Nicholson Financial Services, Inc.David S. NicholsonFinancial Advisor89 Access RoadSte. CNorwood, MA 02062781-255-1101866-668-1101david@nicholsonfs.comwww.nicholsonfs.com

Basic Retirement Planning

June 12, 2020

Retirement Planning — The BasicsYou may have a very idealistic vision ofretirement — doing all of the things that younever seem to have time to do now. But howdo you pursue that vision? Social Securitymay be around when you retire, but thebenefit that you get from Uncle Sam may notprovide enough income for your retirementyears. To make matters worse, few employerstoday offer a traditional company pension planthat guarantees you a specific income atretirement. On top of that, people are livinglonger and must find ways to fund thoseadditional years of retirement. Sucheye-opening facts mean that sound retirementplanning is critical.

But there's good news: Retirement planning iseasier than it used to be, thanks to the manytools and resources available. Here are somebasic steps to help get you started.

Determine your retirementincome needs

It's common to discuss desired annualretirement income as a percentage of yourcurrent income. Depending on whom you'retalking to, that percentage could be anywherefrom 60% to 90%, or even more. The appealof this approach lies in its simplicity. Theproblem, however, is that is doesn't accountfor your specific situation. To determine yourspecific needs, you may want to estimate yourannual retirement expenses.

Use your current expenses as a starting point,but note that your expenses may change bythe time you retire. If you're nearingretirement, the gap between your currentexpenses and your retirement expenses maybe small. If retirement is many years away, thegap may be significant, and projecting yourfuture expenses may be more difficult.

Remember to take inflation into account. Theaverage annual rate of inflation over the past20 years has been approximately 2.2%.1

And keep in mind that your annual expensesmay fluctuate throughout retirement. Forinstance, if you own a home and are paying amortgage, your expenses may drop if themortgage is paid off by the time you retire.Other expenses, such as health-related costs,may increase in your later retirement years. Arealistic estimate of your expenses could helptell you about how much yearly income youmay need to live comfortably.

Calculate the gap

Once you have estimated your retirementincome needs, take stock of your estimatedfuture assets and income. These may comefrom Social Security, a retirement plan atwork, a part-time job, and other sources. Ifestimates show that your future assets andincome could fall short of what you need, therest would have to come from additionalpersonal retirement savings.

Figure out how much you'llneed to save

By the time you retire, you'll need a nest eggthat could provide you with enough income tofill the gap left by your other income sources.But exactly how much is enough? Thefollowing questions may help you find theanswer:

• At what age do you plan to retire? Theyounger you retire, the longer yourretirement will be, and the more moneyyou'll need to carry you through it.

• What is your life expectancy? The longeryou live, the more years of retirement you'llhave to fund.

• What rate of growth can you expect fromyour savings now and during retirement?Be conservative when projecting rates ofreturn.

• Do you expect to dip into your principal? Ifso, you may deplete your savings fasterthan if you just live off investment earnings.Build in a cushion to guard against theserisks.

Build your retirement fund:Save, save, save

When you know roughly how much moneyyou'll need, your next goal is to save thatamount. First, you'll have to map out a savingsplan that works for you. Assume a rate ofreturn that you are comfortable with, and thendetermine approximately how much you'llneed to save every year between now andyour retirement to reach your goal.

The next step is to put your savings plan intoaction. It's never too early to get started(ideally, begin saving in your 20s). To theextent possible, you may want to arrange tohave certain amounts taken directly from yourpaycheck and automatically invested inaccounts of your choice [e.g., 401(k) plans,

Why save for retirement?

Because people are livinglonger. According to the U.S.Administration on Aging,persons reaching age 65 havean average life expectancy ofan additional 19.5 years.*

*Source: NCHS Data Brief,Number 355, January 2020

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payroll deduction savings]. This arrangementcould help reduce the risk of impulsive orunwise spending that could threaten yoursavings plan — out of sight, out of mind. Ifpossible, save more than you think you'll needto provide a cushion.

