Picture It NowYour Financial Future

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ONE OF THE MOST POPULAR employee benefits these days is aretirement savings plan — and for good reason. Your retirementsavings plan offers tax benefits and an easy method of settingaside money for the future.

Together with the income you may receive from Social Security,other pension plans, and other savings and assets, your retirementsavings plan can become a valuable tool for retirement planning.

Picture It Now was developed by the financial and educationalexperts at Standard & Poor’s Financial Communications to help you make the most of your retirement planning strategies. Although neither your employer nor Standard & Poor’s FinancialCommunications can guarantee that this guide will enhance the performance of your retirement savings plan account, the information you’ll find here is based on widely accepted conceptsthat are supported by historical fact. It should provide the “blueprint” you need to make informed retirement planning decisions. And informed decision making is the most important factor in helping to transform your vision for retirement into reality.

About Picture It Now

1 | Retirement: An Old

Concept With a New Flair

2 | Your Retirement Savings

Plan Provides the Power

to Prepare

3 | The Power of Tax Deferral

4 | Put Time on Your Side

5 | Understanding Investments

6 | Finding the Right Mix: How

Do You Feel About Risk?

7 | Building Your Investment

Portfolio

8 | Next Steps

Picture It Now

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Retirement isn’t what it used to be. In the past, retirement was more about entering the final stage of life thanabout planning for its next chapter. In the 21st century, retirement can mean a new career or business, part-timework, volunteerism, education, or travel.

Longer Life, Higher Costs Thanks to medical advances, better nutrition, and increased awareness of health-related issues, people are living longer than ever. That means retirement is lasting longer than ever — but itis also more expensive. Costs don’t decline across the board when you retire. They change. Clothing and commutingcosts may go down, but your medical costs will probably rise. For example, you may decide to supplement Medicarewith additional health insurance, which is costly for retirees. And don’t forget about inflation, which can significantlyinfluence a retiree’s cash flow through the years.

Prepare Yourself Be realistic about your plans forretirement. Are you financially on track? In 2009, theaverage benefit retired workers received from SocialSecurity was $1,161 a month.1 The bottom line is that it’sup to you to accumulate enough money to help ensure anadequate retirement income.

Planning Pointers More than ever before, gettingready for the retirement of tomorrow depends on carefulplanning today. This guide is designed to help you put aplan into action. It will help you develop and refine along-term strategy using one of the best tools available —your retirement savings plan.

1Source: Social Security Administration, “Monthly StatisticalSnapshot,” October 2009.

Retirement: An Old Concept With a New Flair

Where Do Retirees Get Their Income? 2

Other 3%

Social Security 36%

Earnings

Qualified Retirement Plans (including 401(k)s and IRAs)

Other Assets

29%

17%

16%

2Source: Fast Facts & Figures AboutSocial Security, 2009. Based onaggregate data for retiree income,2007. Due to rounding, total mayequal more or less than 100%.

Assets Any owned

properties or rights that

have value. These include

cash, investments, art,

jewelry, real estate, and

other items considered to

have cash value.

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How Much Can You Expect From Social Security?

Each year, the Social Security Administration (SSA) mails statements to allworkers age 25 and over that will help them estimate their future potentialretirement benefits. When you receive yours (usually three months beforeyour birthday), check to make sure your information, including your earningsrecord, is correct. The information is based on data received by the SSA from your current and previous employers. If you find an error, call the SSA at 1-800-772-1213. You can also estimate your potential benefit online at www.ssa.gov/planners.

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You’ll Probably Keep More Than You Think … Your contribution will reduce your take-home pay,but because they are made with pretax dollars, they reduce your take-home pay by less than you might think.

Say you are in the 28% federal income tax bracket. For every $100 you contribute to your plan, your taxes are reduced by $28. So each $100 contribution will only “feel” like $72 in terms of what you miss from yourtake-home pay.3

… While Postponing Tax Payments to Uncle Sam Your retirement savings plan also allows you toshelter your nest-egg earnings from taxes until you retire. That means that you don’t have to pay taxes on your contributions and earnings until you withdraw the money.4

This process — postponing taxes on your plan contributions and earnings — is known as tax deferral. You’ll haveto pay taxes eventually, but if you wait until retirement to withdraw the money, you may come out ahead — especially if you are in a lower tax bracket.

3These examples are hypothetical. Calculations have been simplified for illustrative purposes. They are based on a 28% federalincome tax rate, but do not take into account state taxes or other withholdings that may affect your tax situation.

4Withdrawals will be taxed at then-current rates. Early withdrawals prior to age 591/2 may be subject to a penalty tax.

