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The ABCs of Retiring

The ABCs of retiring Assess your current situation Balance decisions to help reach your goals Choices to help along the way A B C

Assess Your Current Situation

What’s your vision for retirement? Hobbies Travel Work part-time

How much will you need? You may need less than 100% of your current income if: Your mortgage is paid off You have no work-related expenses You are not or will not be supporting dependents You are no longer saving for retirement You may need more than 100% of your current income if: You plan to purchase a second home or pay rent You are still supporting dependents You plan to spend more on your favorite activities You require additional medical care

Sources of retirement income Personal savings Employer-sponsored retirement plans Social Security Part-time work Rental income Previous retirement plans

Social Security Susan Age: 54 Desired retirement age: 66 When am I eligible? How much will it cover? How will taxes affect it? Contact the U.S. Social Security Administration at or ssa.gov Current as of June †

Retirement income risks Outliving retirement savings High withdrawal rates Market performance At Birth Current Age Female Male Source: Centers for Disease Control, Deaths; Preliminary Data for Life Expectancy

Retirement income risks Inflation Healthcare costs

Balance decisions to help reach your goals

Considerations for your retirement savings Contribute a little more Take control of debt Adjust your retirement lifestyle expectations Budget for expenses Choose the proper investment mix Work longer Take advantage of catch-up contributions

The benefit of budgeting Karen Age: 62 Desired retirement age: 66 How can I make budgeting easier? What’s the first thing I need to do? How can planning for expenditures improve my life in retirement?

Choices To Help Along the Way

Creating a retirement income plan How comfortable are you with market risk? What are your ongoing expenses? Will you have other income? How important is a guaranteed income stream? How actively do you want to manage retirement savings?

Access savings for retirement income Rollover Cash out* Leave it in the plan *This choice has tax implications. Your distribution will be subject to ordinary income taxes (20% will be withheld for federal taxes as required by law). A cash distribution is also subject to a 10% federal penalty unless you are age 59 ½, age 55 or more when you separated from service. Some states may require state income tax withholding. You may want to consult with your tax advisor before taking a distribution in cash.

Converting savings into income Annuities Bank Solutions (FDIC Insured) Mutual Funds CHOICES BY INVESTMENT STRATEGY Maximize Savings PotentialHelp Reduce Volatility Optimize Income Potential Variable Annuities 1 Fixed Annuities 1 Annuities with guaranteed living benefits 1 Long-Term Certificates of Deposit (CDs) Money Market Accounts Savings Accounts CDs CD Laddering Equity Funds Short-Term Fixed-Income Funds Money Market Funds 2 Fixed-Income Funds Short-Term Fixed-Income Funds 1 Guarantees are based upon the claims-paying ability of the issuing insurance company. 2 An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Retirement income strategies Bill Age: 62 Desired retirement age: 66 INVESTMENT RISK ACCESS TO RETIREMENT SAVINGS OTHER RETIREMENT INCOME RETIREMENT EXPENSES I am comfortable with the risk of using the stock market to generate retirement income. I want flexibility to move my retirement savings around. I expect some income from an employer-sponsored pension plan. My fixed living expenses are low. I prefer to rely more on guaranteed income. I can forego some flexibility in exchange for more guaranteed income. I don’t expect income from an employer-sponsored pension plan. My fixed living expenses are high. INCOME CHOICES* MUTUAL FUNDS INCOME ANNUITY LOW RISK HIGH RISK * This information is just a guideline – it isn’t intended to tell you which income choices to use. The guarantees provided with regard to an income annuity are supported by the insurance provider. This example is for illustrative purposes only.

Your age and retirement

Retirement countdown checklist

Your resources 24 hour Internet access at principal.com/ABCsofRetiring Call our automated phone system, at

Thank You

Important Information The Principal Financial Group ®, Des Moines, Iowa , No investment strategy, such as diversification or asset allocation, can guarantee a profit or protect against loss in periods of declining value. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that the member companies of the Principal Financial Group ® are not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group ® (The Principal ® ), Des Moines, IA PT123F-05 | 08/2014 | t do ©2014 Principal Financial Services, Inc. NOTE TO PRESENTER: Use in ALL presentations