Focus on Financial Wellness Workbook

HANDBO
HA
B OK
O
YOUR
FINANCIAL
FITNESS
HANDBOOK
Set goals.
Take action.
principal.com/financialfitness
Stay motivated.
FINANCIAL FITNESS
GET FINANCIALLY FIT
Set goals.
Take action.
Stay motivated.
While many workers are not adequately prepared for retirement, you
don’t have to be one of them. Your employer offers a retirement plan to
help you save. Why not challenge yourself to make the most of it —
and take other steps toward financial fitness and security?
Whether you are just starting out, nearing retirement, or anywhere
in between, the Principal Financial Group® has tips and resources to
help you get and stay financially fit. It just takes a little planning and
determination on your part. In this handbook, you’ll find inspiration,
tips and tools to help you focus on your financial fitness and get your
retirement on track.
It’s time to focus on your financial fitness.
2
FINANCIAL FITNESS
Set goals.
Where do you want to be in five years? Ten
years? How do you want to spend your
retirement? What about buying a home or
saving for your children’s college education?
Answering these questions can help you plan
for your future and set your goals.
Take action.
As your goals begin to take shape, you’ll have a
better understanding of what you’ll need to do
to reach those goals. Here you’ll find practical,
motivating, how-to ideas on what you can do
today to improve your financial fitness.
Stay motivated.
To stay on track, you need a solid strategy. A
financial professional can act as your financial
fitness trainer, helping you put together a
financial action plan based on your specific
goals. If you’ve already developed a strategy
that’s working for you, it’s a good time to sit
down with a financial professional to review it
and, if needed, make adjustments.
Get started by evaluating your goals and creating an action plan!
3
SET GOALS.
FINANCIAL FITNESS
Identify your goals.
What does financial fitness look like?
To be physically fit, you set goals. You should take the same approach to financial fitness.
What do you want to achieve? Some suggestions are included to help you get started.
MY
Y F AM
AMIL
ILY:
Y: I WA
W NT T O …
Be deb
ebtt-fr
free
ee
Purc
Pu
r ha
rc
hase
se
e/ssel
e l a ho
h m
me
e
B pre
Be
repa
pa
are
red
d fo
forr un
unex
ex
xpe
ectted
d
exp
xpen
endi
ditu
di
tu
ure
ress
Purc
Pu
rccha
hase
se
e a sec
econ
ond
d ho
h me
e
P an for the birr th or ad
Pl
adop
op
pti
t on
n of a cch
hilild
d
Help
He
p sen
end
d my
m chi
hild
ld
d (r
(ren
en)) to col
o le
lege
ge
He
elp
p mak
ake
e lilife
fe
e eas
asie
i r fo
ie
forr an eld
der
e ly
famil
am
milyy me
m mb
m er
4
MY H OM
O E : I WA
A NT
N TO …
Save
Sa
ve for
or::
p oj
ojec
ects
ec
ts
Rem
e od
odel
e in
ing
g pr
Main
Ma
in
nte
ena
nanc
nce/
e/up
upke
up
k ep
ke
p
Payy of
Pa
offf mo
m rt
r ga
age
g
D wn
Do
wnsi
s ze aft
si
fter
e chi
er
hild
ldre
re
en le
l av
ave
e
SET GOALS.
MY C AR
AREE
EER
R : I WA
WANT
NT T O …
Take
Ta
ke
e adv
dvan
anta
t ge of my
ta
m emp
mplo
loye
lo
y r’
ye
r’ss re
reti
t re
ti
eme
m ntt pla
an
C ns
Co
nsol
olid
idat
id
a e re
at
r tiire
r me
ment
nt savvin
ings
gs fro
rom
m a fo
orm
mer emp
mplo
loye
y r
ye
Turn
Tu
rn
n my ho
hobb
b y in
bb
into
to inc
ncom
o e
om
Go bac
ackk to sch
c oo
ooll
Adva
Ad
va
anc
n e in
n my ca
are
reer
e
er
Work
Wo
rk par
artt ti
t me
m
M R ET
MY
ETIR
IREM
EM
M EN
E T: I WA
WANT
NT T O …
Re
eti
tire
r at ag
re
ge __
___
_ __
____
____
____
__
E jo
En
joyy my hob
o bi
bies
ess
E jo
En
joyy le
lear
a niing
ar
g opp
ppor
orr tu
uni
niti
t es (t
ti
(tak
akee cl
clas
a se
as
s s or go ba
back
ckk to sc
scho
hool
ho
ol))
Volu
Vo
lunt
ntee
eerr
T av
Tr
avel
e
Live
Li
v a hea
ve
ealt
lthy
thy lifes
iffesty
tyyle
e
THE UNEXPECTED : WHEN LIFE HAPPENS ...
It is important to protect yourself against unexpected expenses by creating
a cash reserve. Many experts recommend keeping six months of living
expenses on hand in an emergency fund. This may help you pay for
unexpected expenses while keeping your monthly budget intact.
• Change of income
• Death of a family member
• Inflation
Inflation or deflation
• Taxes
• Suddenly single
• Investment changes
• Health issues
5
TAKE ACTION.
TURN YOUR GOALS
INTO RESULTS.
Take action to make progress on your goals.
