30

40

50

60

70

80

90

100

FIVE HAZARDS1. Outliving your income

2. Inflation

3. Unpredictable investment returns

4. Unanticipated expenses

5. Not staying within budget

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HAZARD #1

OUTLIVING YOUR INCOME

Here’s to a long life!

But will you have enough to live on?• You need enough to sustain you to an advanced age

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HAZARD #2 INFLATION$9.50 for a cup of coffee?

Will your income keep pace with inflation?• Inflation may “raise the bar” of how much you will need• It will cost you more to buy the same things you buy today

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HAZARD #3

UNPREDICTABLE INVESTMENT RETURNS

I hadn’t planned on that.

Will your investments perform?• Reduced principal can mean an income stream is less than anticipated

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HAZARD #4

UNANTICIPATED EXPENSES

I never get sick!

Can your budget handle life’s surprises? • You need to prepare for unforeseen events including extraordinary

medical expenses and long-term care

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HAZARD #5

NOT STAYING WITHIN BUDGET

Did we really need that?

Do you have a budget and are you within it?  • Living above your means may deplete assets in later years

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SO WHAT DOES ALL THIS MEAN? It means you must have:• An adequate accumulation to retire• A plan for providing an income stream you won’t outlive* • An emergency fund(s) for unanticipated expenses

* All guarantees are subject to the issuer's claims-paying ability.

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GETTING WHERE YOU NEED TO BEDetermine what you have now and then calculate your needs for retirement

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GETTING WHERE YOU NEED TO BE• If necessary, consider modifying your strategy• You may still have time to boost savings• If possible, adjust your income needs and explore other income sources• Review your investment mix to optimize potential return• Consider assuming more risk in your portfolio, consistent with your risk tolerance• Remember to take taxes into consideration

- 20% mandatory withholding/ordinary income- Possible tax penalty

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THE BUILDING BLOCKS OF A WELL-DESIGNED RETIREMENT PLAN

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GUARANTEED – consisting of fixed annuities offering a guaranteed payout based on the underlying insurer’s claims-paying ability

EQUITIES – stocks or stock funds

MONEY MARKET – short term, highly liquid instruments

REAL ESTATE – direct real estate investments, or real estate investment trusts

FIXED INCOME – government and corporate bonds or bond funds paying a fixed rate of interest

INVESTING AND TAXES

DIVERSIFY ACROSS ASSET CLASSES, AND WITHIN THEM

17Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income.* Based on the claims-paying ability of TIAA.

LARGE CAP

MID CAP

SMALL CAP

INTERNATIONAL

GUARANTEED*

FIXED INCOME

EQUITIES

REAL ESTATE

MONEY MARKET

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RETURNS BY ASSET CLASS AND INFLATION OVER THE LONG TERM (Please note that past performance is no guarantee of future results.)

THE BUILDING BLOCKS OF A WELL-DESIGNED RETIREMENT PLAN

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MUTUAL FUNDAn investment company that pools funds from individuals to buy securities selected to meet specific criteria and goals.

ANNUITYA contract by which an insurance company agrees to make regular payments to someone for life or for a fixed period. Annuities usually either pay a fixed rate or one that varies based on market conditions.

0

5,000

10,000

15,000

20,000

25,000

TAKE ADVANTAGE OF HIGHER CONTRIBUTION LIMITS2010 Limits for Salary Deferral Retirement Plans*

MOST EMPLOYEES EMPLOYEES AGE 50 AND OLDER WITH 15+ YEARS OF SERVICE

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$25,000**

403(b) Plans Only

$22,000 401(k) and

403(b) Plans

EMPLOYEES WITH 15+ YEARS OF SERVICE

EMPLOYEES AGE 50 AND OLDER

$19,500**

403(b)Plans Only

$16,500 401(k) and

403(b) Plans

* Based upon your salary, you may contribute up to the maximum amount under each scenario represented by the different bars.** You must be an employee of an eligible teaching institution, hospital, church, home health agency or health and welfare service agency to be eligible for these contribution limits. Note: 2010 limits for salary deferral retirement plans. Source: www.irs.gov

DOLLAR COST AVERAGING CAN WORK TO YOUR ADVANTAGE• Contribution made regularly and systematically• Generally not as vulnerable to market levels as investing all at once• Potential lower average cost per share• Does not guarantee against loss

INVESTING AND TAXES

Dollar cost averaging does not assure a profit or protect against a loss in declining markets. Because such a strategy involves periodic investment, you should consider your financial ability and willingness to continue purchases through periods of low price levels.

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All Of You Represent Institutions With Very Attractive Retirement Benefits To Help Your Employees Prepare For A Secure Financial Future• Experienced and well-known investment providers

• A variety of ways to save: 403(b), Roth 403(b), 457(b), IRA Products

• Ongoing support and education

• Online tools

• Dedicated resources to help you achieve your goals and objectives

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QUESTIONS & ANSWERS

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THANK YOU FOR YOUR TIME AND ATTENTION.We appreciate the opportunity to meet with you today.

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Investment products are not FDIC insured, may lose value, and are not bank guaranteed. You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877 518-9161 or visit tiaa-cref.org for a prospectus that contains this and other information. Please read the prospectus carefully before investing.

TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit tiaa-cref.org for details.

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.

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© 2010 Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY 10017

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