Retirement Planning and Income Protection

1 Retirement Planning and Income ProtectionBuilding and implementing your Retirement plan900 SALEM STREET SMITHFIELD, RHODE ISLAND 02917 2020 FMR LLC. All rights reserved. Designing your plan for retirement02 Retirement is different today03 Improper asset allocation04 The impact of inflation05 market volatility07 Rising health care costs08 Outliving your savingsSaving for retirement10 Begin saving for Retirement early11 Personal and workplace investments12 Income Protection and saving for retirementTransitioning to retirement14 Essential and discretionary expense coverage15 Diverse sources of income16 Guaranteed sources of incomeLiving in retirement18 Social Security benefits19 Required minimum distributions20 Income Protection and living in retirement22 Creating Retirement cash flowYour next steps23 Put your strategies to work Designing your plan for retirementWhat is your plan for Retirement ?

2 While this may seem like a straightforward question, the answers can be complicated. There are so many variables; some are known while others may be impossible to pin matter what stage you re in regarding your ideal Retirement whether it s saving for, transitioning into, or living in Retirement you ll need to have a working understanding of several key risks as well as how they may impact your potential outcomes. Your awareness of these variables will help you implement your Retirement and Income Protection Planning AND Income PROTECTION1 Key RisksIssues to consider no matter what stage of life you re in Developing a savings plan Building an asset allocation strategy Reviewing and rebalancing your portfolio regularlyTransitioning to retirementSaving for retirementLiving in Retirement Meeting essential expenses with guaranteed sources of Income * Balancing growth potential with guarantees, flexibility, and volatility Planning for discretionary expenses Relying on diverse sources of Income Developing a plan that includes growth, guarantees, and flexibility Planning for essential and discretionary expenses.

3 As well as unexpected expenses*Annuity guarantees are subject to the claims-paying ability of the issuing insurance Planning AND Income PROTECTION2 KEY RISKSR etirement is different today Building your Retirement roadmap involves many critical decisions. When should you start saving? How much should you save? How long will you work? How long will you live in Retirement ? What will you spend in Retirement ?Today s Retirement lifestyle is more active, more expensive, and will likely last longer. Your life has probably been nothing like your parents life, and your Retirement will presumably be different, too. People are living longer, which is why it s critical to consider the key risks you may face when you create your Retirement : Centers for Disease Control and Prevention National Center for Health Statistics, Census, Bureau of Labor Statistics, and Gallup, as of June Expectancy of a 65-Year-OldAverage Retirement AgePEOPLE ARE RETIRING EARLIER AND LIVING LONGER1930195019701990201077798182845962 646871 Average Retirement length in 2010: 25 yearsKEY RISKS3 KEY RISKSA sset mix performance figures are based on the weighted average of annual return figures for certain benchmarks for each asset class represented.

4 Historical returns and volatility of the stock , bond, and short-term asset classes are based on the historical performance data of various indexes from 1926 through the most recent year-end data available from Morningstar. Domestic stocks represented by IA SBBI US Large Stock TR USD 1/1926 1/1987, Dow Jones Total market 2/1987 most recent year-end; foreign stock represented by IA SBBI US Large Stock TR USD 1/1926 12/1969, MSCI EAFE 1970 11/2000, MSCI ACWI Ex USA 12/2000 most recent year-end; bonds represented by intermediate-term bonds 1/1926 12/1975, Barclays Aggregate Bond 1/1976 most recent year-end; short-term represented by 30-day Treasury bills 1926 most recent year-end. It is not possible to invest directly in an index. Although past performance does not guarantee future results, it may be useful in comparing alternative investment strategies over the long term.

5 Performance returns for actual investments will generally be reduced by fees and expenses not reflected in these investments hypothetical illustrations. Indexes are unmanaged. Generally, among asset classes, stocks are more volatile than bonds or short-term instruments and can decline significantly in response to adverse issuer, political, regulatory, market , or economic developments. Although the bond market is also volatile, lower-quality debt securities, including leveraged loans, generally offer higher yields compared with investment-grade securities, but also involve greater risk of default or price changes. Foreign markets can be more volatile than markets due to increased risks of adverse issuer, political, market , or economic developments, all of which are magnified in emerging 28%5%18%35%42% ALLOCATING YOUR PORTFOLIO, CONSIDER THE RETURN AND VOLATILITY TRADE-OFFSS hort-TermConservativeModerate with IncomeModerateBalancedGrowth with IncomeGrowthAggressive GrowthMost AggressiveAverage Annual Annual Annual Annual Return:7.

