1. Social Security Administration, Official Social Security Website. (2014, April 2). Social Security Basic Facts. Retrieved from http://www.ssa.gov/news/press/basicfact.html 2. Social Security Online. (n.d.) Frequently Asked Questions: Ratio of Covered Workers to Beneficiaries. Retrieved from http://www.ssa.gov/history/ratios.html 3. Gallup. (2009, April 20). Americans Increasingly Concerned About Retirement Income: Expected Reliance on 401(k) Plans Shows Major Drop from Last Year. Retrieved from http://

www.gallup.com/poll/117703/Americans-Increasingly-Concerned-Retirement-Income.aspx 4. Charles Schwab Corporation. (2013, August 15). Workers Bank on 401(k) for Retirement but Need Help Making the Most of It, Says New Schwab Survey. Retrieved from http://

pressroom.aboutschwab.com/press-release/schwab-corporate-retirement-services-news/workers-bank-401k-retirement-need-help-makin 5. Bergen, W. J. Determining Withdrawal Rates Using Historical Data. Journal of Financial Planning. 1999: 171-180. 6. The Week. (2012, April 20). How 401(k)s Are Failing Millions of Americans. Retrieved from http://theweek.com/article/index/226886/how-401ks-are-failing-millions-of-americans

Boomer

Beach

Gen X, INC.Millenial

Startup

Retirement Savings by AgeHow Does Your 401k

Balance Stack Up?The 401k is one of Americans’

main investment tools and it’s how we build the majority of our wealth.

How much do I need to save?

Is it possibleto save enough?

How does my portfolio compare?

Millenial

Startup

Boomer

Beach

Gen X, INC.

$544

401k plans allow employees to put aside a portion of their income for retirement. This money, often supplemented with matching funds from employers, grows tax-deferred until it is withdrawn at retirement age of at least 59 ½.

The forecast is gloomy for Social SecurityCurrently, Social Security benefits represent only 38% of retirees’ income.1 The percentage of retirees is increasing compared to the number of contributing workers, and many believe the future of Social Security’s future is grim.

The 4% Rule You will need enough savings to be able withdraw 4% each year, accounting for annual inflation, and have it last about 30 years.5

Why inflation matters Because you will need your portfolio to last for decades, you must factor in inflation. It only takes a few years for inflation to take a significant bite out of your purchasing power.

Nuts and bolts • 401k plans are now the principal way to save for retirement.• Employees can take savings with them when they change jobs.• Participants can decide how and how much to invest in their retirement.• 401k plans have mostly filled the void left by disappearing traditional pensions.

1950 2010

In 1950, there were 16.5 workers contributing to Social Security per beneficiary.2

In 2010, there were only 2.9 workers per beneficiary.2

But 401k plans can be confusingIn 2013, Schwab Retirement Plan Services commissioned a nationwide survey of more than a thousand 401k plan participants.4

felt a lot of stress about correctly allocating 401k

dollars.

34%

did not know the best

investment options.

46%

wanted an easier way to figure out how to

choose the right 401k investments.

57%

found explana-tions of 401k investments confusing.

52%

And we’re worriedHaving enough money for retirement is the #1 financial concern for Americans: over half doubt that they will have enough money to live comfortably once they retire.3

401k basics

Retirement Rules of Thumb

401K savings add up

What’s the reality?

It’s Time to Take Action

401K PLANS ARE essential

Assumptions: 1. A relatively conservative portfolio; 2. An income stream that can potentially be sustained for 30 years.

Assumptions: 1. Start full-time employment at age 22; 2. Work at companies with 401k plans; 3. Rollover any previous 401k balances when changing jobs; 4. Contribute the maximum contribution of $17,500 per year; 5. No company match; 6. 5-10% growth compounded over 43 years.

Portfolio Balance at Start of Retirement

Age

Based on The 4% Rule, what size portfolio will you need for your budget?

401k balance over time with maximum annual contribution

Expe

cted

Bud

get i

n Fi

rst Y

ear o

f Reti

rem

ent

Portf

olio

Bal

ance

$3.5M

$3M

$2.5M

$2M

$1.5M

$1M

$0.5M

$150K

$140K

$90K

$130K

$80K

$120K

$70K

$110K

$60K

$100K

$50K

$0.5M

25

$1M$0.0M

30

$1.5M

35

$2M $2.5M

40

$3M

45

$3.5M

50 55 60 65

Diminished purchasing power of $1,000 over timeAssuming 3% annual inflation

$1,000$744

10 years

20 years

Save early and oftenThe amount you need to save may seem daunting. But if you start early and save diligently, you will be surprised at what you can accomplish.

To see how your savings stack up and to take control of your money, get the free app from Personal Capital.

Average 401k balances by age group

If you aren’t making maximum contributions, you’re not aloneUnfortunately, the reality is that average balances are far from ideal.6

CoreLiving Expenses

Work/ SavingExpenses

Pre-Retirement Income Post-Retirement Budget

CoreLiving

Expenses

You won’t spend as much in retirementBudget between 70% - 80% of your pre-retirement income per year to maintain your current standard of living.

52%

43 $3.5M$17.5K

$78K $25K $0

=YEARS MAX ANNUAL

CONTRIBUTIONPORTFOLIO

+

People within 10 years of retirement have

saved an average of only

More than one-third of them

have less than

More than half of all employees have no retirement plan.

$129,00050-67

year olds

$63,50035-49 year olds

$16,50022-34

year olds

How does the overall average 401k balance compare to what you need?$3,500,000 is the portfolio size needed to maintain an annual budget of $140,000 per year using The 4% Rule. However the overall average 401k balance is only $101,650.

$101,650

$140KANNUALBUDGET

= $3.5MPORTFOLIO

$3,50o,o00

TAKE ME TO PERSONAL CAPITAL