As you
u eva
valu
lu
uatte yo
your
urr per
e so
ona
nall fina
nanc
ncia
nc
iall
MY F AM
M IL
I Y
s tu
si
tuat
atio
at
ion,
io
n the
n,
here
re
e are sev
ever
eral
al thi
h ng
ngss yo
you
u ca
can
n
do
o tha
hatt wi
willlll alllow
w you to ta
ake
k con
o trrol
o of
your
yo
u fi
ur
fin
nan
anci
ciial fi
fittne
n ss
ss..
C ea
Cr
e te a mon
nth
thly
ly
y bud
dge
get.
t. A mon
onth
th
hlyy
budg
bu
dget
dg
et sho
houl
u d in
ul
incl
clud
u e sa
ud
savi
ving
vi
ng for bot
oh
shor
sh
orr t- and lon
ongg-te
gterm
rm
m fi
fin
nan
nci
c al nee
eeds
ds..
By devvel
elop
opin
ing
g a pl
plan
an
n and takkin
ing
g ac
acti
tiion
n
regu
re
g la
gu
larl
r y,
rl
y you
ou’l
’lll be abl
ble
e to
t tra
rack
ck you
ur
im
mme
medi
d atte ne
n ed
e s an
nd ke
keep
ep
p wor
orki
king
ng
towa
to
w rd you
wa
o r fu
utu
t re
e fi
fin
nan
nci
cial
a sta
al
abi
b lility
ty.. Itt
ty
m y no
ma
nott be eas
asyy att tim
imes
e . Bu
es
But,
t, no pa
p in
i ,
no
o gai
ain.
n. Kee
e p in min
ind
d th
hat sho
hort
rt-t
rt
-ter
erm
m
chan
ch
an
nge
g s ca
an ha
h ve
v lon
o gg-te
term
te
r eff
rm
ffec
ects
ec
tss.
Make
Ma
ke
e a pla
lan
n to red
educ
uce
e cr
c ed
edit
it car
ad
debt
de
bt.. The big
bt
igge
g stt dra
ge
rag
g on anyy fi
fin
nan
nci
cial
all
p an is de
pl
debt
bt, es
espe
peci
pe
cial
a ly cre
al
redi
ditt ca
card
rd
d deb
ebt.
t.
Payy do
Pa
down
w you
wn
ourr ba
bala
la
anc
nces
e , or
es
o con
onsi
s de
si
derr
co
ons
nsol
olid
idat
id
a in
at
i g wh
w att you
o owe
w to pa
payy itt
offf fa
of
astter
er..
What
Wh
a spe
at
peci
cifi
ficc st
fi
step
epss do you
ep
o nee
eed
d to tak
ake
e
Viisi
s t pr
prin
inci
ciipa
pal.
l.co
com/
m/ca
m/
calc
ca
lcul
ulat
attor
orss to hel
elp
p
to hellp ac
achi
h evve yo
hi
y urr goa
oals
lss?
yo
ou ev
eval
alua
uate
te
e the
h cos
osts
t ass
ts
ssoc
ocia
iate
ted
d wi
with
th
h
crred
edit
it car
ard
d de
debt
bt,, ho
bt
home
m refi
me
efin
nan
anci
c ng
ci
ng,,
debt
de
btt con
onso
so
olilida
da
ati
tion
on
n and mor
o e.
e Be su
s re
e
to che
heck
ck out the “W
“Wha
hatt wi
willlll it ta
ake
e to
6
Make a budget!
payy of
pa
offf my
m bal
alan
ance
c ?” and
ce
n “S
“Sho
ho
oulld I
See pages 10-11.
cons
co
nssol
o id
dat
ate
e my
m deb
ebts
t ?”
ts
? cal
a cu
ula
l to
tors
rs..
TAKE ACTION.
Requ
Re
qu
ues
e t a fr
free
ee cre
redi
ditt re
epo
p rt
rt.. By law
aw,, yo
y u ar
are
e en
nti
titl
tled
ed
to one
n fre
ree
e cr
cred
edit
it rep
e or
ortt ev
ever
e y ye
er
year
ar fro
rom
m ea
each
ch of th
the
e
tthre
ree
e maain rep
epor
orti
t ng
ti
g com
ompa
pa
ani
n es — Equ
quif
iffax
ax,, Ex
Expe
p ri
pe
rian
an
n
and
an
d Tr
Tran
ansU
s niion
sU
n. Yo
You
u ca
c n ge
gett yo
y ur fre
r e crred
dit rep
e or
ortt
by vis
i ittin
ing
g an
nnu
nual
alcr
cred
edit
ittre
repo
po
ort
rt.c
.com
om
m or qui
uizz
zzle
zz
l .ccom
le
om.
Read thrrou
Read
o gh
h you
ourr re
repo
port
rtss th
thor
o ou
or
o ghly
ly,
y, an
a d lo
look
ok for
o
erro
er
ro
orss and
d inc
nccon
o si
s st
sten
e ci
en
cies
ess. Iff you
o fi
fin
nd er
e ro
rors
rs,, co
c nttac
actt
the
th
e cr
cred
edit
ed
it rep
por
o ti
ting
n com
ng
ompa
pa
anyy tha
h t is
issu
sued
su
e the rep
ed
epor
ort.
t
t.
They
Th
ey wililll be
b abl
ble
e to tel
elll yo
ou wh
w at you can do to
corr
co
rrec
ectt itt.
