Increasing contributions in your retirement plan account

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1 Retirement Plans Participant education program Increasing contributions in your retirement plan account

2 Importance of retirement plans. Benefits of retirement plans. Taking advantage. 2

3 Whether or not you ve enrolled in your company s retirement plan, we want you to have access to education that can help you prepare for retirement. Use this brochure to learn about the benefits of having a retirement plan and how increasing your contributions can help you reach your retirement goals. 3

4 Americans aren t saving enough for retirement Don t be a statistic What s it going to take? Social Security isn t enough Many Americans don t have a retirement savings plan, even though almost 70% of them have access to a 401(k) plan. 25% of Americans have no savings 1 36% of Americans aren t currently saving 2 Only 5% contribute the maximum 3 The type of lifestyle you want to live in retirement will determine the amount of pre-retirement income that you will need. It s likely that Social Security will not fully support you in retirement. Social Security benefits typically cover at most 40% of pre-retirement income 5 Social Security can only pay full benefits to retirees until From 2033 through 2086, Social Security can cover 75% of benefits promised 6 78% Amount of pre-retirement income needed to maintain current lifestyle in retirement. 4 $ amount needed to maintain 4

5 Retirement plans have their tax benefits Enjoy tax-deferred investing See the power of tax-deferred investing Contributing to plan lowers taxable income Taxes are paid at withdrawal, not when contributing Money has more potential to grow Potential to be in lower tax bracket at retirement This chart illustrates the potential difference in growth between a tax-deferred and taxable account. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions. $200k $150k $100k $50k $0k Taxable Investment $158,981 Tax-deferred Investment $115,555 $57,581 $46,960 $15,822 $14, years 20 years 30 years The power of tax-deferred compounding Totals shown reflect a $100 monthly investment, an 8% annual return, a 4% annual wage inflation and a 25% marginal federal income tax bracket. From the taxable investments, taxes are taken each month from deposits and annually upon gains. Taxes are taken on the tax-deferred investment s end balance. This is a hypothetical compounding example and is not intended to predict or project investment results of any specific investment. Investment return is not guaranteed and will vary depending upon your investments and market experience. If costs were reflected, the return would be less. 5

6 Compounding interest and employer matching Compounding interest benefits you Employer matching makes it easier In this example, Investor #1 invests $2,000 per year beginning at age 30 and then stops investing after 10 years ($20,000 total contribution). Although she s no longer contributing to the account, she leaves her money in the account to grow for an additional 25 years. Investor #2 doesn t start investing until age 40. He contributes $2,000 per year for a total of 25 years up until the day he retires ($50,000 total contribution). Although Investor #1 invested $30,000 less than Investor #2, she ended up with a much higher account balance at retirement. That s because she gave her money 10 more years to grow. But, it s never too late to start. Investor #2 still has more than he would have if he didn t start at all. Some employers will set up matching programs, which essentially means they are giving you money towards your retirement. Do yourself a favor and contribute the maximum matching amount. Common program is 50% match of first 6% of your contribution 86% of companies offer a matching program 7 Only a third of employees take advantage of full company match 8 Investor #1 s Account 10 year investment/ compounding period Additional compound on top of investment $160,474 AT RETIREMENT Investor #2 s Account 25 year investment/compounding period $135,353 AT RETIREMENT AGE 65 This illustration is a hypothetical compounding calculation assuming a 7% annual rate of return. It is not intended to serve as a projection or prediction of the investment results of any specific investment. Investments are not guaranteed. Depending on your underlying investments, your return may be higher or lower. Interest compounded annually based on beginning-year contributions. No taxes or fees are reflected in this example, which would lower the results displayed. Source: Nationwide Financial (2008). 6

7 Other tips to help you save more Small increases go a long way Pay attention to the stages in life where you have extra income and consider increasing your contributions: Annual pay increases Bonus payments Debt payoff See what your investments could amount to in the years to come taking these assumptions into consideration. Looking at a $50,000 salary, you could have almost $40,000 more at retirement if you increased your contribution by 1%. Annual contribution rates Salary 9% 10% $25,000 $220,178 $244,642 $50,000 $440,356 $489,284 $75,000 $660,534 $733,926 Assumes biweekly deferrals accumulated at 7% for 30 years. For more information or to access your account nationwide.com/myretirement 7

8 To learn more about how you can be better prepared for retirement, call us or log on today nationwide.com/myretirement Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value This material is not a recommendation to buy, sell, hold or rollover any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation Your Retirement Lifestyle 5 Social Security Planner: Learn About Social Security Programs, Social Security Administration (April 2013) Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved. For more information about the available underlying investment options, including all charges and expenses, please consult a fund prospectus by calling or visiting nationwide.com. Fund prospectuses and additional information relating to your retirement plan can be obtained by contacting your Retirement Plan Representative. Before investing, carefully consider the fund s investment objectives, risks, charges and expenses. The fund prospectus contains this and other important information. Read the prospectus carefully before investing. The Nationwide Group Retirement Series includes unregistered group fixed and variable annuities and trust programs. The unregistered group fixed and variable annuities are issued by Nationwide Life Insurance Company. Trust programs and trust services are offered by Nationwide Trust Company, FSB, a division of Nationwide Bank. Nationwide Investment Services Corporation, member FINRA. Nationwide Mutual Insurance Company and Affiliated Companies, Home Office: Columbus, OH Nationwide, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company Nationwide PNM-2789AO.3 (08/16)