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You can flySave in your retirement plan

Retirement Plans

You’re in good company with Lincoln Financial Group

You can feel confident knowing you are working with a reputable company with a long history and strong commitment to helping Americans achieve retirement income security. With head-quarters in Radnor, Pennsylvania, Lincoln Financial Group, through its family of companies, provides annuities, life insurance, retirement products, mutual funds, institutional money management, financial strategies, and product solutions.

Rise above it: Decide to save

Saving is the only way to get off the ground 2Your retirement plan makes it easy 3Don’t let another payday fly by 6

Join your plan: Decide how much to save

Three ways to get started 7Put your future first 9

Follow a strategy: Decide where to invest

The four fundamentals of investing 10Three major asset classes 12The pyramid of investment risk 12

You can flyTo fly is to be free; “free as a bird,” soaring “up, up and away.” Super powers may be out of reach, but you can fly by saving every payday in your employer-sponsored retirement plan. And you won’t need a cape.

But freedom requires saving. Saving gives wings to your work. You’re not standing still when you’re saving. You’re planning ahead. You have a destination. You’re moving up and moving forward. You can fly.

1

Saving gives wings to your work

2

Rise above it: Decide to saveSaving isn’t easy, but it’s the only way to get off the ground

You know money is tight. Sometimes it’s a struggle just to make ends meet. Even with wise budgeting, it can be tough to stretch a paycheck: The nation’s personal saving rate at the end of 2008 was just under 4%, which is not very impressive.1

As a result, many working adults express extreme concern about having enough money for retirement. And they doubt they’ll have a safety net: 67% worry that their Social Security benefits will be reduced by the time they retire. Most have the same concern about Medicare.2

Financial pressures are forcing many to postpone retirement. Increasing numbers of Americans are also planning to work well past the traditional retirement age.2 At some point, however, most seek to retire and pursue their own interests. And that requires saving now.

1 Bureau of Economic Analysis, March 2009. 2 The 2009 Retirement Confidence Survey, Employee Benefit Research Institute, April 2009.

What does financial security mean?

The American Savings Education Council and AARP posed this question to a number of individuals from both Generations X and Y, and their definitions (multiple answers allowed) included:

Bottom line: People want financial security.


Being able to make ends meet and not living paycheck-to-paycheck

Having enough money left over to save for emergencies or a rainy day

Being able to live comfortably

Not having to worry about one’s finances

Being able to weather hard times and deal with the unexpected

Being able to save for retirement, afford retirement,

or maintain one’s lifestyle in retirement

Being able to provide for one’s family

Being able to have time for leisure, entertainment, or fun

22%

19%

16%

15%

13%

9%

6%

5%

Source: ASEC and AARP, March 2008.

3

This is a hypothetical example. Taxes on retirement plan assets will be due upon distribution and, if taken before age 59½, may be subject to an additional 10% federal tax penalty.

What does financial security mean?

The American Savings Education Council and AARP posed this question to a number of individuals from both Generations X and Y, and their definitions (multiple answers allowed) included:

Assuming a $1,500 bi-weekly salary

Contribution rate 0% 2% 4% 6% 8% 10%

Take-home pay (25% tax rate) $1,125 $1,103 $1,080 $1,058 $1,035 $1,013

Retirement plan contribution $0 $30 $60 $90 $120 $150

Net difference in take-home pay $0 $23 $45 $68 $90 $113

Your retirement plan makes it easy to save

Your employer-sponsored retirement plan allows you to save every payday on a regular basis. A set percentage of your wage is contributed to your retirement account before taxes, and any growth is not taxed until you begin taking withdrawals. There are three key advantages to saving this way: 1) an immediate tax break, 2) tax deferral, and 3) consistency.

1 You receive an immediate tax break

The money you set aside is deducted from your paycheck before your wages are taxed. Since the money is not included in your current taxable income, you pay lower current federal income taxes, and in most cases, lower current state income taxes.

You must save now!

As more Americans enjoy active lifestyles in their 80s and 90s, a brief “rocking chair retirement” is a thing of the past. You could be retired for 20 or 30 years. But nearly 75% of today’s retirees worry at least a little about maintaining a reasonable standard of living2 — they want to preserve their freedom.

But freedom requires saving. And the sooner you start saving, the better. Even if it’s a little at a time, you can begin to build the future you deserve today. It starts with a simple decision — making your retirement as much of a priority as your routine expenses.

You have an advantage. You can save now in your employer-sponsored retirement plan.

Source: Society of Actuaries, 2008.

When you’re 65, these are your longevity odds:

Bottom line: People want financial security.