BE CAREFUL; other
sites may offer a free
credit report for a
trial period and then
charge your credit
card until you cancel
the service.
A hi
h gh
gher
er cre
r di
d t sc
scor
ore
e me
mean
a s yo
an
you
u wi
w ll gen
ener
eral
er
a ly hav
al
ave
e
an
n eas
asie
ie
er tim
tiime
me seccur
urin
ing
in
g a lo
oan
an.. Yo
ou ca
can
n al
also
so che
eck
your
yo
urr cre
edi
ditt sccor
ore
e by
b vis
isit
ittin
ng my
myfi
fico
co.c
.com
.c
o .
om
M in
Ma
i ta
ain
n a deb
ebtt fr
tfree
ee pla
an;; tur
urn
n cr
cred
ed
dit spe
pend
ndin
nd
ing
g
in
nto
o sav
a in
ngs
g . A go
good
od
d tip
p for sav
a in
ing
g iss to allwa
ways
yss payy
y ur
yo
urse
self
lff fi
firrst
st.. Th
hiss mea
ans com
mmi
m tt
t in
i g to
o sav
a in
ing
ga
c rt
ce
rtai
ain
ai
n am
a ou
ount
nt eve
eryy mon
onth
th jusst as you
o payy oth
ther
e
er
biills.
bill
s. An ea
asyy way
a to do
o thi
h s iss to tu
turn
rn
n you
ourr crred
edit
it
s en
sp
endi
ding
ng int
nto
o sa
savi
ving
ng
gs. For
o exa
xamp
m le
mp
le,, if you wer
ere
e
pa
ayi
ying
ng down
ow
wn a cr
cred
ed
dit
i carrd $2
200 a mon
o th
h and now
o
have
ha
v it pa
ve
p id
d off
ff, pu
putt th
he mo
mone
n y to
ne
towa
ward
rd inc
n re
reas
a in
as
ing
g
y urr ret
yo
etir
irrem
emen
en
nt sa
s vi
v ng
gs or you
ourr em
emer
erge
ge
enccy fu
fund
nd..
nd
Update your
beneficiaries on
the following
documents:
Rese
Rese
ear
arch
ch col
olle
lege
le
g sav
ge
avin
ings
gs opt
ptio
ions
nss. Ta
Talk
lk to a fi
fina
n nccia
na
i l
p of
pr
ofes
e si
es
sion
onal
a , an
al
and
d maake a pla
lan
n fo
forr yo
our chi
h ld
dre
r n’
n’ss
c lllleg
co
ege
e or
o you
ur co
cont
n in
nt
inue
u d ed
ue
duc
u attio
on.
Inve
In
vest
sttme
entt
documents
Re
evi
v ew and
n /o
/orr up
upda
d te
da
t you
ourr be
ene
nefi
ficiiar
a ie
ies.
s.
A yt
An
ytim
im
me yo
you
u ha
ave
v a maj
a or
or,, lilife
fe-c
-ccha
hang
ngin
ng
ing
in
g ev
even
en
nt
— ma
m rr
rria
iage
ge,, di
divo
vorc
vo
r e, bir
rc
irth
t of a ch
th
hilld, dea
eath
th of a
s ou
sp
ouse
se
e or ot
o he
herr cl
c os
ose
e fa
fami
mily
mi
lyy mem
embe
berr — yo
be
you
u sh
s ou
uld
revi
re
view
vi
ew
w you
ur liist of be
bene
ne
efi
fici
ciar
ci
arie
ar
iess an
ie
a d ma
make
k cha
ke
hang
n es as
ng
need
ne
e ed
ed
ed. Yo
You
u sh
hou
ould
ld
d als
lso
o in
info
form
fo
r a fam
rm
a ili y me
m mb
ber
wher
wh
ere
e yo
your
ur imp
mpor
orta
tant
nt doc
ocum
umen
ents
en
tss are
e sto
tore
re
ed. Vis
isit
it
p in
pr
inci
cipa
pal.
pa
l.co
com/
co
m//be
bene
n fi
ne
ficciar
ary
y to gett sta
tart
rted
ed
d.
Roth IRA
S arr t an eme
St
merg
rg
gen
ency
cy fun
und.
d. Mo
Most
stt exp
xper
erts
ts agr
g ee
e an
emer
em
errge
genc
ncyy fu
nc
fund
nd sho
houl
u d in
ul
incl
c ud
cl
ude
e at lea
east
st six
x mon
onth
ths’
s’
IRA
Empl
Em
plo
ploy
oyyer
yer
ersponsored
retirement plans
Mutual funds
Life and disability
insurance policies
Annuity contracts
Wills and trust
document(s)
wo
ort
rth
h of liv
ivin
ing
g ex
xpe
ens
nses
ess.
7
TAKE ACTION.
M Y CA
A RE
REER
ER
Defi
efin
ne an
nd de
d sc
s ri
ribe
be you
ur go
goal
als.
s.
AS YOU CREATE A PLAN
TO TAKE ACTION, be
sure to set smaller,
incremental steps so you
always have a fi nancial
fitness goal you can be
working toward.
Mak
ake
e a lilist
s of pe
st
pers
rsson
onal
al str
tren
e gt
en
gths
hss in re
rela
laati
tion
on to yo
your
u goa
ur
o ls
ls.