Understand your investmentoptions

You need to understand the types ofinvestments that are available, and decidewhich ones are right for you.

If you don't have the time, energy, orinclination to do this yourself, hire a financialprofessional. He or she can explain theoptions that are available to you, and canassist you in selecting investments that areappropriate for your goals, risk tolerance, andtime horizon.

Use the right savings tools

The following are among the most commonretirement savings tools, but others are alsoavailable.

Employer-sponsored retirement plans allowingemployee deferrals [such as 401(k), 403(b),SIMPLE, and 457(b) plans] are powerfulsavings tools. Your contributions come out ofyour salary as pre-tax contributions (reducingyour current taxable income) and anyinvestment earnings are tax deferred untilwithdrawn. These plans often includeemployer-matching contributions and shouldbe your first choice when it comes to savingfor retirement. Both 401(k) and 403(b) planscan also allow after-tax Roth contributions.While Roth contributions don't offer animmediate tax benefit, qualified distributionsfrom your Roth account are free of federal(and possibly state) income taxes.

IRAs, like employer-sponsored retirementplans, feature tax-deferral of earnings. If youare eligible, traditional IRAs may enable you tolower your current taxable income throughdeductible contributions. Withdrawals,however, are taxable as ordinary income(unless you've made nondeductiblecontributions, in which case a portion of thewithdrawals will not be taxable).

Roth IRAs don't permit tax-deductiblecontributions but allow you to make tax-freewithdrawals under certain conditions. Withboth types, you can typically choose from awide range of investments to fund your IRA.

Annuities are generally funded with after-taxdollars, but their earnings are tax deferred(you pay tax on the portion of distributions thatrepresents earnings). There is generally noannual limit on contributions to an annuity. Atypical annuity provides income paymentsbeginning at some future time, usuallyretirement. The payments may last for yourlife, for the joint life of you and a beneficiary,or for a specified number of years (guaranteesare subject to the claims-paying and financialstrength of the issuing insurance company).

Note: In addition to any income taxes owed, a10% premature distribution penalty tax mayapply to taxable distributions made fromemployer-sponsored retirement plans, IRAs,and annuities prior to age 59½, unless anexception applies. Due to the Coronavirus Aid,Relief, and Economic Security (CARES) Act,penalty-free withdrawals of up to $100,000 willbe allowed during 2020 for coronavirus-relatedreasons.

1 Calculated from Consumer Price Index (CPI-U)data published by the U.S. Department of Labor,January 2020

Estimating Your Retirement Income NeedsYou know how important it is to plan for yourretirement, but where do you begin? One ofyour first steps should be to estimate howmuch income you'll need to fund yourretirement. That's not as easy as it sounds,because retirement planning is not an exactscience. Your specific needs depend on yourgoals and many other factors. However, bydoing a little homework, you could be well onyour way to a comfortable retirement.

Use your current income as astarting point

It's common to discuss desired annualretirement income as a percentage of yourcurrent income. Depending on whom you'retalking to, that percentage could be anywherefrom 60% to 90%, or even more. The appealof this approach lies in its simplicity, and thefact that there's a fairly common-senseanalysis underlying it: Your current incomesustains your present lifestyle, so taking thatincome and reducing it by a specificpercentage to reflect the fact that there maybe certain expenses you'll no longer be liablefor (e.g., payroll taxes) could, theoretically,allow you to sustain your current lifestyle.

There is no guarantee thatworking with a financialprofessional will improveinvestment results.

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The problem with this approach is that itdoesn't account for your specific situation. Ifyou intend to travel extensively in retirement,for example, you might easily need 100% (ormore) of your current income to get by. It's fineto use a percentage of your current income asa benchmark, but it's worth going through allof your current expenses in detail, and reallythinking about how those expenses mightchange over time as you transition intoretirement.

