take charge of your retirement - houston€¦ · you’ll likely need 60% to 80% of your...

Take Charge

of Your

Retirement

ARCHDIOCESE OF GALVESTON-HOUSTON

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Today’s Agenda

Pension Plan Updates

Retirement Outlook

The Role of Personal Savings

Retirement Resources & Tools

In the event of any inconsistency between this presentation

(and other communications concerning the Pension Plan),

and the Pension Plan document itself, the Pension Plan

document language will always control.

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Pension Plan Updates

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ARCHGH Pension Plan Updates

Pension Plan Updates Coming Soon

Updates to the Pension Plan are being made effective July 1, 2018

Benefits Earned up to June 30, 2018

Your benefit earned through June 30, 2018 is NOT changing

Previously, you earned 1.15% of Plan Compensation for each year of Benefit Service

Effective July 1, 2018

The Plan is reducing the future benefit accrual rate to 1.00% of Plan Compensation for

each year of Benefit Service completed after June 30

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Why Are Changes Being Made?

The AGH Investment Committee recently completed a comprehensive study of economic

conditions and benefits forecasting

Conclusions of this study:

Low interest rates continue to prevail

Future asset performance not expected to offset the need for structural change

The Plan’s funded status has declined even after pension plan changes in 2004

increased contributions from the Archdiocese

Updates are needed to further insure the financial soundness of the Pension Plan.

The AGH Investment Committee reserves the right to make additional changes in future years.

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Assumptions: Lay employee did not reach 25 years of service and age 60 by June 30. Retires at NRD (in this example, age 67)

LAY EMPLOYEE PENSION EXAMPLE

Benefits Earning Period Accrual RateYears of

Benefits Service

Avg. Monthly

Compensation

Estimated

Monthly Benefit

DOH to June 30, 2018 1.15% 10 $2,500 $287.50

Calculation

.0115 x $2,500 x 10 years

Benefits Example

The following demonstrates the effects of changes to the accrual rate effective July 1, 2018

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Benefits Service

Avg. Monthly

Compensation

Estimated

Monthly Benefit

DOH to June 30, 2018 1.15% 10 $2,500 $287.50

July 1, 2018 to NRD 1.00% 10 $2,700 $270

Calculation

.01 x $2,700 x 10 years

Benefits Example


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Benefits Service

Avg. Monthly

Compensation

Estimated

Monthly Benefit

DOH to June 30, 2018 1.15% 10 $2,500 $287.50

July 1, 2018 to NRD 1.00% 10 $2,700 $270

Total Monthly Benefit at Normal Retirement Date $557.50

Benefits Example


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Additional Modifications Effective July 1, 2018

Freezing the additional “bonus” benefit provisions

Must have earned 25 years of service by June 30, 2018 and retire after age 60 in order

to receive the 3% benefit increase, AND …

Must have earned 30 years of service by June 30, 2018 and retire after age 65 for the

“additional 3%” benefit increase to apply

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Early retirement – eligibility for reduced benefit defined as:

A. Attaining the earlier of Social Security Retirement Age (67) OR

B. The later of (i) attainment of 10 years less than Social Security Retirement Age and (ii) the

completion of 15 years of Credited Service

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No retroactive back payments

Payments will commence after election paperwork is filed, but will be actuarially increased based on

participant’s age at the time of commencement

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No in-service commencements beginning at age 70 1/2

(Effective for employees who attain age 70 ½ on or after Jan. 1, 2018)

Must be retired to commence payments

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Retirement Outlook

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Retirement Outlook

The Reality Facing Today’s Retirees

Retirement healthcare costs on the rise

People living longer than in times past

Retirees are more responsible for income replacement

Additional Challenges

Lack of sufficient personal savings

High withdrawal rates

Low yields on traditional retirement accounts

Less Americans covered by pension

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Decline in Americans Covered

0%

25%

50%

1990 2011

Pension Benefits

Advantages of a Pension for Savers

Supplements Social Security

Income that can’t be outlived

Not subject to market risks

No contributions required from the employee

Updates are needed to further insure the financial

soundness of the Pension Plan.

The AGH Investment Committee reserves the right to

make additional changes in future years.