Bottom line: You may be retired for decades.

Bottom line: The more you save, the lower your current income taxes.


Chance of living beyond the age of...

Chance of living beyond the age of...

At least one person has a chance of living beyond the age of...

92Male 85

95Female 89

97Couple 92

50% 25%

50% 25%

50% 25%

2 You harness the power of tax deferral

Taxes won’t be due on the money you save in your retirement plan — or on any investment earnings — until you take money out. This helps to speed the growth of your retirement account. Taxes will be due upon withdrawal, and withdrawals before age 59½ may be subject to an additional IRS tax penalty.

The power of tax deferral

This is a hypothetical example. It is not indicative of any product or performance and does not reflect any expense associated with investing. It assumes $200 monthly contributions, 6% interest, and a 25% tax bracket. Taxes will be due upon distribution of the tax-deferred amount, and if shown, results would be lower. Actual investment results will fluctuate with market conditions, so that the amount withdrawn may be worth more or less than the original amount invested.

Bottom line: Tax deferral can help your money work harder for you.

0

20000

40000

60000

80000

100000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$22,

653

$32,

653

$38,

315 $5

7,66

2

$57,

833

$91,

129

End of year 10

End of year 15

End of year 20

without tax deferralwith tax deferral


3 You save consistently

Saving a set amount on a regular basis, such as every payday, is a long-term approach known as dollar cost averaging. You invest the same amount of money at scheduled intervals to take advantage of market highs and lows. Over time, fewer shares are purchased when the price is high and more when the price is lower. Also, the average cost per share will be lower than the average price per share.

Dollar cost averaging, also known as periodic investing, cannot assure a profit and cannot protect against loss in a declining market. These periodic investing programs involve continuous investing, regardless of fluctuating price levels. As a result, you should consider your financial ability to continue purchasing shares through periods of low price levels.

Month InvestmentShare price

Shares purchased

January $200 $25 8.0

February $200 $25 8.0

March $200 $20 10.0

April $200 $20 10.0

May $200 $18 11.1

June $200 $16 12.5

July $200 $15 13.3

August $200 $15 13.3

September $200 $17 11.8

October $200 $20 10.0

November $200 $20 10.0

December $200 $25 8.0

Total return

Average share price

Total shares purchased

$2,400 $19.66 (avg.) 126

This is a hypothetical example. It is not indicative of any product or performance, and does not reflect any expense associated with investing. Investment values will fluctuate with market conditions, so that the amount withdrawn may be worth more or less than the original amount invested.

5

Bottom line: Consistent savings may help increase returns.


The concept of dollar cost averaging

In this example, $2,400 is invested in a stock for a year using a dollar cost averaging approach. Rather than committing the entire amount at one time, $200 is invested every month:

• Had all $2,400 been invested when the stock was at its peak ($25), 96 shares would have been bought.

• Had all $2,400 been invested at the lowest price ($15), 160 shares would have been bought with a greater investment gain. However, this requires knowing exactly when to buy and is difficult even for investment professionals.

• The average share price was $19.66, but with dollar cost averaging the average cost per share was $19.05.

Don’t let another payday fly by

Today, over 20% of the population admits to being chronic procrastinators, delaying action on even the most important responsibilities.1 How might that affect your retirement savings?

The cost of waiting just one year to save for retirement may run into thousands of dollars

This is a hypothetical illustration and is not indicative of any product or performance; it does not reflect any taxes due upon distribution or any fees associated with invest-ing. Investment options are subject to market risk. It assumes $200 monthly contribu-tions, 6% interest, and retirement at age 65.

Your future stays on hold unless you start saving now. A recent study has shown that thinking about tasks in more concrete terms can help reduce the urge to procrastinate.2 Read on for some concrete steps you can take to get your retirement planning off the ground.

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AgeRetirement plan

balance at age 65Cost of waiting

one year

25 $383,393$24,039

26 $359,354

35 $195,851$13,423

36 $182,428

45 $91,129 $7,496

46 $83,634

Bottom line: The sooner you start saving, the better.

1 The Procrastination Equation: Today’s Trouble with Tomorrow, Piers Steel, 2009.2Sean McCrea et al, Psychological Science, December 2008.

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Join your plan: Decide how much to saveStretch your wings. Here are three ways to get started:

You’ve made a smart decision and joined your employer-sponsored retirement plan. You’ve already begun to fly. The more you save, the greater the heights you can reach.

The next decision is more complicated: How much can you afford to save? Here are three easy ways to get started: 1) meet your match, 2) challenge yourself to save 2%, or 3) save money you’re “spilling” every week.