Project your retirementexpenses

Your annual income during retirement shouldbe enough (or more than enough) to meetyour retirement expenses. That's whyestimating those expenses is a big piece ofthe retirement-planning puzzle. But you mayhave a hard time identifying all of yourexpenses and projecting how much you'll bespending in each area, especially if retirementis still far off. To help you get started, here aresome common retirement expenses:

• Food and clothing• Housing: Rent or mortgage payments,

property taxes, homeowners insurance,property upkeep and repairs

• Utilities: Gas, electric, water, telephone,cable

• Transportation: Car payments, autoinsurance, gas, maintenance and repairs,public transportation

• Insurance: Medical, dental, life, disability,long-term care

• Health-care costs not covered byinsurance: Deductibles, co-payments,prescription drugs

• Taxes: Federal and state income tax,capital gains tax

• Debts: Personal loans, business loans,credit card payments

• Education: Children's or grandchildren'scollege expenses

• Gifts: Charitable and personal• Savings and investments: Contributions to

annuities and investment accounts• Recreation: Travel, dining out, hobbies,

leisure activities• Care for yourself, your parents, or others:

Costs for a nursing home, home healthaide, or other type of assisted living

• Miscellaneous: Personal grooming, pets,club memberships

Don't forget that the cost of living may go upover time. And keep in mind that your

retirement expenses may change from year toyear. For example, you may pay off yourhome mortgage or your children's educationearly in retirement.

Other expenses, such as health care andinsurance, may increase as you age. To helpprotect against these variables, build acomfortable cushion into your estimates (it'salways best to be conservative). Finally, afinancial professional can help you make sureyour estimates are as accurate and realistic aspossible.

Decide when you'll retire

To determine your total retirement needs, youcan't just estimate how much annual incomeyou need. You also have to estimate how longyou'll be retired.

Why? The longer your retirement, the moreyears of income you'll need to fund it. Thelength of your retirement will depend partly onwhen you plan to retire. This importantdecision typically revolves around yourpersonal goals and financial situation. Forexample, you may see yourself retiring at 50to get the most out of your retirement. Maybea booming stock market or a generous earlyretirement package will make that possible.Although it's great to have the flexibility tochoose when you'll retire, it's important toremember that retiring at 50 will end upcosting you a lot more than retiring at 65.

Estimate your life expectancy

The age at which you retire isn't the only factorthat determines how long you'll be retired. Theother important factor is your life span. We allhope to live to an old age, but a longer lifemeans that you'll have even more years ofretirement to fund. You may even run the riskof outliving your savings and other incomesources. To help guard against that risk, you'llneed to estimate your life expectancy. Youcan use government statistics, life insurancetables, or a life expectancy calculator to get areasonable estimate of how long you'll live.Experts base these estimates on your age,gender, race, health, lifestyle, occupation, andfamily history. But remember, these are justestimates. There's no way to predict how longyou'll actually live, but with life expectancieson the rise, it's probably best to assume you'lllive longer than you expect.

Identify your sources ofretirement income

Once you have an idea of your retirement

Once you have an idea ofyour retirement incomeneeds, your next step is toassess how prepared youare to meet those needs. Inother words, what sourcesof retirement income will beavailable to you?

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income needs, your next step is to assesshow prepared you are to meet those needs. Inother words, what sources of retirementincome will be available to you? Youremployer may offer a traditional pension thatwill pay you monthly benefits. In addition, youcan likely count on Social Security to provide aportion of your retirement income. To get anestimate of your Social Security benefits, visitthe Social Security Administration website(www.ssa.gov) and order a copy of yourstatement. Additional sources of retirementincome may include a 401(k) or otherretirement plan, IRAs, annuities, and otherinvestments. The amount of income youreceive from those sources will depend on theamount you invest, the rate of investmentreturn, and other factors. Finally, if you plan towork during retirement, your job earnings willbe another source of income.