2 | 3

Your Retirement Savings Plan Providesthe Power to Prepare

Monthly Monthly Taxable Taxes 3 Take-HomePay Contribution Pay Pay

$2,500 $0 $2,500 $700 $1,800$2,500 $100 $2,400 $672 $1,728

Contribution = $100 Out-of-Pocket Difference = $72

Dividends A portion of

profits that a corporation

may pay to its stockholders.

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Your retirement savings plan provides one of the most convenient ways to save money. Your contributions (that is, the money you put into the account) are deducted automatically from your paycheck — and what you don’t see, you won’t spend. For many people — particularlythose who have difficulty saving money — payroll deductions are a great way to build savings.

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If you think tax deferral sounds like a potentiallyvaluable benefit of your retirement savings plan,you’re right.

Consider the difference in growth between a tax-deferred retirement savings plan account and ataxable investment account. The chart shows that ifyou invested just $200 a month in a tax-deferredaccount earning 8% for 30 years, it would grow to $300,059. The same investment in a taxableaccount would total only $138,848. Both accountsassume a 28% federal tax rate. This example ishypothetical and cannot be guaranteed.5

Over time, tax deferral has the potential to make a significant difference in your ability to build aretirement nest egg that lasts. Why? Because moreof your money is going to your retirement investments,not to the IRS. In our example, $15,000 annual withdrawals are made from both accounts after year 30, but the tax-deferred account lasts longer.

Keep in mind, however, that the government generally doesn’t look favorably on people makingwithdrawals from their retirement savings accountsbefore retirement. To discourage the practice, a 10%penalty on early withdrawals may be imposed on“distributions” (withdrawals) taken before age 591/2,in addition to whatever local and federal incometaxes you may owe. Resist the urge to use yourretirement savings plan account for anything otherthan retirement. In addition to possibly incurring a tax penalty, you could be depriving yourself ofpotential future income.

5These examples assume an 8% annual rate of return beforeretirement, a 6% annual rate of return after retirement, and withdrawal amounts that provide the investor with $15,000 a year after taxes. Withdrawals from the tax-deferred accountare taxed at the 28% federal tax rate. Examples have beensimplified for illustrative purposes. Investment returns cannot be guaranteed.

$05 10 15 20 25 30 35 40 45 50 55

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000 $300,059

$138,848

Years

Tax-Deferred

Taxable

Tax Deferral Can Make a Lasting Difference5

The Power of Tax Deferral

The Benefits of Regular Contributions

When you contribute a predetermined amount of money to your retirement savings plan on a regular basis, you’re using a strategy called “dollar cost averaging” (DCA).6 DCA offers an important benefit.

How? DCA may allow you to take advantage of price swings in the market. That’s because your regularcontribution can buy more investment shares when prices go down, and fewer when prices go up. Forexample, if one share of an investment costs $5 one month, a $40 contribution buys eight shares. If theprice drops to $4, the same amount buys 10 shares. The advantage is that, over time, your average cost per share may be less than the investment’s average price per share.

6Regular investing does not guarantee a profit or protect against a loss in a declining market. Dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of the securities.

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Tips to Save More

Don’t think you can afford to participate? Think again. Focus on small steps. Here are some tips to find that extra cash to invest.

• Bring your lunch to work and you could save about $25 per week, or $1,300 per year. Brew your own morning coffee,and you could save $500 or more annually.

• When grocery shopping, use a list. Don’t shop hungry. Buy during sales, and use coupons for items you regularly purchase. This strategy can cut 25% or more off your grocery bills.

• If you usually get a substantial tax refund, consider decreasing your federal tax withholding and redirecting thatamount into your retirement savings plan.

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Return Profit on an

investment, usually

expressed as an annual

percentage rate.

Risk Possibility that an

investment will lose or

not gain value.

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WHEN YOU’RE SAVING FOR RETIREMENT, one of your most powerful allies is time. The sooner you startsaving, the better off you may be. Consider the cases of two hypothetical retirement plan participants, Caroland Andy. Both are age 35, plan to retire around age 65, and are eligible to enroll in their retirementsavings plan. But the two have different philosophies when it comes to saving for retirement.