1 Your match is “free money”

One frequently suggested approach is to save at least enough to receive your employer’s matching contribution, or “match.” Many employers offer a match. It can be a strong incentive to promote enrollment in a retirement plan.

Here’s how it works: When you save a set percentage of annual wages in your plan, the

employer matches that amount, up to the specified percentage. For example, let’s say the match is 1%. If you contribute 1%, your employer will also contribute 1%.

An employer match is popularly known as “free money;” yours for the taking simply by saving enough to qualify. Ask about the availability of matching contributions. You may not receive it immediately, and vesting requirements sometimes apply, but a match may be a feature of your employer-sponsored retirement plan. If it is, grab the “free money.”

2 Challenge yourself to save 2%

Saving 2% of your annual wages is also a good starting point. Over time, you may be able to step up your contributions. But it’s all right to test your wings at 2%. You’re making a serious commitment to save, and even this relatively small amount has long-term growth potential.

0

100000

200000

300000

400000

500000

600000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Today 5 10 15 20 25 30 35 40

Years

Acc

ou

nt

valu

e

$127,470

$382,409

$509,879

$254,940

8% savings rate6% savings rate

4% savings rate

2% savings rate

Saving more lifts you higher

These graphs assume a $40,000 annual salary and a 6% annual return in a tax-deferred account. These hypothetical examples are not indicative of any product or performance and do not reflect any expense associated with investing. Taxes will be due upon distribution. It is possible to lose money investing in securities.

Bottom line: A little is good, a little more is better.


3 Spill less coffee money

If you could find room in your budget to save just $10 a week in your retirement plan, you’d be making a genuine commitment to your future. Take a close look at your weekly expenses. Perhaps you could “spill” $10 less on coffee or soft drinks each week.

If you spend $10 a week on coffee or soft drinks over the next 30 years, your tab will be about $15,600. However, if you save $10 a week in your retirement plan for 30 years, you could potentially have an account worth $42,000.1

Of course, you needn’t give up coffee, soft drinks, and other simple pleasures to save for retirement. Just spill a little less each week — $10 less, for example — and set it aside in your plan. It’s a small price to fly.

1 This assumes a 6% return, compounded monthly in a tax-deferred account. This is a hypothetical example and is not indicative of any product or performance, and does not reflect any expense associated with investing. Taxes will be due upon distribution. It is possible to lose money by investing in securities.

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44%Yes

44%Yes56%

No

Lo estimé

Pregunté a un asesor financiero

Completé una hoja de cálculoo utilicé una calculadora

Have you tried to determine how much money

you’ll need in retirement?

How did you make the determination?

(multiple answers allowed)

The 2009 Retirement Confidence Survey, Employee Benefit Research Institute, April 2009.

Bottom line: Your future is worth planning wisely.

Guessed/made own estimate

Asked a financial advisor

Filled out a worksheet or used an online calculator

Other

60%

33%

27%

11%

9

About 28% of people surveyed by AARP said they spent more time watching reality TV in the last month than they spent planning for retirement over the last 10 years. And, about 43% said they spent more time planning their most recent vacation than they spent managing their financial assets to last a lifetime.1

Yet, you may be retired — working part time, starting a new career, running your own business, going back to college, pursuing lifelong hobbies and interests, traveling, volunteering — for decades. Shouldn’t you spend at least as much time planning for a comfortable, fulfilling retirement as you do getting ready for a summer vacation?

Of course you should! Take time to determine how much money you’ll need to enjoy your retirement. And most importantly, take time to learn the basics of wise investing.1 AARP Financial Inc., October 2008.

Put your future first

Bottom line: Devote more time to planning your future.

People who spent more time planning their last vacation than planning for retirement1

Average length of vacation:1 to 2 weeks

Average length of retirement:10, 20, or 30 years


August 2020

August 2030

August 2040

Guessed/made own estimate

Asked a financial advisor

Filled out a worksheet or used an online calculator

Other

August

43%

Follow a strategy: Decide where to investYour investment strategy is your flight plan, setting your speed, your direction, and your estimated time of arrival.

Investing forces most people out of their comfort zone. In a recent survey, 59% of respondents gave themselves a grade of C or worse when it comes to financially preparing for retirement.1 However, economists contend we handle complex, everyday financial tasks — payments on homes, cars, credit cards, and taxes — surely and successfully. In short, most of us underestimate our financial abilities.

You can do this: The four fundamentals of investing

Taken step by step, investing need not be intimidating. All you need are flying lessons. Once you understand the basics, you can make wise decisions with your money. Let’s start with the four fundamentals of smart investing: 1) outpace inflation, 2) set a goal, 3) manage risk, and 4) diversify. 1AARP Financial Inc., October 2008.


