Reinventing Retirement Date

Reinventing Retirement »Your Retirement Plan “Purchase Plan” »Finding the Money to Save »The Price of Your Retirement »How Social Security Fits In »It's About Time »Investing Basics »Enrolling in Your Plan

What Does the Future Hold for You? 1 EBRI 2013 Retirement Confidence Survey, March Source: Staying Ahead of the Curve 2013: AARP Multicultural Work and Career Study, February 2013 »69% of workers plan to work for pay in retirement 1 »25% of retirees report that they currently work in retirement 1

The Payment Plan »Automatic payroll contributions »You're in control »Pretax Savings power

Comparison Shopping Amanda's 6% Pretax Savings Strategy Jake's 6% After-Tax Savings Strategy $25,000Annual Pay$25,000 -$1,500Pre-Tax Contribution$0 $23,500Taxable Pay$25,000 -$3,525Federal Income Tax-$3,750 $225Tax Savings$0 After-Tax Contributions-$1,500 $19,975Take-Home Pay$19,750 FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration is not intended as financial planning or investment advice. It assumes a 15% federal tax rate and does not account for state, social security, or other taxes.

The Payment Plan »Automatic payroll contributions »You're in control »Pre-Tax savings power »Tax-deferred growth

Comparison Shopping Amanda (earns 8% in her retirement plan) Pre-tax Account Balance Year Jake (earns 8% but has to pay taxes first) After-Tax Account Balance $23,46810$21,926 $43,98615$39,642 $74,13420$64,258 $118,43225$98,462 $183,51930$145,989 $279,15335$212,026 $419,67240$303,785 FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration is intended to show a comparison between investing in a tax-deferred versus a taxable investment vehicle. It is not intended as a projection or prediction of future investment results, nor is it intended as financial planning or investment advice. It assumes an annual salary of $25,000, 6% savings rate, 8% annual rate of return, a 15% federal income tax bracket, and reinvestment of earnings with no withdrawals. Rates of return may vary. Distributions from a tax-deferred retirement plan may be taxable as ordinary income. Assumes that the taxable account does not hold any investment for more than 12 months. Taxable investments held longer than 12 months may qualify for lower capital gains and/or qualified dividend tax rates, which may make the return on the taxable investments more favorable, thereby reducing the difference in performance between the accounts shown. The illustration does not reflect any associated charges, expenses or fees. The tax-deferred accumulation shown would be reduced if these fees had been deducted.

FOR ILLUSTRATIVE PURPOSES ONLY. This is a hypothetical illustration intended to show possible retirement income. It is not intended as a projection or prediction of future investment results, nor is it intended as financial planning or investment advice. It assumes a 0% annual rate of return during retirement, a 15% federal income tax bracket, no additional withdrawals, and does not account for state, social security, or other taxes. Rates of return may vary. Distributions from a tax-deferred retirement plan may be taxable as ordinary income. The illustration does not reflect any associated charges, expenses or fees. The hypothetical income shown would be reduced if these fees and/or taxes had been deducted. Consumer Clue AmandaJake $419,672Account Balance$303,785 $20,984Annual Withdrawal$15,189 -$3,147Less 15%$0 $17,836 Money to Dream With Each Year $15,189

Finding the Money to Save »Too many expenses »Struggling to make ends meet »Need a new car »Taking care of parents

Tracking the Cash »Spending journal »Awareness »Budget “Before I started tracking where all my money was going, it was just crazy! Every day was a living nightmare—Attack of the Spending Monster.”

Excerpts from a sample spending journal FOR ILLUSTRATIVE PURPOSES ONLY

Start With a Few Small Sacrifices »Buy frozen pizza instead of eating out »Exercise at home instead of the gym »Re-evaluate cellphone plan usage »Carpool to work “It's better to dream big, I always say. But the first time I did a retirement estimate, I just about fainted. How on earth was I supposed to come up with that kind of money? Then I realized that you have to start somewhere.”