6 3 3 %Average Annual Return:7. 9 3 %Average Annual Annual Annual Annual TermAggressiveGrowthMostAggressiveBalanc edGrowth100%30%14%50%6%10%35%40%15%5%49% 25%21%70%30%60%15%25%50%20%21%9%45%12%15 % 28%5%18%35%42%100%Short Term30%Short Term14% Stocks50%Bonds6%Int l Stocks10%Short Term35% Stocks40%Bonds15%Int l Stocks5%Short Term49% Stocks25%Bonds21%Int l Stocks60% Stocks15%Bonds25%Int l Stocks70% Stocks30%Int l StocksLegend: n Short-Term n International stocks n Domestic stocks n BondsLegend: n Highest One-Year Returnn Lowest One-Year Returnn Highest Five-Year Return n Lowest Five-Year ReturnImproper asset allocationChoose a mix of stocks , bonds, and cash that is appropriate for your Retirement investing goals. Take into account your time horizon, financial situation, and tolerance for market shifts.

7 As this chart illustrates, allocation mixes with more stock exposure have the potential for both higher returns and larger losses. An overly conservative strategy can result in missing out on the long-term potential of stocks , while an overly aggressive strategy can mean taking on undue risk during volatile Planning AND Income PROTECTION4 The impact of inflationThe decreasing buying power of the dollar should be a real concern for all preretirees and retirees. Imagine how inflation might affect the buying power of your money over time and what that could mean for maintaining your lifestyle in Retirement . Even a relatively low inflation rate could have a significant impact on your buying : Here s What Thanksgiving Dinner Cost the Year You Were Born, USA Today (November 2018); Here s What These 25 Everyday Items Cost 30 Years Ago, The Motley Fool (August 2018).

8 For illustrative purposes only. With retirements spanning 30 years or more, you ll want to find a balance between growth and RISKSHYPOTHETICAL EXAMPLE: INCREASING COSTSKEY RISKS5 market volatilityNo matter your investing time frame, market volatility should be a concern. Yes, markets have historically performed well over the long term. However, a sudden market downturn when you re either nearing or early in Retirement can have an impact on how long your money will last. Because of the fear of market volatility, many investors approaching Retirement may feel more comfortable with an overly conservative investing approach. But this may mean missing out on potential growth past performance is no guarantee of future results, a well-rounded Retirement Income plan includes growth, guarantees, and flexibility. A Retirement Income plan may help you combat the effects of inflation and maintain your buying power, allowing you to have the Retirement lifestyle you ve : Fidelity Investments, December 31, performance is no guarantee of future S&P 500 Index is a market capitalization weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation.

9 S&P and S&P 500 are registered service marks of Standard & Poor s Financial Services RISKSHYPOTHETICAL EXAMPLE: THE IMPACT OF RETIRING INTO A VOLATILE MARKET12/31/20170 250 500 750 1,250 1,000 1,500 1,750 2,000 2,250 2,500 2,750 Dec-14 Dec-15 Dec-16 Dec-17 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 3/24/0010/9/023/9/0910/9/0749% decline101% increase57% decline295% increaseMarket volatility in the S&P 500 Index(December 31, 1996, to December 31, 2017) Retirement Planning AND Income PROTECTION6 KEY RISKSN egative returns earlier in your Retirement can have a greater impact on your portfolio than later in Retirement . This is because your portfolio s value may be reduced by both the market downturn as well as the withdrawals you take. This will result in a smaller portfolio left to benefit from any potential future growth opportunities.

10 For that reason, should your portfolio s value decrease, you might want to consider reducing the amount of Income you withdraw. Unfortunately, many retirees find it difficult to modify their spending when the market experiences a VOLATILITY: market RETURNS AREN T PREDICTABLEH ypothetical examplePORTFOLIO APORTFOLIO BYearReturnBalanceReturnBalance0$100,000 $100,0001 15%$80,750 22% $115,900 2 4%$72,720 8% $119,772 3 10%$60,948 30%$149,20448%$60,424 7%$154,298 512%$62,075 18%$176,171610%$62,782 9%$186,577 7 7%$53,73728%$232,41884%$50,68714%$259,25 79 12%$40,204 9%$231,3741013%$39,78116%$262,594117%$37 ,216 6%$242,13812 10%$28,99417%$277,4521319%$28,55319%$324 ,2171417%$27,557 10%$287,296 15 6%$21,204 7%$302,0561616%$18,79613%$335,67417 9%$12,555 12%$290,9931814%$8,6124%$297,4331928%$4, 624 7%$271,962209%$010%$293,6582118%$012%$32 3,297227%$08%$343,7612330%$0 10%$304,885248%$0 4%$287,8902522%$0 15%$240,456 Arithmetic Growth Rate6%6%Sequence of returns risk revolves around the timing or sequence of a series of adverse investment returns.