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1 Outpace inflation

Inflation is the headwind that complicates your flight. If not for inflation, preparing for retirement would be as simple as putting money in a savings account. Unfortunately, it’s not that easy. Returns on savings accounts rarely beat inflation over time. Even by the historically low inflation rate of 3%, the annual cost of living will almost double in only 20 years. Prudent investing can help you outpace inflation.

Living expenses at a 3% inflation rate

2 Set a goal

As a rule of thumb, many professional money managers say your long-term goal should be to replace at least 75% of your current income when you retire. Some even put the figure as high as 90% or more.2 Of course, this depends on how active your retirement will be, how long you have to save, and how long you intend to keep working.

3 Manage risk

Remember, there is such a thing as playing it too safe. When you invest, you put money at risk. There is a chance that you’ll lose money, or that it won’t grow as much as expected. A wise investor doesn’t try to avoid all risk, but does try to manage it.

4 Diversify

The key to investing is to establish and follow a sound strategy. Asset allocation, also known as diversification, is one recommended strategy. Decades of research indicate that asset allocation is one of the most important factors affecting investment returns.3 Asset allocation is the way your money is spread among three major asset classes: stocks, bonds, and cash/stable value options.

Diversifying among asset classes helps minimize risk, but it cannot eliminate the risk of investment losses. Also, there is no assurance that assuming more risk will enhance results. However, if one asset class performs poorly, it only affects one part of your investment portfolio, which is your total collection of assets.

The everyday impact of inflation

0

20000

40000

60000

80000

100000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

Today 20 yrs 30 yrs

$40,

000

$72,

244

$97,

090

NOW 24 years

3% annual inflation


2 Bureau of Labor Statistics: Consumer Expenditures Survey, November 2008.3 www.sec.gov, March 2009.

In just 24 years, a modest 3% annual inflation rate can cut your saving’s purchasing power in half!

Overview of three major asset classes

Let’s swoop down for a closer look at the three major asset classes:

• Stocks are shares in the ownership of a company. Stocks carry greater risks than bonds and cash/stable value options. However, in the past, stocks have offered the greatest potential for long-term growth.

• Bonds are issued by corporations or government agencies. Whereas stocks are shares of ownership in a company, bonds are essentially “loans” by investors to corporations or government agencies. You invest in a bond seeking a return on the amount you put in, plus a fixed rate of interest, paid at some set date.

• Cash/stable value options are similar to bonds but hold money for much shorter periods. They offer low investment risk, but with low returns.

Your employer-sponsored retirement plan offers access to these asset classes through a variety of investment options that pool investments in stocks, bonds, and other investments, as well as balanced combinations of stocks and bonds. Some retirement plans also offer company stock as an investment option.

12


Cash/stable value

Bonds

Balanced (Stocks/Bonds)

Stocks

Mor

e risk

, high

er po

tentia

l retu

rn

Less risk, lower potential return

The pyramid of investment risk

Generally, the greater the risk of any investment option, the greater the potential return; the lower the risk, the lower the potential return. The investment pyramid illustrates the relative risk and potential return of the three major asset classes, and balanced stock and bond options. As you move up the pyramid, the higher the risk and potential return.

Please note: There are significant differences in risk among investment options within these asset classes.

13


Overview of stocks

Stocks may be categorized by market capitalization, geographic scope, business sector, market index, or investment styles. Stock prices will fluctuate with changing market conditions.

Market capitalization, also known as “market cap,” is a measure of a company’s size. It is determined by multiplying the market price of the stock by the number of shares outstanding. For example, if a company has 1 million shares outstanding and its stock trades at $50 a share, its market cap is $50 million ($50 x 1 million shares).

There are three general levels of market cap:

• Large-cap stocks are shares of national and multinational firms with well-known products or services provided to consumers, other businesses, or governments.

• Mid-cap stocks are shares of usually established firms in established industries with regional, national, and sometimes international markets for their products and services.

• Small-cap stocks are shares of often emerging firms in sometimes emerging industries. However, these small companies can be established firms with local, regional, and sometimes even national and international markets. Small-cap stocks may be riskier than large- and mid-cap stocks.

14

Geographic stock categories carry risks associated with international or global investing. These include differences in regulation of financial data and reporting, currency exchange differences, and economic and political systems that may be different than those in the United States. Generally:

• International stocks are shares of companies based in foreign countries.

• Global stocks are shares of both U.S. and foreign companies.

• Emerging markets stocks are shares of companies based in developing countries.