Make up any income shortfall

If you're lucky, your expected income sourceswill be more than enough to fund even alengthy retirement. But what if it looks likeyou'll come up short? Don't panic— there areprobably steps that you can take to bridge thegap. A financial professional can help youfigure out the best ways to do that, but hereare a few suggestions:

• Try to cut current expenses so you'll havemore money to save for retirement

• Shift your assets to investments that havethe potential to outpace inflation (but keepin mind that investments that offer higherpotential returns may involve greater risk ofloss)

• Lower your expectations for retirement soyou may not need as much money

• Work part-time during retirement for extraincome

• Consider delaying your retirement for a fewyears (or longer)

Saving for Your RetirementYou have several options for saving for your retirement. How do you know what to do? Here'sone common approach:

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Traditional IRAs

Definition

A traditional individual retirement account orindividual retirement annuity (IRA) is apersonal savings plan that offers tax benefitsto encourage retirement savings. You cancontribute up to the lesser of $6,000 in 2020(unchanged from 2019), or 100% of yourtaxable compensation to a traditional IRA. Inaddition, individuals age 50 and older canmake an extra "catch-up" contribution of$1,000 in 2019 and 2020. Funds in atraditional IRA grow tax deferred until they arewithdrawn. Contributions may be fully orpartially tax deductible, depending on certainfactors.

Prerequisites

• You have taxable compensation (i.e.,wages, self-employment income) duringthe year

• You can deduct the full amount of yourcontribution provided that you are notcovered by an employer-sponsoredretirement plan

• If you are covered by anemployer-sponsored retirement plan, yourIRA deduction (if any) depends on yourmodified adjusted gross income (MAGI)and your federal income tax filing status.You will be entitled to a partial deduction in2020 if your MAGI is less than:1. $75,000 if your filing status is single or

head of household (less than or equalto $65,000 for a full deduction)

2. $124,000 if your filing status is marriedfiling jointly (less than or equal to$104,000 for a full deduction)

3. $10,000 if your filing status is marriedfiling separately (full deduction notavailable)

Note: These income ranges are for the 2020tax year, and are indexed for inflation.

• If you're not covered by an employer plan,but your spouse is, your deduction islimited in 2020 if your MAGI is $196,000 to$206,000, and eliminated if your MAGIexceeds $206,000.

Key strengths

• Deductible contributions are made on apre-tax basis

• Funds in traditional IRAs grow tax deferreduntil they are withdrawn

• IRAs offer a wide range of investmentchoices

• $1,362,800 of IRA assets may be protectedin the event of bankruptcy under federallaw [SEP IRAs, SIMPLE IRAs, andamounts rolled over to an IRA from anemployer qualified plan or 403(b) plan, plusany earnings on the rollover, aren't subjectto this dollar cap and are fully protectedunder federal law if you declarebankruptcy]1

Key tradeoffs

• Your ability to deduct contributions may bereduced or eliminated if you are covered byan employer-sponsored retirement plan

• Funds you withdraw from a traditional IRAare taxable income in the year received (tothe extent that the withdrawal consists ofdeductible contributions and investmentearnings)

• Withdrawals taken before age 59½ may besubject to a 10% premature distribution tax(subject to certain exceptions, including upto $100,000 in 2020 for coronavirus-relateddistributions)

• Minimum annual withdrawals are requiredafter you reach age 72 (required minimumdistributions)2

• Taxable portion of distributions will betaxed at ordinary income rates even iffunds represent long-term capital gains ordividends paid on stock held within the IRA

Variations from state to state

• States vary in their protection of IRAs fromcreditors

• States differ in their tax treatment of IRAs

How is it implemented?