Start With a Few Small Sacrifices »Leave the ATM card at home »Shop for clothes on sale » or send letters to long-distance friends instead of calling »Take your lunch to work »Shop for groceries with coupons and a list »Avoid beverages at restaurants (order water instead) »Carpool

Discover Bigger Savings »Refinance mortgage at a lower interest rate »Consolidate credit card debt at lowest interest rate available »Shop for less expensive car insurance »Consider renting out the spare bedroom (if you're a homeowner)

Discover Bigger Savings »Do your homework and buy a good used car (rather than a new car that depreciates quickly) »Plan on taking a low-budget vacation »Pay off a car loan or personal loan; put the money into your retirement plan instead »Use raise or bonus money to increase your retirement contribution

Consumer Clue »Become aware of spending habits »Track spending with a journal »Use a budget »Pay yourself first

The Price of Your Retirement »Do the math »Revisit calculations annually »Retirement planning is an ongoing process

7% 10%15%20% 20s 30s 40s 50s A Rule of Thumb…

About Social Security “Retirement … I guess Social Security will help cover some expenses. “I don't really know how much— I'll figure it all out when the time comes.”

Consumer Clue »People are living longer 1 »Outlook for Social Security is uncertain »Full benefits payable to at least –With no legislative changes, Social Security would pay 75% of benefits afterward 2 1 Source: The State of Aging and Health in America, Source: 2013 Summary Annual Report of the Social Security and Medicare Boards of Trustees

Changes Are Afoot »Full retirement age is being increased »Increased reduction in benefits at age 62

Consumer Clue The Early Retirement Penalty »If you were born in 1960 and your average annual pay is $35,000: –Your full retirement age benefit: $1,246 per month (at age 67) –Your reduction in benefit if taken at age 62: 33%, or $407 per month Source: Social Security Administration, 2014

Reinventing Retirement »Staying informed — »Taking responsibility for your own financial security »Planning for retirement now—no matter what your age

It's About Time “There is a lot going on in my life right now. I like to travel and I want to buy a house. I figure I've got plenty of time before I need to get serious about saving for retirement.”

Consumer Clue The Rule of 72 Expected rate of return6% Divide into 7272/6 Equals number of years for your money to double 12 The rule of 72 is a mathematical rule used to approximate the number of years it takes a given investment to double in value. It is not a guarantee of future results.

Can You Afford to Wait? Value when you reach: If You Start At Age: Age 22$2,500 N/A Age 31$5,000$2,500 Age 40$10,000$5,000 Age 49$20,000$10,000 Age 58$40,000$20,000 Age 67 (full retirement age)$80,000$40,000 Cost of missing one doubling period:-$40,000 An Initial $2,500 Investment Has the Potential to Double Every Nine Years FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration is not intended as a projection or prediction of future investment results, nor is it intended as financial planning or investment advice. It assumes a 8% annual rate of return and reinvestment of earnings with no withdrawals. Rates of return may vary. The illustration does not reflect any associated charges, expenses or fees. The tax-deferred accumulation shown would be reduced if these fees had been deducted.

The Impact of Inflation Over Time The Impact of Inflation ItemTypical Cost in 2014Estimated Cost in 2034 New American home$322,800 1 $583,012 Gallon of gasoline$ $6.00 In-State Tuition per year (public four- year college or university) $8,893 3 $16,061 Pound of coffee$ $9.07 New vehicle$32,890 4 $59,403 1 Source: January Source: January Source: sector , Source: Over-Month-According-To-Kelley-Blue-Book, January 2014 FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration assumes a 3% rate of inflation for 20 years.

Asset Allocation »Invest for your risk tolerance and savings goals. »Know your time frame. »The investment strategies on the following slide are intended only to illustrate possible investment portfolio allocations that represent an investment strategy based on risk and return. »This is not intended as financial planning or investment advice.

Consumer Clue Understanding Risk vs. Return Potential Money Market Funds Large-Cap FundsCorporate Bond Funds 1 International Funds 3 Small-Cap Funds 2 Mid-Cap Funds 2 Intermediate U.S. Government Bond Funds 1 Lower Risk/ Lower Return Potential Higher Risk/ Higher Return Potential 1 A bond fund’s yield, share price and total return change daily and are based on changes in interest rates, market conditions, economic and political news, and the quality and maturity of its investments. In general, bond prices fall when interest rates rise and vice versa. 2 Equity securities of small and medium-sized companies may be more volatile than securities of larger, more established companies. 3 Foreign investments involve special risks, including currency fluctuations and political developments. Cash Equivalents / Bond Funds / Stock Funds An investment in a Money Market 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.

Common Investment Choices »Stocks –Higher Risk –Higher Growth Potential »Bonds 1 –Moderate Risk –Medium Growth Potential »Stable Assets/Cash –Lower Risk –Lower Growth Potential 1 A bond fund’s yield, share price and total return change daily and are based on changes in interest rates, market conditions, economic and political news, and the quality and maturity of its investments. In general, bond prices fall when interest rates rise and vice versa.

