Diocese of Davenport Employee Retirement Savings Plan

Today’s Agenda

•Why is it important to save for retirement?

•How does the Diocese of Davenport Employee Retirement Savings Plan work?

•What kind of investments are available inside the Plan?

•How do you access your retirement account at TIAA-CREF?

Is Social Security enough?

•Social Security was never designed to be the sole funding source of a worker’s retirement.•Introduced in 1935 when average life expectancy was 61.7 years old.•Didn’t start paying benefits until age 65-people were not expected to live long enough to receive benefits!

•Social Security accounts for only 36.5% of a retirees income

Good news-we are living longer!

•A 63% chance that at least one member of a couple, aged 65 today, will live to celebrate his or her 90th birthday.

•A 36% chance that one member of that couple will live to be 95.

•To successfully fund your retirement, you will need to save enough to support yourself for at least 20 years-are you on track to retire successfully?

Don’t forget about inflation

•Just eating in retirement can cost two people over $200,000!•$5 a meal, 3 meals a day, over 20 years.

•Add a modest 3% inflation rate, and the cost is nearly $300,000!

Why should you save for retirement?

No one else is going to do it for you!

Benefits of saving in the Diocese of Davenport Employee Retirement Savings Plan

•Contributions to the plan are tax deferred-lower your income tax bill.

•Money in your account grows tax deferred-don’t pay taxes on it until you withdraw the money at retirement.

•It’s easy! Contributions are withheld from your paycheck and submitted to the plan on your behalf.

•You decide how to invest the money-broad range of investments available from TIAA-CREF.

Enjoy the benefits of tax-deferred savings

You may also benefit from tax-deferred growth

How much should you save?

Diocese of Davenport Employee Retirement Savings Plan Provisions

•Immediately eligible to make 401(k) contributions starting the January 1st or July 1st following your hire date.

•Example-Employee hired March 1, 2013 enters the plan July 1, 2013.

•Can contribute up to $17,500 of your pay to the plan on a pre-tax basis.•Employees age 50 + can contribute an extra $5,500, for a total of $23,000

•You can change the amount of your contribution anytime by contacting your payroll processor.

Diocese of Davenport Employee Retirement Savings Plan Provisions

•Eligibility for employer matching contributions:•Age 21•One Year of Service

•1,000 hours of service in 12 months for hourly workers•Salaried workers credited with 45 hours of service for each week worked

•Diocese will match 100% of the first 2% you contribute to the plan•2% contribution=2% employer match•1% contribution=1% employer match•No contribution=no employer match

•Some locations may make additional discretionary contribution-see your payroll processor for more information.

Diocese of Davenport Employee Retirement Savings Plan Provisions

•Retirement accounts with previous employers can be rolled into this plan. Some benefits of consolidating your retirement accounts include:•Everything is in one place-easier to get a clearer picture of your retirement outlook.•Fewer statements to keep track of and fewer websites to access to manage accounts.•Potential cost savings of having all investments together.

Diocese of Davenport Employee Retirement Savings Plan Provisions

•Withdrawal Options•Termination of employment•Retirement•Death•Disability•Financial Hardship-IRS Definition

•Purchase of a principal residence, or to prevent foreclosure from principal residence.•Medical expenses for self, spouse, or dependents.•College tuition for self, spouse, or dependents.•Burial or funeral expenses for parent, spouse, or dependent.•Repair of damage to principal residence that qualifies for a casualty deduction.

Diocese of Davenport Employee Retirement Savings Plan Provisions

•Hardship Distribution (Continued)•TAXABLE!•If under age 59 ½, additional 10% penalty for early withdrawal•Cannot make contributions to the plan for 6 months

•The best thing to do with your retirement account is to leave it alone!

Investing-The “Basics”

•Stocks (Equities)

•Bonds (Fixed Income)

•Money Market/Stable Value

What do you get when you buy a stock?

•Ownership in a company

•Typically more volatile than bonds

•Since 1926, the average large cap stock has returned 10%

What do you get when you buy a bond?

•You get an I.O.U•You are essentially loaning money to a government or a corporation

•Bond issuer agrees to pay a specified rate of interest during the life of the bond and then to repay the face value of the bond when it becomes due.

•Bonds are typically less risky and less volatile than stocks.

•Long-term US Treasury bonds have historically returned 5%.

What to do to avoid any and all risk?

What is your risk tolerance?

•To determine your risk tolerance, you need to answer a number of questions:•How old are you?•How long do you have to save and when do you need the money?•How much money do you need to fund a successful retirement?•How much have you already saved?

Diversification

Investment Options

Diocese of Davenport Employee Retirement Savings Plan

(Performance and Expenses as of 3/31/2013)

Stock (Equity) Options

Diocese of Davenport Employee Retirement Savings Plan

•Diversified portfolio selected to track the overall market for all publicly traded stocks in the US.

•All US stocks-less than 1% international exposure.

CREF Equity Index Account

•Diversified portfolio of stocks, with both domestic and international exposure.

•67% in US companies and 32% in international companies.

CREF Stock Account

•Invests primarily in large, well-known US companies that present exceptional growth opportunity-think Apple, Google, Microsoft, etc.

•93% in US companies and 5% in international companies.

CREF Growth Account

•This is a GLOBAL fund-invests in companies of all sizes, both inside and outside of the US

•52% in US companies and 46% in international companies.

CREF Global Equities Account

•60% stocks/40% bonds•70% US/30% International

•Only invests in companies who meet the fund manager’s socially responsible criteria.

CREF Social Choice Account

•Seeks favorable long-term returns through rental property and appreciation of real estate.

•Currently holds 80% in real estate and 20% in short-term instruments.

TIAA Real Estate Account

Bond (Fixed Income) Options

Diocese of Davenport Employee Retirement Savings Plan

•Seeks long-term rate of return that outpaces inflation.

•99% of this fund is invested in US Treasury inflation-indexed bonds.

CREF Inflation-Linked Bond Account

•Mix of US Government and agency securities, corporate bonds and mortgage-backed bonds.

•Can have international exposure as well, and up to 20% in lower-quality bonds.

CREF Bond Market Account

•80% of assets in short-term bonds, which means less volatility than longer-term bonds.

•Remember risk VS reward!

CREF Short-Term Bond Account

• Cash-equivalent

•Non-existent rate of return

CREF Money Market

• “Guaranteed” Investment, paying 3% return

•Withdrawal restrictions on this investment•Cannot take a lump sum withdrawal•Withdrawal paid out over ten-year period

TIAA Traditional Annuity

TIAA Access Account-Lifecycle Funds

TIAA Access Account-Lifecycle Funds (Continued)

TIAA Access Lifecycle Funds

TIAA Access Lifecycle Funds

Accessing your account with TIAA-CREF

• Contact TIAA-CREF by calling (800) 842-2776

•Access your account online at www.tiaa-cref.org