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Saving is Essential

Saving is Essential. Nest egg requires many years to build. You may need at least 70%–80% of your current salary to retire comfortably. 2 If you don’t save, you may have to work during retirement. Retirement could last over 20 years.

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Saving is Essential

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  1. Saving is Essential • Nest egg requires many years to build. • You may need at least 70%–80% of your current salary to retire comfortably.2 • If you don’t save, you may have to work during retirement. • Retirement could last over 20 years. 2 Social Security Administration news release, “The Social Security Administration and the American Savings Education Council Announce National ‘Save for Your Future’ Campaign,” May 17, 2002, http://www.ssa.gov/pressoffice/retiremint.htm; Center for Retirement Research at Boston College, “Myths and Realities about Retirement Preparedness,” May 2006, http://www.bc.edu/centers/crr.

  2. How Much Should You Save? • It can be overwhelming and frustrating. • Here’s a simple “rule of thumb”: • In your 20s, save 7% of your salary. • In your 30s, save 10% of your salary. • In your 40s, save 15% of your salary. • In your 50s, save 20% of your salary. • The important thing is to start saving as much as you can right now!

  3. Paycheck Comparison* Before After Raise Raise Gross Pay $2,000 $2,000 Raise 80 Total Pay $2,000 $2,080 Minus Estimated Tax Withheld - 380 - 395 Total Take-Home Pay $1,620 $1,685 Difference in Take-Home Pay $65 * For illustrative purposes only. Assumes federal income tax withholding of 15% and state and local income tax withholding totaling 4%, and does not account for Social Security or Medicare taxes.

  4. Paycheck Comparison* Before After Raise Raise Gross Pay $2,000 $2,080 Minus Contributions - 50 - 100 to Plan (Before Tax) Taxable Pay $1,950 $1,980 Minus Estimated Tax Withheld - 371 - 376 Spendable Pay $1,579 $1,604 It’s a win-win: You’re getting $25 more pay per month, and you’re contributing $50 more a month for retirement, which you haven’t seen yet! * For illustrative purposes only. Assumes federal income tax withholding of 15% and state and local income tax withholding totaling 4%, and does not account for Social Security or Medicare taxes.

  5. $50 monthly $100 monthly $150 monthly Growth Over Time* $225,044 $150,030 $88,942 $75,015 $59,295 $29,647 $27,625 $18,417 $9,208 Savings after 10 years Savings after 20 years Savings after 30 years * For illustrative purposes only. This hypothetical example does not represent the performance of any investment options. It assumes an 8% rate of return and reinvestment of earnings with no withdrawals. The illustration does not reflect any charges, expenses or fees that may be associated with your Plan. The tax-deferred accumulations shown above would be reduced if these fees had been deducted.

  6. Budgeting Ideas 5 Monthly costs are based on general averages. 6 This illustration is hypothetical and assumes an investment in a tax-deferred retirement account in which you earn an average annual rate of return of 8%, compounded monthly. This hypothetical example is not based on (or predicting the performance of) any specific investment plan or savings strategy.

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