• Open an IRA with a bank, financialinstitution, mutual fund company, lifeinsurance company, or stockbroker

• Select types of investments to fund the IRA(e.g., CDs, mutual funds, annuities)

• Make contributions up to the due date ofyour federal income tax return for that year(usually April 15 of the following year), notincluding extensions

1 This amount is scheduled to be adjusted forinflation in April 2022.

2 RMDs have been waived in 2020 due to theCARES Act.

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Roth IRAs

Definition

A Roth individual retirement account (IRA) is apersonal savings plan that offers tax benefitsto encourage retirement savings. You cancontribute up to the lesser of $6,000 in 2020(unchanged from 2019), or 100% of yourtaxable compensation to a Roth IRA. Inaddition, individuals age 50 or older can makean extra "catch-up" contribution of up to$1,000 in 2019 and 2020. Contributions to aRoth IRA are not tax deductible, but the fundsgrow tax deferred and distributions are taxfree under certain conditions.

Prerequisites

• You have taxable compensation (i.e.,wages, self-employment income) duringthe year of the contribution

• Your modified adjusted gross income(MAGI) for 2020 must be:1. $124,000 or less for a full contribution

if your tax filing status is single or headof household (partial contributionallowed, up to MAGI of $139,000)

2. $196,000 or less for a full contributionif your tax filing status is married filingjointly or qualifying widow(er) (partialcontribution allowed, up to MAGI of$206,000)

3. $10,000 or less for a partialcontribution if your tax filing status ismarried filing separately and you livedwith your spouse at any time duringthe year (full contribution not allowed)

Note: These income ranges are for the 2020tax year, and are indexed for inflation.

Key strengths

• Qualified distributions are tax free (andpenalty free)

• You have flexibility in withdrawing yourfunds prior to retirement

• You are not required to take anydistributions while you are alive

• Contributions can be made even if you arecovered by an employer-sponsoredretirement plan

• IRAs offer a wide range of investmentchoices

• $1,362,800 of IRA assets may be protectedin the event of bankruptcy under federallaw [SEP IRAs, SIMPLE IRAs, andamounts rolled over to an IRA from anemployer qualified plan or 403(b) plan, plusany earnings on the rollover, aren't subjectto this dollar cap and are fully protectedunder federal law if you declarebankruptcy]1

Key tradeoffs

• You receive no tax deduction when youmake a contribution

• If a withdrawal does not qualify for tax-freestatus, the portion that represents earningsis subject to federal income tax (andperhaps an early withdrawal penalty ifunder age 59½)

• Special penalty provisions may apply towithdrawals of Roth IRA funds that wereconverted or rolled over from a traditionalIRA, SEP IRA, or SIMPLE IRA

• There is always the possibility that the lawwill change in the future

Variations from state to state

• States vary in their protection of Roth IRAsfrom creditors

• States may differ in their tax treatment ofRoth IRAs

How is it implemented?

• Open a Roth IRA with a bank, financialinstitution, mutual fund company, lifeinsurance company, or stockbroker

• Select types of investments to fund theRoth IRA (e.g., CDs, mutual funds,annuities)

• Make contributions up to the due date ofyour federal income tax return for that year(usually April 15 of the following year), notincluding extensions

1 This amount is scheduled to be adjusted forinflation in April 2022.

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Comparison of Traditional IRAs and Roth IRAs

Traditional IRA Roth IRA

Maximum yearlycontribution (2020)

Lesser of $6,000 or 100% ofearned income ($7,000 if age50 or older)

Lesser of $6,000 or 100% ofearned income ($7,000 if age50 or older)

Income limitation forcontributions

No Yes

Tax-deductible contributions Yes. Fully deductible if neitheryou nor your spouse iscovered by a retirement plan.Otherwise, your deductiondepends on your income andfiling status.

No. Contributions to a RothIRA are never tax deductible.

Age restriction oncontributions

Not after 2019 No

Tax-deferred growth Yes Yes; tax free if you meet therequirements for a qualifieddistribution.

Required minimumdistributions during lifetime

Yes. Distributions must beginby April 1 following the yearyou reach age 72. (Note:RMDs have been waived in2020 due to the CARES Act.)

No. Distributions are notrequired during your lifetime.

Federal income tax ondistributions

Yes, to the extent that adistribution representsdeductible contributions andinvestment earnings.