Carol Starts Immediately Eager to start building her savings, Carol begins contributing $150 permonth. However, after 10 years, she has to stop contributing because of other financial obligations. Sheleaves the money in the account, hoping it will continue to grow on its own. She earns an average rate of return of 8% per year. At age 65, she will have a total of $128,758 in her account.7

Andy Waits Andy, on the other hand, chooses not to participate in the plan immediately because he figures he has plenty of time. At age 45, he begins contributing $150 per month and, unlike Carol, continues to do so until his retirement. He also earns an average return of 8% per year. Yet upon retiringat age 65, Andy will have a total of just $88,942 in his account.7

Surprising Results AlthoughCarol contributes half as much as Andy,she ends up with about $40,000 more.The reason is that Carol’s earnings continue to build upon themselves, aprocess known as compounding.Because her account has a 10-year head start, the compounding effectsnowballs, and she winds up with moremoney. Now consider what Carol andAndy would have accumulated if theyhad made contributions for the entire30-year period — $225,044.7

7These examples are hypothetical and for illustrative purposes only. Investment returns cannot be guaranteed.

Put Time On Your Side

$18,000 Contributed$110,758 Earned

Carol starts at 35, stops after 10 years

Results at age 65

$54,000 Contributed$171,044 Earned

Both start at 35, continue to 65

$36,000 Contributed$52,942 Earned

Andy starts at 45, continues to 65

An Early Start Can Be Your Best Move 7

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Despite their volatility, stocks have significantly outpaced bonds and cash historically,making them the investment of choice for long-term investors.

8For the period from January 1, 1980, through December 31, 2009. Stocks are representedby Standard & Poor's Composite Index of 500 Stocks, an unmanaged index that is generallyconsidered representative of the U.S. stock market. Bonds are represented by a compositeof returns on long-term government bonds, constructed from yields published by the FederalReserve, and the Barclays Long-Term Government Bond index. Cash is represented by acomposite of the yields of 3-month Treasury bills published by the Federal Reserve and theBarclays 3-Month Treasury Bills index. Inflation is represented by the monthly change in the Consumer Price Index. Note that prior to November 2008, the Barclays indices werecompiled by Lehman Brothers. Past performance is not a guarantee of future results.

Once you recognize the benefits of participating in your retirement savings plan, the next step is to begin building your investment strategy.Through your plan, you have a wide range of investment options to choose from.

The right mix of investments for you will depend on several factors, such as the number of years you have until you retire; yourlifestyle and financial situation; and your ability to withstand market swings (occasional changes in the value of your investments).In addition, you need to understand the types of investments offered, as well as the risk and reward potential associated witheach type.

About Asset Classes In general, the investment choices in your retirement savings plan can be categorized into one of three majorasset classes — stocks (or equities), bonds (or fixed-income securities), and cash (or money market or stable value securities).

Stocks represent a share of ownership in a company. When you buy a stock, you buy part ownership in that company. The value of astock rises and falls according to how attractive it is to buyers and is influenced by the general conditions of the stock market. Stocksare considered the riskiest of these three asset classes, but they also offer the highest potential rewards for that risk.

Bonds represent debt and are considered IOUs. Whenyou buy bonds, you are essentially lending money to acompany, city, or other government body. The seller ofthe bond promises to make regular interest paymentsfor a specific period of time and then repay the loan at a stated date in the future, known as the bond’s“maturity date.” Bonds’ risk/return potential can

Understanding Investments

StocksBonds

CashInflation

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2009

2008

$0

$5

$10

$15

$20

$25

$30

$35

Target the Investments That Are Right for You 8

vary depending on their type, but generally they areconsidered a moderate-risk investment and offer amoderate rate of return.

Cash investments are safe, short-term investmentssuch as money market securities and investment contracts. The value of your principal (the money youcontribute) will rarely fluctuate, although interest rates will rise and fall with market conditions. Cashinvestments are low-risk investments, but they alsooffer the lowest potential returns.

About Investment Funds When you investthrough your retirement savings plan, your money may be invested in mutual funds or pooled funds, as opposed to individual stocks, bonds, or cashinvestments. Mutual funds and pooled funds are managed by professional money managers, who“pool” the money of many different individuals anduse that combined buying power to purchase a varietyof different stocks, bonds, and/or cash investments.Each fund pursues a stated objective, which can befound in its prospectus. Your ownership in the fund isrepresented by the number of shares you own.

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How you divide — or allocate — the money in your retirement plan account among the three major asset classes willdepend on a number of factors. One of the most crucial factors is determining how you feel about risk.

The following questions can help you determine how much risk you are comfortable with and can help lead you to anasset allocation that may be right for you.9 (See results on next page.)

Finding the Right Mix: How Do YouFeel About Risk?

Market capitalization

The total value of a

company’s stock. To find

the market capitalization of

a company, multiply the

price of one share by the

total number of shares

outstanding. Definitions of

large-, mid-, and small-cap

companies can vary. See

below for examples.

Large-cap stocks Stocks

issued by companies with

market capitalizations of

more than $10 billion.