Mak
a e a ti
time
melililine
ne.
ne
Cre
reat
ate
e be
benc
ncchm
hmar
a ks
ar
ks.
Rev
e is
isit
it,, ev
it
eval
a ua
al
uate
te,, an
nd if
i nec
eces
essa
sary
ry,, ad
dju
just
stt you
ourr go
goal
alls.
M Y HO
HOME
ME
G to th
Go
the
e “H
“Hom
ome
om
e Fiina
n nc
ncin
ing”
g cal
g”
alcu
cula
cu
la
ato
tors
rs at
prin
pr
principal.com/calculators
i ci
in
c pa
al.
l.co
com/
m/ca
m/
c lc
ca
lcul
u at
ul
ator
orss to
t lea
earn
rn
n:
How muc
u h sh
hou
ould
l I put dow
ld
o n?
Wha
hatt wi
w ll my mo
orttga
age pay
ayme
m nt be?
me
How adv
dvan
anta
tage
geou
ge
ouss ar
a e ex
extr
traa pa
tr
aym
y en
ents
tss?
MY R ET
T IR
IRE
E M ENT
EMEN
T
Do
o a ret
etir
irrem
men
e t we
well
lllne
ness
s che
ss
eck
ckup
up..
up
• Co
Cons
nsid
ns
id
derr inc
n re
r assin
ng yo
your
ur deffer
erra
rall to
t you
ourr em
e pl
ploy
o er
oy
er’s
’s
reti
re
tire
reme
ment
nt pla
lan.
n A sma
n.
mallll inc
ncre
re
eas
ase
e no
ow ma
mayy me
mean
a
an
a bi
big
g di
diff
ffer
ff
erren
e ce in yo
your
ur ret
etir
irem
em
men
entt sa
savi
v ng
vi
ngs.
s
s.
• C
Con
onsi
side
d r re
de
r ba
bala
la
anc
ncin
ng yo
y ur ret
etir
irem
em
men
entt pl
plan
an
in
nve
v st
stme
m nt opt
me
p io
ions
ns..
ns
• Ta
Take
ke advvan
nta
tage
ge of an ann
nnua
uall in
ncr
crea
ease
ea
se
prog
pr
o ra
og
ram,
m, if av
avai
a la
ai
labl
b e.
bl
• Co
ont
ntac
acct T
The
Th
e Pr
Prin
inci
cipa
pal to
p
o lea
earn
rn
n how
o to co
cons
nssol
olid
idat
id
ate
e
r ti
re
tire
re
eme
m ntt sav
avin
in
ngs
g fro
rom
m a fo
form
rmer
e emp
er
mplo
loye
yer.
r..
Don’t let a setback throw you off track. Power through,
continue to make good decisions and think long term.
8
TAKE ACTION.
Benefit from tax savings
Pre-tax contributions to a retirement plan are not subject to federal income tax
until they are withdrawn from the plan. Here’s how you could benefit:
Bi-weekly pay
10%
CONTRIBUTION
NO
CONTRIBUTION
$1,346
$1,346
Pre-tax contribution
$135
Taxable income
$1,211
This amount goes into
the plan.
With no contribution, you’d
pay more income tax.
$0
$1,346
Taxes (25% tax bracket)
$303
Take-home pay
$908
Pay is reduced by the amount
contributed to the plan and
income tax.
$101
Why is the impact to pay less than the amount
going into the plan? Tax savings! With no
contribution, you would’ve lost an additional $34
to taxes. By making a pre-tax contribution, you
defer paying the income tax.
Impact to paycheck
$337
$1,009
This chart assumes tax withholding of 25%. Individual taxpayer circumstances may vary.
This is for illustrative purposes only.
M et
Me
e witth a fi
fina
nanc
na
nccia
iall pr
prof
o es
of
essi
s on
si
onal
all to di
d sc
scus
u s:
us
• Am
A I on tr
trac
a k fo
ac
or re
etiire
reme
me
ent
nt??
• If not
o , what
whatt ste
teps
ps can
n I tak
ake
e no
n w to sta
art clo
osi
sing
ng the gap
ap??
• Tu
Turn
rn
nin
ing
g sa
savi
ving
ng
gs in
into
to a str
trea
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m of
o inccom
ome
e at ret
etir
irrem
men
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t.
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ociial Seccur
urit
ity
y be
ene
nefi
fitss. Th
T er
e e ar
are
e tw
wo wa
ays del
elay
ayin
i g yo
in
y ur ben
enefi
efitt s ca
efi
can
n
incr
in
crea
cr
e se
ea
e you
ourr mo
mont
ntthl
hlyy pa
paym
ym
men
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ts.. If
I you con
onti
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ti
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ork
rkin
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ng af
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reac
acchi
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ourr fu
f ll
reti
re
t re
ti
reme
m nt ag
me
ge
e, yo
you
u’l add mor
u’ll
o e ea
earn
r in
rn
ings
g to yo
gs
your
ur Soc
o ia
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Secu
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e or
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d Hig
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ghe
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time
me ear
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mean
an hig
ighe
he
er be
bene
ne
efi
fits
ts whe
hen
n yo
you
u
reti
re
tire
re. In add
ddittio
ion,
n, you
u’l
’ l ea
arn
n del
elay
a ed
ay
d rettir
irem
emen
en
nt
cred
cr
edit
ed
itt s fo
forr ea
ach
c yea
ar yo
ou de
ela
layy re
reti
tire
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eme
m nt
nt.. Fo
Forr mo
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r
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in
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rmat
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n, go to ss
ssa.
a.go
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gov.
go
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v.