No, for qualified distributions.For nonqualified distributions,only the earnings portion istaxable.

10% penalty on earlydistributions

Yes, the penalty applies totaxable distributions if you areunder age 59½ and do notqualify for an exception,including up to $100,000 in2020 for coronavirus-relateddistributions.

No, for qualified distributions.For nonqualified distributions,the penalty may apply to theearnings portion. (Special rulesapply to amounts convertedfrom a traditional IRA to a RothIRA.)

Includible in taxable estateof IRA owner at death

Yes Yes

Beneficiaries pay income taxon distributions after IRAowner's death

Yes, to the extent that adistribution representsdeductible contributions andinvestment earnings.

Generally no, as long as theaccount satisfies the five-yearholding requirement.

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401(k) Plans

Key strengths

• You receive "free" money if your contributions are matched by your employer (subject to yourplan's vesting schedule)

• You decide how much to save (within federal limits) and how to invest your 401(k) money• Your regular 401(k) contributions are made with pre-tax dollars• Earnings accrue tax deferred until you start making withdrawals, usually after retirement• Your Roth 401(k) contributions (if your plan allows them) are made with after-tax dollars;

there's no up-front tax benefit, but distributions of your contributions are tax free and, if yousatisfy a five-year waiting period, distributions of earnings after age 59½ or upon yourdisability or death, are also tax free.

• You may qualify for a partial income tax credit• Plan loans may be available to you (special loans provisions may apply in 2020 due to the

CARES Act)• Hardship withdrawals may be available to you, though income tax and perhaps an early

withdrawal penalty will apply• Your employer may provide full-service investment management• Savings in a 401(k) are generally exempt from creditor claims in bankruptcy (but not from IRS

claims)

Bear in mind ...

• 401(k)s do not promise future benefits; if your plan investments perform badly, you couldsuffer a financial loss

• If you withdraw taxable funds prior to age 59½ you may have to pay a 10% early withdrawalpenalty (in addition to ordinary income tax), unless an exception applies, including up to$100,000 in 2020 for coronavirus-related distributions

• The IRS limits the amount of money you can contribute to your 401(k)• Unless the plan is a SIMPLE 401(k) plan, a safe harbor 401(k) plan, or the plan contains a

qualified automatic contribution arrangement (QACA), you may have to work for youremployer up to six years to fully own employer matching contributions

A 401(k) plan is a type ofemployer-sponsoredretirement plan in which youcan elect to defer receipt ofsome of your wages untilretirement. If you makepre-tax contributions, yourtaxable income is reducedby the amount that youcontribute to the plan eachyear, up to certain limits.The contributed amount andany investment earnings aretaxed to you whenwithdrawn or distributed. Ifyour plan allows after-taxRoth contributions, there'sno immediate tax benefit,but qualified distributionsare tax free.

Most 401(k) plans offer anassortment of investmentoptions, ranging fromconservative to aggressive.

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Differences Between a Roth 401(k) and a Roth IRA

Roth 401(k) Roth IRA

Maximum contribution(2020)

Lesser of $19,500 or 100% ofcompensation

Lesser of $6,000 or 100% ofearned income

Catch-up contribution ifage 50 or older (2020)

$6,500 $1,000

Who can contribute? Any eligible employee Only taxpayers who earnless than:• Single/Head of household:

$139,000• Married (filing jointly):

$206,000• Married (filing separately):

$10,000

Lifetime requireddistributions after age 72?1

Yes No

Potential employermatching contribution?

Yes2 No

Federal bankruptcyprotection

Unlimited $1,362,800 (all IRAsaggregated)3

Loans available? Yes, if plan permits No

Five-year waiting period forqualified distributions?