Business sector stocks are shares of companies in a particular market, industry, or economy, such as healthcare or utilities. The investment risk associated with a specific sector is greater than the risk associated with the overall stock market.

Investment style groupings include:

• Value stocks priced lower than may be expected, with the intention of selling them later at a higher value.

• Growth stocks of companies with strong growth potential or a history of growing earnings. As a general rule, growth stocks tend to be more volatile than value stocks.

• Blends of growth and value stocks.

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Overview of bonds

There are different types and grades of bonds with varying risks. The market values, or prices, of bonds will fluctuate with changing interest rates. Since bonds pay fixed interest rates, their prices increase when prevailing interest rates fall and decrease when interest rates move higher. In other words, interest rates in the overall economy and bond prices tend to move in opposite directions.

Bonds may provide downside protection in a falling stock market. While stocks have outpaced bonds over most time periods — and especially over long-term periods — bonds tend to be less volatile than stocks and tend to rise when stocks decline. Since bonds usually behave differently than stocks, they may help smooth out the performance of a diversified portfolio. However, past performance is no guarantee of future results.

Overview of balanced investment options

Balanced investment options hold a combination of stocks and bonds. They offer a level of risk between pure stock funds and pure bond funds. Such funds are designed to manage downturns in the stock market without too much of a loss. However, balanced investment options will usually increase less than all-stock investment options during a rising market.

Overview of cash/stable value options

Cash/stable value investment options generally hold short-term money market instruments that simply seek to hold their value and pay a modest level of interest. These instruments are liquid, which means they can be quickly converted to cash. An investment in a money market instrument is not insured or guaranteed by the FDIC or any government agency. Although a money market instrument seeks to preserve its value, it is possible to lose money by investing in one.


16

Determine your investor profile

Before you decide which investment options to choose, consider your time horizon and risk tolerance. Your time horizon is the number of years your investments have the potential to grow. Generally, the longer you can invest before you intend to withdraw your money, the greater the level of risk you can take. Your risk tolerance is the level of investment risk with which you’re comfortable. Both determine your investor profile. A brief profile questionnaire is available to help guide your decision making.

Rebalancing can keep you on course

Over time, changes in the stock and bond markets may cause your portfolio to shift away from your target asset allocation. It’s wise to revisit your account annually to make certain your asset allocation strategy is still aligned with your investor profile. Rebalancing does not assure a profit and does not protect against investment losses. It is a method to help manage risk.

Your strategy is your compass

A celebrated aviator’s flying instructor once pointed at the compass and told her, “Trust this, but nothing else. Your judgment will never be more accurate than that needle. It will tell you where you ought to be going and the rest is up to you.”1 A thoughtful, well-designed asset allocation strategy can be your compass.

Enrolling in your employer-sponsored retirement plan is a strong commitment to your future. Save every payday, save as much as you can, and take time to invest with care.

1West with the Night, Beryl Markham, Houghton Mifflin Company, 1942.


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Save, and you’ll find you can fly.

Over seventy million Americans can’t be wrong.

That’s how many are enrolled to save every payday in employer-sponsored retirement plans. More than 8 out of 10 who are offered a retirement plan are enrolled.2 You can enjoy the same advantage to save for a secure financial future. Ask about joining your retirement plan. Don’t let another payday fly by.

2 National Compensation Survey: Employee Benefits in Private Industry in the United States, U.S. Department of Labor, August 2008.

This material was prepared to support the promotion and marketing of investment and insurance products. Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

Insurance and annuity products are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Policies and contracts sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. Affiliates are separately responsible for their own financial and contractual obligations.

A tradition of integrityAt Lincoln Financial Group, we have a heritage of helping companies find solutions to their funding and benefit needs — with the same honesty, integrity, and responsibility that you’d expect from our namesake. It’s a legacy that we proudly and respectfully continue each day.

The strength of Lincoln Financial Group® affiliatesWe believe our continued commitment to strength and stability is indispensable to who we are and critical to your confidence in us. We pride ourselves on being able to identify and deliver sophisticated financial strategies and product solutions for the creation, protection, and utilization of capital. We are committed to assist companies in helping their employees and their families redefine their retirement because we don’t believe retirement is an end — it’s an opportunity for everyone to start doing what they were meant for all along.

©2009 Lincoln National Corporation

www.LincolnFinancial.com > Employer Retirement Plans

Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.

Affiliates are responsible for their own financial and contractual obligations.

LCN0904-2028800 EM-GEN-09-0947 EM-FLY-BRC257_Z01 PPL 9/09 Z01 Order code: EM-FLY-BRC257

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