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Ma
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ngg-te
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rm
e
Save
Sa
ve
e for futture
ure he
heal
alth
t ca
th
are nee
eds
ds..
9
TAKE ACTION.
H OUSE
SEHO
O LD B UDGE
G T WO
W R
RK
K SH
S EEEE T
PA
AR
RT
T 1: IN
N COME
M
M Month
My
hly Takke-Home
m
Othe
er Inco
ome
+
Total Mont
ntthl
hy
Spen
Sp
en
nda
dabl
b e In
bl
Inco
cco
ome
m
=
PA
A RT 2: MO
O NTHL
H Y EX
E PENS
N ES
E
Currren
e t Spen
e ding
g
S elterr
Sh
Mor
o tg
gag
age
ge orr Ren
entt
Insurrance
Prope
p rty Ta
T xe
es
Hom
o e Maain
nte
ena
nanc
nce
nc
e
Uttilit
ililittie
es
Gas and Ele
l ctricc
Water
e
Tel
e ep
pho
one
Food
Fo
od
o
d
T ansp
Tr
sp
porr tatiion
Car Payyme
ents
Insurrance
Gas and Oil
Rep
pai
a rs/M
Maiinten
e ance
e
M dica
Me
al
C othing
Cl
n
10
Re
evision
ns
N w Bu
Ne
udg
get
TAKE ACTION.
De
ebtt
Cre
edi
d t Ca
Card Pay
a ment
ntt s
n
Loaan Paym
ymen
e ts
ts
Oth
her Deb
ebt Pa
eb
Paym
y en
ents
t
Currrentt Sp
Spen
e ding
g
Revisio
ons
Ne
ew Budg
dg
get
Entert
r ainm
ment/Re
Recrea
ation
Cab
ble
l , Vi
V de
d os,, Mo
M vi
vies
Spo
p rts an
po
nd Ho
obbiess
Sub
bscri
r pt
p ions
Vaccattio
i ns
n
In
nve
est
sm
me
entt s
Rettiremen
e t Plan
a
Con
o tribut
u ion
E errge
Em
genc
enc
ncyy Fu
und
d
Mut
u ual Fu
F nd
n s,, Sto
t ckks, etc..
Annuity
Chi
hild
ld
dre
ren’
n s Ed
n’
E uc
ucat
atio
at
ion
io
n
Savvings Accou
unt
Miscel
e laneo
ous Ex
xpensses
e
Giff ts
Oth
her
e
Totall Expe
enses
e
and
d In
Invest
stment
st
t
nts
nt
Totall Mont
n hly
y
Sp
pen
nda
d ble
e Inco
ome
m :
Tota
T
t l Ex
E pe
enses
e
and In
I vesttment
nts:
–
–
–
Surplu
l s orr Short
r age:
=
=
=
11
STAY MOTIVATED.
SUPPORT YOUR
FINANCIAL FITNESS
Keep the momentum going!
The most important steps you can take toward financial
STAY ON TRACK.
fitness are to sit down with a financial professional, and
Complete the Financial
Fact Finder on pages
14-15 to assess your
personal situation
before meeting with a
financial professional.
develop a plan. What you do next is up to you. What’s
important is that you continue to take action to keep the
momentum going.
REWA
RE
WA
A RD
D YOU
U RS
RSEL
E F!
EL
A you fol
As
ollo
low
lo
w yo
your
ur pla
l n, be su
sure
r to se
re
sett sm
mal
a le
er,, inc
ncre
reme
m nttal
me
a
g al
go
alss fo
or yo
your
urrse
self
l alo
lf
ong the way for botth sh
shor
o t- and
or
d lon
ngg
t rm
te
m goa
oals
ls;; th
ls
that
att way you
u alw
way
ayss ha
h ve
e a goaal yo
you
u ca
c n be
w rkkin
wo
ing
g to
t wa
w rd to he
help
lp kee
eep
p yo
you
u mo
m ti
t va
ate
t d. Whe
hen
n yo
you
u
re
eacch a be
enc
nchm
hmar
arkk su
ar
s ch as el
elim
im
min
inat
a in
at
ing
g crred
dit
i car
ard
d de
debt
bt,
bt
find a wayy to re
ewa
w rd you
ours
rsel
elf.
el
f
f.
Benc
Be
nchm
nc
hmar
hm
a k:
ar
12
Ways
Wa
yss to re
rewa
w rd
wa
d you
urs
rsel
elf:
el
f:
STAY MOTIVATED.
ACCOUNTABILIT Y
ACCOUNTABILITY
To stay on track, you will need to hold yourself accountable. By staying focused
and remaining committed to your plan, you can reach your financial goals.
