How do you envision your retirement?

1

It’s About Money, Not Age

One of the biggest misconceptions people have about retirement is that it is simply a function of age.

•You could spend one-third of your life in retirement.•To maintain your standard of living in retirement, you will likely need an annual income equal to about 80% of your final working income.

Estimate your life expectancyEstimate your life expectancy

Source: National Vital Statistics Report, Vol. 58, No. 21, June 28, 2010

Current Age Men Women

25 76.5 81.1

35 77.2 81.4

45 78.1 82.0

55 79.7 83.0

65 82.0 84.7

75 85.4 87.3

85 90.7 91.8

Will you have money for “must-haves?”

Healthcare • Housing • Food • Transportation

Personal Retirement Savings

NC Retirement System

Social Security

Traditional Retirement Benefits

Gallagher Benefit Services, Inc.

“Three Legged Stool”

When Does Social Security Begin?

If You Were Born… Full Benefit Begins Reduced Benefit Begins

Before 1938 Age 65 Age 62

Between 1939-1959 Between Age 65 and 67* Age 62

In 1960 or later Age 67 Age 62

Social Security Benefits

“The average monthly Social Security benefit for a retired worker is about $1,177 in 2011.”

Source: www.socialsecurity.gov

* The full retirement ages for this group change based on the specific year of birth. For more information, visit the Social Security Administration at www.ssa.gov

$0.51 $0.69 $0.99 $1.41 $1.50 $1.98 $2.79 $3.94

$7,200 $11,420 $15,047 $19,054 $20,411 $26,877 $37,913 $53,480

What will costs be in the future?

Inflation can zap the power of your retirement savings. So you may need more than you thought.

For illustration purposes only. Assumes a 3.5% annual inflation rate.

1980 1990 2000 2010 2012 2020 2030 2040

Annual Benefits Statement

How confident are you in providing for your retirement?

“A penny saved is a penny earned.” - Ben Franklin

Improve Your Retirement Possibilities with the NC 401(k) & NC 457 Plans

Start saving NOW with the NC 401(k) & the NC 457 Plans

Don’t forget to increase your savings as you age

Contributions to NC 401(k)/457 Plans

• Made by payroll deduction

• No minimum contribution

• Maximum is $23,000 if you’re 50 or older in 2013 ($17,500 if you’re younger than 50)

• Change your contribution anytime– You don’t have to meet with a representative!

– website, toll-free customer service center or forms

Contributions to NC 401(k) & NC 457…

• Tax Advantages– Pre-tax contributions offered in either plan may be best if you:

• Have a short time horizon until you need to take withdrawals

• Need a tax break this tax year

• May be in a lower tax bracket in retirement

– Roth after-tax contributions to the NC 401(k) may be best if you:

• Have a longer time horizon until you need to take withdrawals

• Want a tax-free source of income in retirement

• May be in the same or higher tax bracket in retirement

• Rollover funds into your account – May roll funds from former employer retirement plans and some IRA’s

– Can be done regardless of employment status

– Requires pre-approval from Prudential

Put asset allocation into action!

You have two options:

1.Do it yourself

2.Get help withGoalmaker

13

Do it yourself

Stock FundsLarge-CapNorth Carolina Large Cap Value FundNorth Carolina Large Cap Index Fund North Carolina Large Cap Growth Fund

Small-Mid CapNorth Carolina Small/Mid Cap Value FundNorth Carolina Small/Mid Cap Index FundNorth Carolina Small/Mid Growth Cap Fund

InternationalNorth Carolina Global Equity FundNorth Carolina International Index FundNorth Carolina International Fund

Stable ValueNC Stable Value Fund

Fixed IncomeNorth Carolina Fixed Income FundNorth Carolina Fixed Income Index Fund

All investing involves risk, such as fixed income (interest rate), default, small cap, international and sector risks—including the possible loss of principal.

The GoalMaker asset allocation models available in your plan have been determined by [insert advisor firm name here].

You may want to consider other assets, income, and investments you may have before applying these models to your individual situation. Consult the prospectus for information about how the portfolio manager invests the assets of any particular investment option. Proposed allocations assume a retirement withdrawal period of 15 years. Past performance of investments or asset classes does not guarantee future results.

Introducing GoalMaker®

GoalMaker Portfolio: C04

Conservative, 16+ Years to Withdrawal

The Benefit of Rebalancing with GoalMaker

• Automatic

• Fixed date every quarter

• Maintains your original investment ratios

• No transaction or asset management fees!

What if You Need the Money?

