how do I decide which payment option is right for me?

Transcription

1 how do I decide which payment option is right for me? Teacher Retirement System of Texas (TRS) payment options

2 how you collect your TRS benefit is as important as when When to retire is one of the most important financial decisions you can make. Equally important is deciding on a payment option for your Teacher Retirement System of Texas (TRS) retirement benefit. It s a decision that can have a significant impact on your finances throughout your retirement years. This brochure provides an overview of your TRS payment choices and some of the factors you may want to consider when selecting a payment option for your TRS benefit.

3 many different payment options to choose from TRS offers six monthly payment choices for your TRS retirement benefit. And, if you meet the eligibility requirements, you can also elect one of several partial lump-sum distributions in addition to receiving monthly benefits. 1 All together you can have up to 27 different payment choices. Monthly Payment Choices The standard annuity provides the highest TRS monthly benefit payment. It pays you a monthly benefit as long as you live and stops when you die. There are no monthly continuing survivor benefits. Five optional monthly annuities are also available. Each of these options includes a survivor benefit for your beneficiary. Your monthly payments are reduced, from the standard annuity, under these options to reflect the type of beneficiary coverage elected and your age at retirement. The three joint and survivor annuities provide you with reduced monthly payments for life and, upon your death, either 100%, 75%, or 50% of your monthly payments to your beneficiary. Payments under these options are reduced to cover two lifetimes yours and your beneficiary s. The two guaranteed period annuities provide you with reduced monthly payments for life, with payments guaranteed for 60 or 120 months, as you elect. If you die before all guaranteed payments are made, your beneficiary will receive the remaining guaranteed payments. (You can name multiple beneficiaries under a guaranteed period payment option.) Partial Lump Sum Option (PLSO) The PLSO is available, in addition to your monthly TRS benefit, and allows you to choose a partial lump-sum distribution equal to 12, 24, or 36 months of your standard service retirement annuity. If you elect the PLSO, your lifetime continuing monthly benefit is actuarilly reduced to reflect the value of your PLSO payment and your age at retirement. 1 Contact the Teacher Retirement System of Texas for eligibility information: many different options to choose from 1

4 TRS Payment Choices Monthly Payment Options Standard Annuity Option 1 Option 2 Option 3 Option 4 Option 5 100% Joint and Survivor 50% Joint and Survivor Guaranteed Period 60 Payments Guaranteed Period 120 Payments 75% Joint and Survivor PLSO decision is in addition to making a monthly election If electing the PSLO, you must choose the amount and number of payments Without PSLO PLSO Amount Number of Annual Payments 12 x standard monthly annuity 1 24 x standard monthly annuity 1 or 2 36 x standard monthly annuity 1, 2, or 3 2 many different payment options to choose from

5 what to consider when choosing your payment option When deciding how to collect your TRS benefits, you need to consider many factors, including: Longevity What is the longevity history in your family? Keep in mind that average longevity has been steadily increasing, so if you retire at age 57, there s a good chance your retirement will last 30 years. And there s a 40% likelihood it will last longer. 2 This is even more true for women, whose lifespans are generally longer. Inflation Concerned about inflation? You re not alone. No one can know for sure where inflation rates are headed. But the bottom line is that each year the same amount of money buys a little less, and even moderate rates of inflation can severely erode the future purchasing power of your hard-earned retirement dollars over time. Consider that at just 2.5% inflation, an item that costs $100 today would cost $145 in 15 years. Finding ways to help offset the effects of inflation during your retirement years is important and could become critical if you re going to spend 20 or more years in retirement. Beneficiaries How many beneficiaries do you have? What is their current situation (e.g., do they have their own retirement plans)? If you have one or more beneficiaries, you also need to account for their probable lifespans as well. Inheritance Plans Is leaving an inheritance important to you? If yes, you may want to consider a TRS payment option, which can help you fund a financial legacy for your heirs without jeopardizing your long-term financial security. Ownership and Control Would you prefer to have control over a portion of your TRS retirement funds? With a PLSO, for example, once you receive a lump-sum distribution, those funds are no longer part of, or controlled by the TRS. Taxes Have you looked into the effect of taxes on your retirement income? Payments from the TRS are subject to federal income taxes. When and how you receive payments could affect your tax situation. 2 Society of Actuaries, Life Expectancy Calendar, based on the SOA Annuity-2000 tables with 1% mortality improvement. what to consider when choosing your payment option 3

6 making the right choice for you Deciding on a payment strategy for your TRS benefit is not a simple decision. You need to evaluate many complex issues, consider all your choices, and determine how each choice will affect your retirement income and your personal situation. That s why it is important to consult with a financial professional who can help you view these decisions within the context of your individual circumstances. And that s why you should speak with a financial professional at AXA Advisors, LLC. Financial professionals at AXA Advisors in Texas have a history of helping TRS participants with their retirement choices. So we re very familiar with the issues that teachers like you face. And AXA Equitable is one of the largest investment providers for 403(b) plans in Texas. Our EQUI-VEST variable deferred annuity for 403(b) plans is the investment choice for over 32,000 employees for whom we manage over $582 million in 403(b) assets. 3 In addition, we combine the advantages of our local service and support with the strength of a global financial power AXA Group. AXA Advisors and AXA Equitable Life Insurance Company are part of the global AXA Group, which is one of the world s largest and most respected financial services organizations. 4 Call Us; We Can Help Call us and get the guidance you may need to help you plan for the future and make the right TRS payment decisions based on your individual needs, retirement goals, and risk tolerance. 3 Information as of July 30, AXA Group refers to AXA, a French holding company for an international group of insurance and financial services companies, together with its direct and indirect consolidated subsidiaries. AXA Advisors, LLC, and AXA Equitable Life Insurance Company are indirect, wholly owned subsidiaries of AXA. AXA Equitable has sole responsibility for its life insurance and annuity obligations. 4 making the right choice for you

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8 The information provided in this brochure is not intended as legal or tax advice. It is based on our general understanding of the subject matter addressed and is for informational purposes only. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and you should seek advice from an independent tax advisor based on your particular circumstances. The Teacher Retirement System of Texas (TRS) is governed by the state of Texas. If discrepancies arise between this brochure and TRS information provided by the state of Texas the information provided by the state will govern. Securities are offered through AXA Advisors, LLC, member FINRA, SIPC. Fixed annuities are offered through AXA Network, LLC. Variable annuities are issued by AXA Equitable Life Insurance Company (AXA Equitable), NY, NY, and distributed by AXA Advisors. AXA Advisors, AXA Network and AXA Equitable are affiliated companies and do not provide legal or tax advice. Please consult your legal and tax advisors regarding your particular circumstances. AXA Advisors, AXA Network, and AXA Equitable are solely responsible for their own obligations AXA Equitable Life Insurance Company. All rights reserved Avenue of the Americas, New York, NY 10104, (212) Visit our website at G30699 GE (1/13) (Exp. 1/15) Cat. # (1/13)