Accountability partners can be a spouse, friend and/or financial professionals:
It is helpful to gather the following materials before you put
your plan together or meet with a financial professional:
Most recent tax return
Investment documents
Pay statement from
employer
Latest statement from
IRA, 401(k) and other
retirement plan(s)
Life
e an
a d di
disa
sa
abi
bilility
liity
in
nsu
sura
ancce po
polililci
cies
cies
Ann
A
nnuiity con
ntrrac
acts
t
ts
Willls and tru
rust
stt
docume
entt (ss)
Fin
inan
anci
cial
ci
a Facct Fi
Find
n er
nd
(pag
(p
a es 14-15
4-15
45)
Latest statement from
om
mutual funds
THINK OF YOUR FINANCIAL PROFESSIONAL AS A TRAINER
who will help you stay focused on your financial fitness.
13
STAY MOTIVATED.
FINANCIAL FAC T FINDER
GENERAL:
1. Age this year:
18-35
36-54
55-58
59-61
62-64
65-69
70 plus
2. Do you have a budget?
Yes
No
Last updated? _____________
3. Do you have a formal, written financial plan and goals?
Yes
No
Last updated? _____________
4. Do you have a will?
Yes
No
Last updated? _____________
5. Year you plan to retire: _____________
FAMILY:
6. Your current marital status:
Single
Married
Separated
Divorced
7. Your tax filing status:
Single
Head of Household
Married Filing Jointly
Married Filing Separately
8. Number of dependents you claim on tax return: _____________
9. When was the last time you reviewed the beneficiary
designations on your accounts? _____________
10. Do you want to plan for a child’s college education?
Yes
No
EMPLOYMENT:
11. Have you recently:
Left a job
Started a business
Sold a business
Taken a second job
12. Does your employer offer retirement plan benefits?
Yes
No
13. Did your employer cut back or eliminate retirement plan or health care benefits?
Yes
14
No
STAY MOTIVATED.
SHORT-TERM SAVINGS:
14. How much have you saved for immediate needs and emergencies?
Checking account $ _____________
Savings account $ _____________
RETIREMENT ACCOUNTS:
15. Do you have a retirement account with your current employer?
Yes
No
16. If so, what is the approximate balance? $ _____________
17. Does your employer match your retirement contributions?
Yes
No
18. If so, what is the matching percentage? ___________ %
19. Do you have retirement assets sitting in a retirement plan with a previous employer?
Yes
No
20. Do you have assets in an IRA?
Yes
No
21. Do you have any FDIC-insured certificates of deposit (CDs)?
Yes
No
22. Do you have any fixed or variable annuities?
Yes
No
23. Did you contribute to a traditional or Roth IRA during the year?
Yes
No
24. Are you considering Roth conversion?
Yes
No
Undecided
FINANCIAL EVENTS:
25. Have you purchased any major assets during the year (e.g., boat, home, auto)?
Yes
No
26. Have you taken on or eliminated any mortgage debt this year?
Yes
No
27. Do you have other debt?
Yes
No
28. If so, what is the approximate amount? $ _____________
15
ACHIEVE FINANCIAL FITNESS.
Set goals, take action and stay motivated by using
Tools and information at
principal.com/financialfitness
.
CONNECT WITH US:
Facebook: facebook.com/PrincipalFinancial
Twitter: twitter.com/ThePrincipal
WE’LL GIVE YOU AN EDGE®
While this communication may be used to promote or market a transaction or an idea that is
discussed in the publication, it is intended to provide general information about the subject matter
covered and is provided with the understanding that none of the member companies of The Principal are
rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties
under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters
pertaining to legal, tax, or accounting obligations and requirements.
These are only general guidelines, which may be helpful in making personal financial decisions. Responsibility
for these decisions is assumed by you, not the Principal Financial Group or any of its member companies.
Insurance products and plan administrative services are provided by Principal Life Insurance Company,
a member of the Principal Financial Group ® (The Principal®), Des Moines, IA 50392.
For financial professionals: The Principal Financial Group developed this handbook. You must obtain approval
from your compliance area before using. The Principal Financial Group grants you
permission to use the content of this handbook.
PT349B | t14012901v2 | 02/2014
FINISH
SEE RESULTS IN
YOUR FINANCIAL
FITNESS.
Whether you’ve already got a financial training
program in place or you fall in the “couch-to-5K”
category, take the first step today to help finish
stronger at retirement:
TAKE THE 10% CHALLENGE
Consider contributing at least 10 percent of your pay
to your employer-sponsored retirement plan. If you
can’t push to the full 10 percent right away, consider
starting with a smaller amount.
SIGN UP at principal.com/10percentchallenge
Enter for a chance to win a Fitbit Flex™ to
monitor your physical fitness progress.
WHY 10%? Because analysis shows you may need to save at
least 10 percent of your pay, plus any employer contributions,
throughout your career to have enough income in retirement.1
This assumes you may need about 85 percent of your pre-retirement
income to maintain your current lifestyle after you retire.2 Each
individual’s situation is unique, though, so your savings and postretirement needs may differ.
1
Based on analysis conducted by the Principal Financial Group®, August 2013. The estimate assumes a 40-year
span of accumulating savings and the following facts: retirement at age 65; a combined individual and plan sponsor
contribution of 12 percent; Social Security providing 40 percent replacement of income; 7 percent annual rate of
return; 2.5 percent annual inflation; and 3.5 percent annual wage growth over 40 years in the workforce. This estimate
is based on a goal of replacing about 85 percent of salary. The assumed rate of return for the analysis is hypothetical
and does not guarantee any future returns nor represent the return of any particular investment. Contributions do not
take into account the impact of taxes on pre-tax distributions. Individual results will vary. Participants should regularly
review their savings progress and post-retirement needs.
