Basic Financial Education

2 Startling Financial Literacy Facts Americans are spending $ for every $ they bring home. ( Today’s 30-yr-olds could be the most indebted generation in modern history. (Business Week, Nov. 14, 2005) It costs the average American family over $200,000 to raise a child to 18. (US Department of Agriculture) Almost two-thirds of students have to borrow money to get through school; as many as one-fourth may be accumulating credit-card debt to help pay for tuition. (Business Week, Nov. 14, 2005) People are living longer.

3 Startling Financial Literacy Facts The average American household with at least one credit card carried a balance of $7,942 in ( 55% of American workers have no idea how much they will need to save to make their retirement dreams a reality. ( More than one-third (36.1%) of Americans report that they don’t use a budget to manage their family’s expenses. ( We need to educate ourselves about saving & spending wisely!!

% Most Americans Are NOT Saving Enough for Retirement Changes in the national savings rate © 2009 Morningstar, Inc. - All rights reserved. 3/1/2009

HistoricalEstimated Social Security is Under Strain From Fewer Workers Per Retiree: Ratio of workers to beneficiary © 2009 Morningstar, Inc. All rights reserved. 3/1/2009

6 Key Questions Planning for the Next Chapter How long do you expect to live in retirement? What income sources will make up your retirement “paycheck”? How might inflation and investment strategies affect the amount that you need to accumulate for retirement? Advice from current retirees: “Develop a retirement plan ASAP!”* *Source: Mathew Greenwald & Associates, October 2004.

7 Retirement: An Old Concept with a New Flair Longer Life, Higher Costs Retirement may last 20, 30, or more years Can you live that long without a regular paycheck? Some costs decline, but others (like health care) typically rise

8 Create Your Own “Paycheck” Where Do Current Retirees Get Their Income? Social Security39% Earnings25% Qualified Retirement Plans (including 401(k)s and IRAs)19% Other Assets14% Other3% Source: Social Security Administration, September 2008.

9 The Impact of Inflation Beating Inflation is Critical to Long-Term Success Inflation has been called the silent enemy of the retirement planner. Even low rates of inflation can sneak up on you. At just 4% inflation a year, the value of a dollar would be cut in half in less than 20 years!

10 How Should You Choose Investments? Determining Your Mix Through Asset Allocation Contributing factors:  Your time horizon  Your accumulation goal  Your risk tolerance

11 Ongoing Maintenance Make Periodic Adjustments to Stay on Track Allocations can shift due to market performance For example, stock market surges can increase stock allocation; declines can lower allocation Consider revisiting the Investor Questionnaire as you experience new life events

12 Your Next Move Now What? FOR ELECTIVE DEFERRAL PLANS ONLY: Determine your contribution amount Fill out the required forms

13 Financial Planning Tips to Think About... Establish a household budget and prioritize Avoid high interest and fee loaded credit cards – consider other alternatives Health insurance Disability insurance Life insurance – term vs. other options Create wills, living power of attorneys: medical & financial

14 Can You Stay the Course Long Term?

15 What the Real Risk Isn’t People have a hard time making the critical distinction between volatility and loss Look carefully at the following number $6,200,000,000 Volatility isn’t risk, and temporary decline isn’t a loss. No panic, no sell. No sell, no lose. Warren Buffet once said that being an investor is like being in business with a manic-depressive as a partner. There are times when he’s euphoric and wants to buy you out at any cost and times when he is depressed and frantic to sell. You should buy when he’s depressed.

16 Congratulations! You’re on Your Way to a Comfortable Retirement!

Thanks for listening. Any questions…..

18 Important Disclosures Regarding Simulated Strategies Our investment strategy is based on the principles of Modern Portfolio Theory (MPT) The tenets of MPT provide for a passive long-term buy-and-hold strategy implemented through globally diversified portfolios. Mutual funds representing asset classes where academic research has demonstrated higher expected returns for the level of risk taken are combined in a single portfolio. Portfolios are constructed in a manner to provide diversification for the purpose of reducing the risk caused by volatility. Portfolios are rebalanced to maintain agreed upon asset allocations. Historical performance information is provided to demonstrate the methodology used in building portfolios using the aforementioned investment strategy. This information should not be considered as a demonstration of actual performance results, and should not be interpreted as such. The results are based on back-tested data and not actual accounts. The back-tested data used in creating the simulated strategies includes simulated data where live funds were not in existence to provide actual returns. The simulated data was developed in the belief that it represents the historic performance of the live funds. Live funds will differ from simulated strategies. Simulated data does not reflect deductions of fund expenses that an investor would pay and does not represent results of actual trading. Live funds may exclude securities with characteristics not otherwise excluded in certain databases used in some simulated strategies. Sources and Descriptions of Data (following these disclosures) is an integral part of and should be read in conjunction with this explanation. Back-tested data does not represent the impact that material economic and market factors might have on an investment advisor’s decision-making process if the advisor were actually advising an investor. The back-testing of performance differs from actual account performance because an investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. The back-tested results assume ordinary and capital gains and dividends are reinvested, regular rebalancing and no income taxes. Information about advisor fees and expenses is available upon request.