YOUR FINANCIAL FUTURE Your Guide to Life Planning

June 2017 In This Issue

Investing for Retirement: A Marathon, Not a Sprint

Investing for retirement is a lifelong endeavor that ideally starts in young adulthood and remains a healthy habit throughout your working years. Obstacles to Avoid on the Road to Investment Growth

Most long-term financial goals require you to maintain a long-term investment outlook. Don't let your goals be sidetracked by these potential obstacles. Talking Finances With Aging Parents This recent edition of our newsletter should answer a Talking about money matters with family is never easy -- especially when an adult child needs lot of questions for you. to ask aging parents some sensitive, but necessary, questions. Please don't hesitate to call if we can clarify anything. Getting to Know Indexes: An Apples to Apples Exercise

Jere El-Bakri, AIF Market indexes are valuable tools for individual investors. They can provide a window into the Retirement Plan Consultants risk/return history of investments, which helps in tracking the approximate performance of LPL Registered Principal particular investments. 510 South 200 West Salt Lake City, UT 84101 (801) 326-8001 Fax: (866) 716-6110 [email protected] www.rpcslc.com 2 Your Guide to Life Planning

Investing for Retirement: A Marathon, Not a Sprint

Let's face it: You can't fund a 20-year retirement in just five years. Investing for retirement takes time, and success requires that you start early and invest appropriately at each stage of your life.

The Early Bird

Successful investors often begin putting money into an investment account as soon as they start working. If Successful investors you began investing in your 20s, you may be well on your way to a comfortable retirement. By starting to save often begin putting at the beginning of your career, you have many years to reap the potential benefits of compounding -- the money into an continuing reinvestment of investment earnings. If you're eligible to contribute to a tax-qualified retirement investment account plan at work, you also have the potential advantage of tax-deferred growth of your account assets. And, if your as soon as they start employer matches employee contributions, you'll enjoy the added benefit of "free" money. working. If you began investing in When you're just starting out in the work force, you have an important advantage: time. Even though some of your 20s, you may be your savings may be earmarked for shorter-term goals, such as a down payment on a house or a child's well on your way to a education, your long time horizon for retirement means you may be able to take more risk with your comfortable investments. During these early years, you may want to allocate more of your portfolio to investments that 1 retirement. have the potential for growth over the long term, such as stocks and stock mutual funds. Time Is on Your Side

By the time you reach your 30s and 40s, you may have been saving for retirement for several years through your employer's retirement plan, your own individual retirement account, other investments, or a combination of the above. The middle years, when you're generally well-established in your career, are critical to the growth of your retirement assets. Consider contributing the maximum amount you can afford -- or at least as much as your employer will match -- to your account. Now may be the perfect time to increase your contributions.

Maximum growth of your assets should be your goal during the middle years. Since you probably still have quite a few years before you retire, you may want to continue to keep a portion of your portfolio invested in securities, such as stocks, with the potential for higher returns. Historically, over the long term, stocks have always recovered from any decline in value and generally offer the best inflation protection of any investment.2 However, only you can determine how much investment risk you're comfortable with.

The Home Stretch

By your 50s and 60s, you may have considerable assets in your retirement account. As you get nearer to retirement, you may be concerned with protecting your assets from loss. If you've allocated a sizeable portion of your portfolio to riskier investments such as stocks, you may want to preserve your gains by moving some of your money into potentially less volatile investment types. Your tolerance for risk will help you determine the percentage of your account to allocate to lower risk investments, such as bonds and money market funds.3

Stock market fluctuations are not the only risk to your retirement funds. Even modest inflation can significantly reduce your nest egg's buying power in the future. Your savings may have to fund a retirement that lasts for 15, 20, or 30 years. For this reason, during your remaining working years -- and after retirement -- you may want to keep at least a portion of your portfolio invested in stocks, which historically have outpaced inflation.

Your financial professional can help you design an appropriate investment strategy for each stage of your life.

1Investing in stocks involves risks, including loss of principal. Investing in mutual funds involves risk, including loss of principal. Mutual funds are offered and sold by prospectus only. You should carefully consider the investment objectives, risks, expenses and charges of the investment company before you invest. For more complete information about any mutual fund, including risks, charges and expenses, please contact your financial professional to obtain a prospectus. The prospectus contains this and other information. Read it carefully before you invest.

2Past performance is no guarantee of future performance.

3An investment in a money market fund is not insured nor guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund.