2
Assuming pre-retirement annual gross income of $40,000. Aon Consulting’s 2008 Replacement Ratio StudyTM
http://www.aon.com/about-aon/intellectual-capital/attachments/human-capital-consulting/RRStudy070308.pdf
If you’re not ready to contribute 10 percent, challenge
yourself to take incremental steps. The commitment you make
today can support to your financial fitness now and in retirement.
See the potential impact a small increase in retirement plan
contributions may have on take-home pay and retirement income.
ADDITIONAL
CONTRIBUTION
REDUCTION IN
BI-WEEKLY
TAKE-HOME
PAY
ESTIMATED
ADDITIONAL
SAVINGS AT
RETIREMENT
ESTIMATED
ADDITIONAL
MONTHLY
RETIREMENT
INCOME
1%
$10
$49,782
$187
2%
$20
$99,565
$373
3%
$30
$149,347
$560
5%
$50
$248,911
$933
This example is for illustrative purposes only. It assumes $35,000 in annual
income, 3.5 percent annual wage growth, 30 years to retirement, 7 percent
annual rate of return and a 25 percent tax bracket. Estimated monthly
retirement income calculations assume a 4.5 percent annual withdrawal
in retirement. The assumed rate of return is
hypothetical and does not guarantee any future
returns nor represent the return of any particular
investment option. Reduced take-home pay is
accurate for the initial year and would change
based on participant’s annual pay. Estimated
savings amounts shown do not reflect the impact
of taxes on pre-tax distributions. Individual
taxpayer circumstances may vary.
CONNECT WITH US:
Facebook: facebook.com/PrincipalFinancial
Twitter: twitter.com/ThePrincipal
TO TAKE THE CHALLENGE TODAY,
VISIT principal.com/10percentchallenge
Terms & Conditions
The Principal Financial Group promotion is intended for viewing and participation in
the United States only (limit one entry per person) and you may enter by completing
the form fields on principal.com/10percentchallenge and clicking submit, or by
hard copy mailing by sending your name, address, city, state/zip, email address and
phone number to: The Principal Financial Group, Attn: 10% Challenge, c/o A. Rohret,
T-010-S38, 655 9th St., Des Moines, IA 50309-1502. Entries must be received through
the site or postmarked by Dec. 31, 2014. Four winners will be selected each quarter.
Each winner will receive one Fitbit FlexTM (or comparable activity tracker) valued at
approximately $99. Winners will be notified via email provided and mailing address
will be confirmed. Prizes awarded could be subject to taxes, and depending on the
dollar amount of the prize, may be taxed at a supplemental rate. Please see your tax
advisor for potential tax implications. No purchase necessary to enter or win and need
not be present to win. If winner cannot be contacted via the provided email, the
prize is forfeited and another name will be drawn. Employees of the Principal Financial
Group are not eligible. Fitbit FlexTM is a registered trademark of Fitbit, Inc.
Helping you meet your
retirement savings needs
C H A L L E N G E S FA C I N G T O D AY ’ S
RETIREMENT INVESTORS
Funding a long-lasting, comfortable retirement
requires a substantial nest egg. Most financial
professionals agree you may need to generate
approximately 85 percent of your annual preretirement income1 each year to maintain the
lifestyle you’re accustomed to through retirement.
You should also account for inflation when calculating your yearly
income needs. Rising costs over time can erode your purchasing
power, so $100 today may purchase much less 20 years from now.
85 PERCENT OF YOUR
ANNUAL PRE-RETIREMENT
INCOME MAY BE NEEDED
1
ACCOUNT FOR INFLATION
WHEN CALCULATING YOUR
YEARLY INCOME NEEDS
And, American life expectancies are growing longer, so you can likely
expect to live 20 to 30 years in retirement.
As the baby boomer generation approaches retirement, Social
Security will likely be pushed to its limits. The age at which Social
Security recipients qualify for full benefits is rising, meaning
Social Security’s role in funding your retirement may be limited.
Contributing to your employer’s retirement plan may now be more
important than ever.
1
Aon Consulting’s 2008 Replacement Ratio StudyTM
SOCIAL SECURITY
MAY BE LIMITED
B U I L D I N G A D I V E R S I F I E D R E T I R E M E N T P O R T F O L I O W I T H TA X - D E F E R R E D A C C O U N T S
Planning for a more successful retirement generally requires a diversified strategy of several components, including
Social Security, an employer-sponsored retirement plan and your own savings and investments.
Of these, it may be most beneficial to take advantage of one or more tax-deferred retirement savings vehicles, because
the tax benefit means you keep more money working for you, year after year. As you can see in the example below, the
tax-deferral feature can potentially make a difference in long-term returns.
ASSUMES
$5,500 CONTRIBUTION EACH YEAR AND 7% ANNUAL RETURN.
Earnings on after-tax contributions are taxed at 25%.