Source: https://www.epi.org/blog/private-

sector-pension-coverage-decline/

35%

18%

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You’ll likely need 60% to 80% of your pre-retirement income

Sources of Retiree Income

4%

33%

32%

21%

10%

Other

Social Security

Paycheck

Pensions

Savings

Other Sources of Income

Social Security

Trends in Benefits (2018)

Average monthly benefit: $1,404

Full retirement age for 2018:

Percent who claim by 62: 45%

Percent who claim by 64: 60%

Cost-of-living adjustment: 2%

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The Role of Personal Savings

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Savings Scorecard

Households are

currently saving

for retirement

Workers report

having less than

$25,000 saved

Workers report

having less than

$1,000 saved

Dipped into

savings for basic

expenses in 2017

The Modern Saver’s Scorecard Needs Improvement

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Effective Savings Habits

It’s never too late to save

Got a late start? Bump up savings rate each year until you are saving at least 10%

Savings Guidelines by Age

Age Suggested Savings On Hand

By age 35 1x your annual pay




Role of Personal Savings

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Your Income is a Resource

Use your working years as an opportunity to save

more for retirement

Make saving a priority –

For many, saving comes after tithes and giving, but

before discretionary spending

Saving is much more difficult after retirement when

most people live on very fixed resources

Maximize Your Resources

Windows for Saving

Never miss extra opportunities

to save a little extra!

Blessings (gifts or windfalls)

Pay raises or extra hours

Promotions

Bills paid off

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$105,703$70,994

$42,520

$258,297

$106,197

$35,111

$0

$100,000

$200,000

$300,000

$400,000

AGE 25 AGE 35 AGE 45

Your Contribution Growth


$364,000

$177,191

$77,561

Time is a Resource

It’s never too late to save, but the

earlier the better

Compounding growth – Money

earned in one year goes to work

earning money the next

Late Start, or Way Behind?

Bump up your contributions at

least 1% each year

Target saving 15% or more

$125,661

Assumptions: $35k salary, 5% annual savings, retire at age 65, 2% annual raises, 6% annual returns

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Your 403(b) is a Resource

BENEFITS OF SAVING AT ARCHGH

Automatic savings through payroll deduction

Built-in tax advantages

Easy-to-use investment options

PROVIDERS

Fidelity Investments – fidelity.com or 800.343.0860

VALIC – valic.com or 800.448.2542

http://www.fidelity.com/

http://www.valic.com/

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Retirement Resources & Tools

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Retirement Resources

Federal Benefits Programs

SOCIAL SECURITY

Normal retirement benefits

Early retirement

Delayed retirement credits

Spousal benefits

How to determine your benefit amount

Click the Retirement link

Choose Retirement Estimator

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Retirement Resources

Federal Benefits Programs

MEDICARE

Original Medicare

Medicare and your employer’s plan

Must sign up by 65th birthday Easy-to-use menu

Choose Getting Started

with Medicare

Resources in every state

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Retirement Planning Resources

Find out Your Retirement Numbers

MEDICARE

Original Medicare

Medicare and your employer’s plan

Must sign up by 65th birthday

Go to: Planning & Advice >

Retirement > Create your plan

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Find out Your Retirement Numbers

Go to: Planning & Advice >

Retirement > Create your plan

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Questions?

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Frequently Asked Questions

What are my options for receiving monthly benefits?

How do I receive my monthly payment?

How can I calculate my estimated monthly benefit?

What happens if I die before commencing Pension benefits?

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Estimates of Monthly Accrued Benefits at NRD

Estimated benefits shown here are based on

the Plan provisions in effect at July 1, 2018.

Please note these are only estimates and all

Plan provisions are subject to change. All

possible care is taken in calculating these

estimates. At the time an election is made to

begin receiving benefits from the Plan, an

actuary will make a final determination of your

vested benefit, which will be based on your

pay and service at the Archdiocese. In

addition, if any difference arises between the

method used to calculate these benefit

estimates and the method provided for under

the provisions of the Plan documents, the

provisions of the Plan document will govern.

The estimated benefit shown is payable at

your Normal Retirement Date, which is the

later of 15 years of service and your Social

Security Retirement Age (currently between

age 65 ‐ 67 depending on your year of birth).

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Archdiocese of Galveston-Houston

Benefits Department

https://www.archgh.org/benefits or 713.652.8222

403(b) Providers

Fidelity.com

Valic.com


ssa.gov

medicare.gov

napfa.org

Resources

Details on Plan Changes

The following resources were sent

to your home address in April

Notice of Plan changes

Updated Summary Plan Description

Contact the Benefits Department if you

need a duplicate copy

https://www.archgh.org/benefits

http://www.fidelity.com/

http://www.valic.com/

http://www.ssa.gov/

http://www.medicare.gov/

http://www.napfa.org/

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Rough Estimates of Monthly Accrued Benefits

take charge of your retirement - houston€¦ · you’ll likely need 60% to 80% of your...

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