Midcap stocks Stocks

of companies with market

capitalizations between

$3 billion and $10 billion.

Small-cap stocks Stocks

of companies with market

capitalizations below

$3 billion.

1. How many years do you have until you expect to retire?

A. More than 30 years. . . . . . . . . . . . . . . . . . . 3 ptsB. Between 10 and 30 years. . . . . . . . . . . . . . 2 ptsC. Less than 10 years. . . . . . . . . . . . . . . . . . . . . 1 pt

2. Which saying best describes your feelings aboutinvesting?

A. I need to invest aggressively to be able to retire, so I would accept higher risk for potentially higher returns. . . . . . . . . . . . . . . 3 pts

B. I am willing to take a chance with some of my savings, providing it gives me the chanceto earn potentially higher returns. . . . . . . . . 2 pts

C. I am not comfortable risking what I’ve earned,even if it means potentially earning less. . . . 1 pt

3. Which statement best describes your knowledgeabout investing and investment products?

A. I know a good deal about investing, and amalways eager to learn more.. . . . . . . . . . . . . 3 pts

B. I know a little about investing, and am willing to learn a little more. . . . . . . . . . . . . 2 pts

C. I know very little about investing, and I am not interested in learning more. . . . . . . . . . 0 pts

4. If the markets decline and the value of yourstock portfolio drops by 30% over the course of several months, what would you do?

A. Allocate more money into your stock investments. . . . . . . . . . . . . . . . . . . . . . . . . . 3 pts

B. Maintain your current investment position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 pts

C. Move all of your money immediately into a more conservative option. . . . . . . . . . . . . . . 1 pt

5. If you were given a lump sum of $50,000 to investtoday and knew you wouldn’t need the money forat least 10 years, how would you invest it?

A. I would invest most or all of it in stocks or stock mutual funds to maximize its potential for growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 pts

B. I would invest some of the money in stock or stock mutual funds, but would keep at least half in something less risky, such as a bond or money market fund. . . . . . . . . . . . 2 pts

C. I’m taking no chances. I would invest it all in a low-risk government bond or money market fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 pt

TOTAL POINTS:

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Types of Risk

Market Risk = The likelihood that the value of a security will move in tandem with the market.Inflation Risk = The risk that the purchasing power of your investment will decline due to arise in the costs of goods and services.Investment Risk = The potential for an investment to decline in value or produce a lower-than-expected return.Interest Rate Risk = The potential for a bond’s price to fall when interest rates rise.

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The grid below will help you determine your comfort level with risk. If you scored between 5 and 7 points, you’re probably looking for a more conservative portfolio. If you scored between 8 and 11 points, you’re probablymore comfortable with a moderate portfolio that assumes some risk, but alsoincludes a healthy dose of principal preservation. If you scored 12 points ormore, you’re probably seeking a more aggressive portfolio.

7 points or less: Conservative 8-11 points: Moderate 12-15 points: Aggressive

Stocks are the most aggressive type of investment and have historicallyreturned the highest rate of return of the three major asset classes. However,stocks involve the greatest risk. Bonds provide lower risk, but also have lowerreturns historically than stocks. Money market instruments typically earneven less than stocks and bonds, but involve the least amount of risk.

Stocks (as represented by the S&P 500): 11.24% average rate of return overthe past 30 years10

Bonds (as represented by the Barclays Long-Term Government Bond Index):9.69% average rate of return over the past 30 years10

Cash (as represented by the Barclays Treasury Bill Index): 5.66% average rateof return over the past 30 years10

Building Your Investment Portfolio

9Asset allocation does not ensure a profit or protect against a loss. 10Performance for the 30-year period ended December 31, 2009. The performance of any index is not indicative of the performance of a particular investment and does not take into account the effects of inflation or the fees and expenses associated with purchasing mutualfund shares. It is not possible to invest directly into an index. Past performance does not guarantee future results.

Stocks: 40%Bonds: 40%Cash: 20%

Sample Asset Allocations

Stocks: 50%Bonds: 40%Cash: 10%

MODERATE(8-11 points)

Stocks: 80%Bonds: 20%Cash: 0%

AGGRESSIVE(12-15 points)

CONSERVATIVE (7 points or less)

S&P 500 Standard & Poor’s

Composite Index of 500 Stocks

measures the activity of 500

equities, most of which are listed

on the New York Stock Exchange,

the American Stock Exchange,

and the Nasdaq system. It

provides a broad indicator of

the movement of U.S. stock

price levels and changes.

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If you’re new to the plan:

Enroll and select your investments. Follow your plan’s instructions for enrolling and select a mix of investmentsthat closely matches your desired asset allocation.