After-tax contributions
Pre-tax contributions
2013
$5,500.00
$5,500.00
2014
$11,288.75
$11,385.00
2015
$17,381.41
$17,681.95
2016
$23,793.93
$24,419.69
2017
$30,543.11
$31,629.06
2018
$37,646.63
$39,343.10
2019
$45,123.08
$47,597.12
2020
$52,992.04
$56,428.91
2021
$61,274.12
$65,878.94
2022
$69,991.01
$75,990.46
2023
$79,165.54
$86,809.80
2024
$88,821.73
$98,386.48
2025
$98,984.87
$110,773.54
2026
$109,681.58
$124,027.68
2027
$120,939.86
$138,209.62
2028
$132,789.20
$153,384.29
2029
$145,260.64
$169,621.20
2030
$158,386.82
$186,994.68
2031
$172,202.13
$205,584.31
2032
$186,742.74
$225,475.21
2033
$202,046.73
$246,758.47
Assumed rate of return is hypothetical and does not guarantee any future returns nor represent the return of any specific investment option. Withdrawals
prior to age 591⁄2 may be subject to income tax including a 10% IRS tax penalty and redemption costs.
Amounts shown for pre-tax contributions do not reflect the impact of taxes on distributions of those contributions which could be 25 percent or more.
Individual taxpayer circumstances may vary. This is for illustrative purposes only.
TA K E A D VA N TA G E O F S AV I N G S A N D I N V E S T M E N T V E H I C L E S
Another way to save for retirement is to diversify your savings potential by taking advantage of a variety of savings and
investment vehicles. When you participate fully in your employer’s retirement plan, and accumulate savings in other
accounts, you can increase your opportunity to save.
CONTRIBUTION LIMITS
TAX ADVANTAGES
WITHDRAWAL REQUIREMENTS
401(K)/403(B) PLAN
Up to $17,500*; employer
may match contributions
Tax-deferred
earnings
Must begin by age 70½ **
INDIVIDUAL
RETIREMENT ACCOUNTS
$5,500/year*
Tax-deferred
earnings
Traditional: Must begin withdrawals by
age 70½; Roth: No requirements***
DEFERRED ANNUITIES
None
Tax-deferred
earnings
None
MUTUAL FUNDS
None
No
None
CDS
None
No
None
SAVINGS ACCOUNTS
None
No
None
SAVINGS BONDS
None
Depends on
the series
Stop earning interest after a
certain number of years
*IRS limit as indexed for the 2014 tax year; amount may also be further limited by the plan document.
**If you are still working after age 701⁄2, are not a greater than 5% owner of the company, and are still eligible for active participation in the company retirement plan, you
do not have to take the Required Minimum Distribution (RMD) from the company plan until employment is terminated. Your first RMD would not need to be taken until
April 1 following the year of retirement. The exception only applies to the company plan where you are currently employed, not other employer plans or individual IRAs.
***A Roth IRA doesn’t require a withdrawal during the lifetime of the original Roth IRA owner.
Among tax-deferred retirement savings accounts, Individual Retirement Accounts (IRA) can be an ideal choice,
particularly if you have many years until retirement. Depending on the IRA — traditional or Roth — your contributions
may be tax-deductible, or your withdrawals may be tax-free.
Once you’ve taken advantage of savings opportunities through your employer’s retirement plan and IRAs, you may
want to determine if a deferred annuity is appropriate for you. Saving in a deferred annuity is done with after-tax money
and provides the opportunity for tax-deferred growth.
TA X A B L E S AV I N G S A LT E R N AT I V E S
Your retirement nest egg also may consist of taxable savings and investment vehicles, including:
Mutual
funds
CDs (certificates
of deposit)
U.S. savings
bonds
Bank savings
accounts
REFINING YOUR SAVINGS PLAN THROUGHOUT YOUR LIFE
It’s a good idea to re-evaluate your savings plan on at least an annual basis — like your
lifestyle changes, your savings plan should be flexible. The younger you are, the more
aggressive you may wish to be with your retirement savings plan. You can focus on generally
more aggressive investment options that may help with your long-term return potential.
As you approach retirement, you may want to move a portion of your assets into more
conservative investments, such as bank savings accounts, CDs or U.S. savings bonds.
For help building an effective retirement savings
plan, call 1-800-547-7754 or visit prinicpal.com.
WE’LL GIVE YOU AN EDGE®
Investors should carefully consider mutual fund’s investment objectives, risks, charges and expenses prior to
investing. A prospectus, or summary prospectus if available, containing this and other information can be
obtained by contacting a financial professional, visiting principal.com or calling 1-800-547-7754. Read the
prospectus carefully before investing.
Investment options are subject to investment risk. Shares or unit values will fluctuate and investments, when
redeemed, may be worth more or less than their original cost. It is possible for an investment option to lose value.
Annuities, insurance, retirement plans, mutual funds and other securities are not insured by the FDIC, and involve risk, including the
possible loss of principal invested.
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to
provide general information about the subject matter covered and is provided with the understanding that none of the member companies
of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the
Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting
obligations and requirements.
Insurance issued and plan administrative services provided by Principal Life Insurance Company. Securities offered through Princor
Financial Services Corporation, 800/247-1737, Member SIPC and/or independent broker/dealers. Securities sold by a Princor Registered
Representative are offered through Princor®. Principal Life and Princor® are members of the Principal Financial Group, Des Moines, IA 50392.
PQ7048A-13 | © 2014 Principal Financial Services, Inc. | t14011303ot | 1/2014