Consumer Clue Mutual Funds »Variety »Pool your money »Professionally managed

FOR ILLUSTRATIVE PURPOSES ONLY. Source: Index return information from Morningstar Direct SM ©2014 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Direct SM is a trade mark of Morningstar, Inc Invest for the Long Term Growth of $1,000: April 1987 to December 2013 $24,232 $11,928 $10,277 $5,652 $2,655 $2,560 $2,041 Index*Measures S&P 500 ® Index Large-Cap Stocks S&P MidCap 400 ® Index Mid-Cap Stocks 1 Russell 2000 ® IndexSmall-Cap Stocks 1 MSCI EAFE ® IndexInternational Stocks 2 Barclays Capital Bonds 3 Aggregate Bond Index 91-Day Treasury BillsCash Equivalents Consumer Price IndexInflation *A benchmark index is not actively managed, does not have a defined investment objective, and does not incur fees or expenses. Therefore, performance of a fund will generally be less than its benchmark index. You cannot invest directly in a benchmark index. 1 Equity securities of medium-sized companies may be more volatile than securities of larger, more established companies. Equity securities of small-sized companies may be more volatile than securities of larger, more established companies. 2 Foreign investments involve special risks, including currency fluctuations and political developments. 3 A bond fund's yield, share price and total return change daily and are based on changes in interest rates, market conditions, economic and political news, and the quality and maturity of its investments. In general, bond prices fall when interest rates rise and vice versa.

Index Definitions Consumer Price Index (CPI) The CPI is an index that measures the price changes in consumer goods and services, such as gasoline, food and automobiles. 91-Day Treasury Bills U.S. Treasury securities are guaranteed as to the timely payment of principal and interest if held to maturity. Investment options are neither issued nor guaranteed by the U.S. Government. Barclays Capital Aggregate Bond Index The Barclays Capital Aggregate Bond Index is an unmanaged index representative of the broad bond market and is composed of government and corporate bonds, mortgage-backed bonds and asset-backed bonds. S&P 500 ® Index The S&P 500 Index is an unmanaged index considered indicative of the domestic Large-Cap equity market. S&P 500 ® Index is a registered trademark of Standard & Poor’s Financial Services LLC. S&P MidCap 400 ® Index The S&P MidCap 400 Index is an unmanaged index considered indicative of the domestic Mid- Cap equity market. S&P MidCap 400 Index is a registered trademark of Standard & Poor’s Financial Services LLC. Russell 2000 ® Index The Russell 2000 Index is an unmanaged index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index consists of 3,000 stocks, primarily issued by U.S. companies, that includes issues of all sizes, from large to small capitalization companies. Russell 2000 ® is a registered trademark of Russell Investments. MSCI EAFE ® Index The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE ® Index is a registered trademark of MSCI Inc. 33

Seek Balance Seek Balance Through Diversification 1 »Help manage risk »Diversification within a mutual fund »A real life saver 1 Diversification does not ensure a profit and does not protect against loss in declining markets.

Identify Risk Tolerance 35 1.I am a knowledgeable investor who understands the trade-off between risk and return. I am willing to accept a greater degree of risk for potentially higher returns. Strongly Disagree Strongly Agree 2.I am willing to invest on a long-term basis. Strongly Disagree Strongly Agree 3.If one of my investments dropped 20% in value over six months due to stock market fluctuations, I would hold on to that investment, expecting it to recover its value. Strongly Disagree Strongly Agree 4.I have savings vehicles other than this Plan that make me feel secure about my financial future. Strongly Disagree Strongly Agree

Identify Risk Tolerance Investor Types 36 Balance between lower and higher risk investments; may be comfortable with some volatility May be comfortable with higher risk for potentially higher returns CONSERVATIVE 4-8 points MODERATE 9-14 points AGGRESSIVE points May be comfortable with lower risk for potentially lower returns

Combining Risk Tolerance and Time Horizon 37 Years Until Retirement Your Score Moderate (9-14) Aggressive (15-20) 30 or More11 to 2910 or Less Conservative (4-8) Moderate Moderately Conservative Conservative Moderately Aggressive Moderate Moderately Conservative Moderate Aggressive Moderately Aggressive

Establish Asset Allocation 38 Stock FundsBond FundsCash Equivalents FOR ILLUSTRATIVE PURPOSES ONLY. Intended to illustrate possible investment portfolio allocations that represent an investment strategy based on risk and return. This is not intended as financial planning or investment advice. Asset allocation does not ensure a profit and does not protect against loss in declining markets.

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