If you’re a current participant:

1. Review your current situation. You should first know how the money in your account is currently allocated.Look at your existing fund balances and figure out what percentage of your total is invested in each asset class. (Yourretirement savings plan statement contains this information.) Compare that asset allocation with your desired allocation.

Does it match? If not, proceed to step two.

2. Reallocate your existing fund balances. To arrive at yournew allocation, you will have to rearrange your existing fund balances. Ifyour balance is relatively small or your current allocation is close to yourinvestment profile, this step may be fairly easy: Simply follow your plan’sinstructions for transferring money from one option to another.

3. Move large sums gradually to avoid a bumpy ride.If you need to shift a substantial sum of money, you might considermoving it in stages instead of transferring it all at once. By shifting yourmoney gradually, you may avoid exposing the entire amount to extremefluctuations that may occur in the financial markets.

4. Adjust the allocations for upcoming contributions, too.Changing the allocation of your existing fund balances does not necessarily mean that your future contributions will be allocatedaccordingly. Don’t forget to change future allocations to synchronizewith your overall investment strategy.

For all participants, both new and current:

Make periodic adjustments to stay on course. Minor shifts in the stock market are common — and majorchanges sometimes come quickly. These changes can throw your allocation off kilter. Suppose your plan calls for 65% of your savings to be invested in stocks, but the market surges and raises your stock allocation to 75%. One possiblesolution: Get back on track by rebalancing your account once a year to “correct” for the market’s behavior.

It’s also a good idea to reassess your personal investment profile each year by retaking the quiz. That way you’ll stay in the driver’s seat. Your long-term goals — and not the market’s short-term ups and downs — will determine yourinvestment course.

Next Steps

8 | 9

Fluctuations Changes

in an investment’s value

or price.

Share Represents a

portion of interest in

a company or a mutual

fund. Investors purchase

shares of stock or shares

of mutual funds.

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Self-Study 11

BooksThe Bond Book (Thau)Retirement Planning for the Utterly Confused (Petillo)The Intelligent Investor (Graham)Get a Financial Life: Personal Finance for Your Twenties andThirties (Kobliner)The Millionaire Next Door (Stanley and Danko)The Wealthy Barber (Chilton)The Wall Street Journal Guides (A series by various authors)

MagazinesBusinessWeekFortuneKiplinger’s Personal Finance Money

NewspapersBarron’sInvestor’s Business DailyUSA Today Money sectionThe Wall Street JournalYour local newspaper’s business section

Web Siteswww.money.cnn.com (CNN, Fortune, and Money)www.aaii.com (American Association of Individual Investors)www.better-investing.org (National Association of Investors Corporation)www.fool.com (The Motley Fool)www.irs.gov (Internal Revenue Service)www.mfea.com (Mutual Fund Investor’s Center)www.ssa.gov (Social Security Administration) www.thestreet.com (TheStreet.com)www.wsj.com (The Wall Street Journal )

11This is a suggested list and does notconstitute financial advice. Neither youremployer nor Standard & Poor’s canguarantee the accuracy of informationprovided by these resources or thatthese resources will enhance yourinvestment results.

... informed decision making is the most

important factor in transforming your vision

for retirement into reality.

Mutual fund A pool of

money professionally

managed for investors

who are the owners of

the fund. The amount of

each investor’s ownership

is represented by the

number of shares owned.

Mutual funds are

managed with the intent

of achieving specific

objectives, such as

growth of principal or

current income. The

fund manager selects

a diversified mix of

securities to pursue

that objective.

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Picture It Now is published by Standard & Poor’s Financial Communications, 111 Huntington Avenue, 6th floor, Boston, MA 02199. Copyright © 2010, The McGraw-Hill Companies. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Officers of The McGraw-Hill Companies,Inc.: Harold W. McGraw, III, Chairman, President, and Chief Executive Officer; Kenneth M. Vittor, Executive Vice President and General Counsel; Robert J.Bahash, Executive Vice President and Chief Financial Officer. The opinions and recommendations expressed herein are solely those of Standard & Poor’s andin no way represent the advice, opinions, or recommendations of the company distributing the publication to its employees or affiliates. Information has beenobtained by this publication from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, this publication, or any other, Standard & Poor’s does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for anyerrors or omissions or for the results obtained from the use of such information. This group operates independently of, and has no access to, informationobtained by Standard & Poor’s Ratings Group, which may, in its regular operations, obtain information of a confidential nature. Nothing contained herein shouldbe construed as a solicitation to buy or sell securities or other investments. The data in this edition were current as of the time of publication.

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