NC 401(k) Plan• Loan Provision• Hardship Withdrawal

allowed for: – Down payment on a home

– College expenses

– Prevent eviction/foreclosure

– Medical expenses not covered by insurance

– Funeral expenses

– Damage to your home that qualifies as a casualty deduction

• Or, at age 59 ½

NC 457 Plan• Loan Provision• Hardship Withdrawal

allowed for:• Prevent eviction/foreclosure

• Medical expenses not covered by insurance

• Funeral expenses

• Damage to your home that qualifies as a casualty deduction

• Or, at age 70 ½

One-Time Contribution Change Form

• Contribute a portion of large payments to your account on a one-time basis.

• Visit www.NCPlans.prudential.com for a form, or contact your Human Resources or Regional Retirement Education Manager.

When You Leave Your Job…

1) Do nothing! Keep your funds in the Plan

2) Rollover to an IRA or a new employer’s program

• If you remain a NC public employee, you may continue contributing through your next employer!

3) Begin withdrawals:

• Installment payments (monthly, quarterly, semi-annual or annually)

• Partial withdrawal (on an as-needed basis)

• Lump sum withdrawal

• Annuitize all or a portion of your account balance

Tax Penalties At Withdrawal (Pre-tax Balances)

•NC 401(k) PlanNO IRS 10% early withdrawal penalty if you:• Have reached age 59 ½ • Leave employment during or after the year you turn 55• At any age, elect to receive equal payments based upon life

expectancy• Elect the Transfer Benefit and move all or part of your

account to TSERS or LGERS• Retire due to disability• Die, and the funds are distributed to your beneficiary

•NC 457 Plan• Never incur an IRS 10% early withdrawal penalty on

withdrawals

Taxes At Withdrawal (Roth Balances)

NO state or federal income taxes on withdrawals if first Roth contribution remains in the account for 5 tax years and:

• You have reached age 59 ½, or

• You retire due to disability, or

• Your account distribution is made to your beneficiary(ies) upon your death

NC 401(k) and NC 457 Plans – A Low Cost Option for Retirement Savings

Unlike other savings vehicles, your NC Supplemental Retirement Plans do not charge:

• Surrender charges or distribution fees

• Transfer Fees Among Funds

• Annual Account Charges (AAC)

• Up-front sales charges

Optional NC 401(k) / NC 457 Deferred Transfer Benefit

• Available to retiring members with existing NC 401(k) and/or NC Deferred Compensation (457) accounts through Prudential Retirement

• Option to transfer all or a portion of supplemental funds to the Retirement System

• Members who transfer will receive additional separate monthly lifetime benefits based on the amount of transferred funds

• Law enforcement officers vested by June 30, 2010 have the option to transfer funds under this new program or transfer funds under previously established plan specifically for law enforcement officers

• Information on the transfer credit was provided to Prudential Retirement by the State of North Carolina

Are These Plans Right for You? Consider…

Do I need to start or increase my retirement savings?

Would I benefit from a tax-free source of income in retirement?

Consider the NC 401(k) Roth after-tax option if you have at least 5 years before withdrawal

Do I need a tax break now?

Think about a pre-tax contribution to the NC 401(k)

www.NCPlans.Prudential.com

Once enrolled, log on to your account to add beneficiary designations & to manage your account details

Help is Available

Regional Retirement Education Managers

•Free, local resource for your retirement plan questions

•18 dedicated representatives across North Carolina

•Salaried, not commissioned

•Meet by phone, email or in person for help with enrollment, rollovers, investment review or other retirement plan questions

•Find your regional manager online at www.NCPlans.prudential.com

Additional Resources

NC Retirement Systems Member Services Unit•1-877-627-3287 (outside Raleigh area) and (919) 807-3050 (Raleigh area only) •www.myncretirement.com

Social Security•www.ssa.gov

Internal Revenue Service• www.irs.gov• www.dornc.com

“Transfer Benefit” Distribution option• www.NCLifetimeIncome.org

You Only Get One Retirement -Make It A Good One!

Questions? Comments?

Shares are offered by Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ 07102-4077. PIMS is a Prudential Financial company. Prudential Retirement is a Prudential Financial business. Prudential is not a legal or tax advisor.

NC Supplemental Retirement PlansP.O. Box 5340

Scranton PA 18505

1-866-NCPlans(1-866-627-5267)

www.NCPlans.Prudential.com

Account Tools:

Enroll Today

Enroll in the Plan

• Complete the form.

• Visit www.NCPlans.Prudential.com.

•Call the Interactive Voice Response System (IVR) at 1-866-NCPlans, or speak with a Participant Service representative.

Choose your investment options.

Seek guidance as needed.

Monitor your plan carefully, but revise it only as required.

• View your account online.