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Obstacles to Avoid on the Road to Investment Growth

You're in the driver's seat when it comes to choosing investments for your retirement savings. Make too many wrong turns, however, and you may not achieve your long-range financial goals. Here are some common roadblocks to avoid.

The Poor-Diversification Block

By investing in a You're free to choose from the range of investment options your plan offers, but concentrating too much of well-thought-out mix your retirement money in one investment type may not be wise. Some investments do much better than others of investments, you'll -- at times no one can predict. By investing in a well-thought-out mix of investments, you'll give yourself an give yourself an opportunity to take advantage of whichever asset type happens to be thriving at a particular time. opportunity to take Choosing a mix of different investments (diversification) is also a proven strategy for managing investment advantage of 1 whichever asset type risk. When one type of investment is down, another may be up or holding steady, adding stability to the happens to be overall value of your account. thriving at a When planning your investment mix, remember the differences in growth potential of the various asset classes. particular time. For instance, the historical returns of investments such as money market funds are often close to the rate of inflation and may be too low to deliver the long-term growth you need.2 On the other hand, if you have a heavy concentration of potentially high-earning stocks and the market performs poorly, you risk losing a lot of the value of your account, at least temporarily.3

The Quick-Escape Block

Expect the stock market to decline at times. It's inevitable -- only the timing is uncertain. When stock prices drop, don't automatically veer off course by moving your stock investments to bonds or another asset class that may be doing better at the time.4 Instead, it may be prudent to "stay the course" so that you'll be in a better position to benefit from potential future growth down the road.

The Spend-the-Future Block

If you change jobs, you'll have the option of cashing out your retirement account. You may be tempted to take the money and spend it, especially if the amount isn't very large. But, if you spend your retirement money, making up for it later may be very difficult.

The chart below shows just how costly spending a retirement nest egg can be. A much better strategy: Roll over your retirement money into an individual retirement account (IRA), into your new employer's tax-deferred retirement plan, if allowed, or leave it in your current plan, if allowed. You'll likely still be able to choose how your retirement money is invested. And you'll keep it working for you until you're certainly going to need it -- after you retire.

The "Cost" of Withdrawing $25,000

Retirement Account Amount Withdrawn at Age Balance at Age 65 Balance at Age 30 30 When Changing Jobs

Employee A $25,000 $0 $512,786

Employee B $25,000 $25,000 $225,132

Cost of Early $287,654 Withdrawal

Assumes: $125 monthly contributions and 7% average annual investment returns between ages 30 and age 65. Withdrawals are subject to income taxes at then-current rates and a possible 10% additional federal tax if withdrawn prior to age 59½. The chart does not reflect these costs. This is a hypothetical example. Your investment return and contributions will vary.

Source: DST Systems, Inc.

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1There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not assure against market risk.

2An 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.

3Investing in stocks involves risks, including loss of principal.

4Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.

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Talking Finances With Aging Parents

Regardless of whether you and your parents have always talked freely about money or have never discussed the subject, there are several considerations you may want to address with them as they grow older. These six questions may help you think about -- and plan for -- that conversation.

1. Have you thought about how you will approach the subject? When you do decide to touch base, A durable power of tactfully make clear what you'd like to discuss, but also let your parents know you respect their privacy. attorney is a legal 2. Are you confident that they are staying on top of things? Are bills getting paid on time? Are document that investments being monitored? Maybe you have already raised these topics with your parents, but it has designates an been a while since you've checked in. If you think they might appreciate a follow-up, then it may be a individual to make good idea to talk to them again. financial or legal decisions on behalf of 3. Are they taking advantage of banking conveniences, such as direct deposit and online bill payment, to another individual. simplify their financial life? If your parents aren't comfortable with the computer, offer to assist. This document can become very 4. Do your parents have an estate plan, and is it up to date? At a minimum, they should have a will. An effective will should do a few basic things. It should name an executor (or personal representative) -- important should an the individual who will administer your estate after death. It should also spell out how you want your aging senior become property distributed as specifically as possible. If you die without a will, your estate will be divided ill or incapacitated. according to the laws of your state -- not your wishes. Besides a will, there are other planning mechanisms that may be appropriate for their needs. Be sure they consult with a qualified legal professional to discuss the specifics of their situation.

5. Do you and your parents understand the potential benefits of a durable power of attorney document? A durable power of attorney is a legal document that designates an individual to make financial or legal decisions on behalf of another individual. This document can become very important should an aging senior become ill or incapacitated.

6. Should they consider a long-term care insurance policy? With the average cost of a private room in a nursing home now exceeding $92,300 per year depending on where you live, you can see how such expenses could put a tremendous financial strain on a family.1 That is why many people consider long-term care insurance to be a sensible addition to a financial plan. For the most part, nursing home and assisted-living costs have limited coverage under Medicare. And, for most people, qualifying for Medicaid requires individuals to first exhaust their own assets. For more information about long-term care insurance, speak with your financial advisor.

1Genworth 2016 Cost of Care Survey, April 2016.

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Getting to Know Indexes: An Apples to Apples Exercise

The S&P 500® closed out 2016 with a gain of 9.5%. An impressive showing and the fourth year out of the past five that the index was in positive territory come year end.1 If you are not familiar with the S&P 500, -- or the concept of market benchmarks -- it may be wise to take a minute to learn more about these versatile investing tools.

By offering a Indexes: A Primer framework for evaluating the Just as a car salesperson uses the "Kelley Blue Book" to gauge the approximate price for new and used vehicles, risk/return history of you can use market benchmarks, or indexes, to gauge the approximate performance of an investment. Individual indexes track a representative sampling of stocks, bonds, or other securities that may be similar to investments, indexes 2 can be especially the holdings in your investment portfolio. helpful to individual By offering a framework for evaluating the risk/return history of investments, indexes can be especially helpful investors. to individual investors. But when using indexes, be sure you are comparing apples to apples. In order to accurately do this, it helps to be familiar with a variety of indexes and the sectors and asset classes they track.

Many indexes, including those listed below, are reported regularly on major financial websites, in the business news, and in the financial section of local newspapers; national publications such as The Wall Street Journal and Investor's Business Daily; and, internationally, in the Financial Times.

Standard & Poor's Composite Index of 500 Stocks (S&P 500® Index): This index measures the performance of 500 large-cap stocks from a wide range of sectors, including financial, industrial, health care, and telecommunications. The S&P 500 is a market-cap-weighted index, so it gives more weight to stocks with the greatest market value. Dow Jones Industrial Average (DJIA®): Following the returns of 30 well-established, blue-chip U.S. companies, the Dow is among the most renowned of the stock market indexes. However, the S&P 500 can be considered a broader indicator of the stock market. National Association of Securities Dealers Automatic Quotation System (NASDAQ®) Composite Index: This is a market-weighted index of over 3,000 domestic and international stocks traded through the NASDAQ electronic exchange. MSCI EAFE Index: The Morgan Stanley Capital International's Europe, Australasia, Far East (EAFE) Index is a widely used benchmark that is designed to represent the performance of large and mid-cap securities of companies in Europe, Australia, Asia, and the Far East. Bloomberg Barclays U.S. Aggregate Bond Index: Known as Barclays Capital Aggregate Bond Index prior to August of 2016, this index is among the most widely used benchmarks representing investment-grade bonds being traded in the United States.

A Mirror to the Market

One way to put market indexes to work for you directly is to engage in index investing. Index investors purchase shares of investment vehicles such as index funds or exchange-traded funds that seek to replicate the performance of a particular index, such as the Dow Jones Industrial Average or the S&P 500. Because index funds are passively managed and simply mirror the risk characteristics of the underlying index, they can play an important role in an investor's portfolio, offering the market's returns and a known level of risk.

It is important to keep in mind, however, that index funds do not provide you with the opportunity to outperform the market. And if the market is in a down cycle, index fund managers are very limited in their ability to take defensive steps, leaving the index -- and your index fund investments -- vulnerable to market risk.

Don't Rely Solely on the "Blue Book"

Whether you are using market indexes as benchmarks to track the potential performance and risk of a given investment or you are engaged in index investing, be prudent in your choices and don't let the short-term performance of a particular index wield too much influence over your decisions.

Just as you shouldn't buy a car based solely on its blue book value, be sure to research any investment opportunity thoroughly, weighing your personal objectives and risk tolerance before investing. And use the index as just one more resource in your long-term investment toolkit.

1MarketWatch, "More proof as to why the average investor should probably just stick to indexing," January 11, 2017.

2Indexes are unmanaged. Investors cannot invest directly in any index. Past performance does not guarantee future returns. 8 Your Guide to Life Planning

1-591392 The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The financial consultants of Retirement Plan Consultants are registered representatives with and Securities are offered through LPL Financial. Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not Bank/Credit Union Not FDIC/NCUA Insured May Lose Value Guaranteed Not Insured by any Federal Government Agency Not a Bank Deposit

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