Yes, from time you contributeto the plan4

Yes, from time you contributeto ANY Roth IRA

Distributions5 Upon termination ofemployment, age 59½,hardship, disability, anddeath

Any reason

Qualified tax-freedistributions5

59½, disability, and death 59½, disability, death,first-time homebuyer (up to$10,000 lifetime)

Nonqualified distributions Pro-rata distribution oftax-free contributions andtaxable earnings

Tax-free contributionsdistributed first, then taxableearnings

Rollovers To a Roth IRA, Roth 401(k),or Roth 403(b); from a Roth401(k) or Roth 403(b)

To and from a Roth IRA;from a Roth 401(k) or Roth403(b); from a traditionalIRA, 401(k), 403(b) or457(b)6

Investment choices Limited to investmentsoffered by employer

Virtually unlimited7

Notes:

1. RMDs are waived in2020 due to the CARESAct.

2. Employer contributionsand earnings aretaxable whendistributed.

3. SEP/SIMPLE IRAs andamounts rolled over toan IRA from anemployer qualified planor 403(b) plan, plus anyearnings on therollover, aren't subjectto this dollar cap andare fully protectedunder federal law if youdeclare bankruptcy.This amount isscheduled to beadjusted for inflation inApril 2022.

4. Or from the time youcontributed to aprevious employer'sRoth 401(k) plan, if yourolled over yourbalance from that planto the current plan.

5. Depending on planterms. Taxes andpotential penaltiesapply to earnings paidin a nonqualifieddistribution. Specialwithdrawal provisionsmay apply in 2020 dueto the CARES Act.

6. Taxable conversion.

7. Choices will depend onIRA trustee/custodian.

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Annuities

Key strengths

• Interest generated by an annuity accruestax deferred until withdrawn

• You can receive payments from the annuityfor your entire lifetime, regardless of howlong you may live1

• There are normally no contribution limits• There are many different types of annuities

to choose from• You pay taxes only on the earnings portion

of annuity payments• At death, proceeds from an annuity pass

free from probate to your namedbeneficiary

Key tradeoffs

• Annuities carry fees and expenses• May have limitations, exclusions, holding

periods, termination provisions, and termsfor keeping the policy in force

• May have surrender charges

• Contributions are not tax deductible• There may be tax penalties for early

withdrawals prior to age 59½ (subject toexceptions)

• Once you elect a specific distribution plan,annuitize the annuity, and begin receivingpayments, that election is usuallyirrevocable (with some exceptions)

Important: Annuities are long-term,tax-deferred investment vehicles intended tobe used for retirement purposes. Any gains intax-deferred investment vehicles, includingannuities, are taxable as ordinary incomeupon withdrawal. For variable annuities,investment returns and the principal value ofthe available sub-account portfolios willfluctuate based on the performance of theunderlying assets, so that the value of aninvestor's units, when redeemed, may beworth more or less than their original value.

1 Guarantees are subject to the claims-paying abilityand financial strength of the issuing insurancecompany.

Investing for Retirement

Keep in mind ...

• A well-diversified portfolio can help balancerisk. Diversification is a method used tohelp manage investment risk, it does notguarantee a profit or protect againstinvestment loss

• The earlier you start investing, the moreyou could contribute over the course ofyour working lifetime

• By starting early, your investments wouldhave a longer period of time to compound

• With a longer time frame, you may have alarger choice of investment possibilities

What to do ...

• Assess your risk tolerance• Determine your investing time frame• Determine the amount of money you can

invest• Choose investments that are appropriate

for your risk tolerance and time horizon• Seek professional management, if

necessary

Note: All investing involves risk, including thepossible loss of principal.

Variable annuities are soldby prospectus. Pleaseconsider the investmentobjectives, risks, charges,and expenses carefullybefore investing. Theprospectus, which containsthis and other informationabout the variable annuitycontract and the underlyinginvestment options, can beobtained from your financialprofessional. Be sure toread the prospectuscarefully before decidingwhether to invest.

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Nicholson Financial Services,Inc.

David S. NicholsonFinancial Advisor89 Access Road

Ste. CNorwood, MA 02062

781-255-1101866-668-1101

david@nicholsonfs.comwww.nicholsonfs.com

June 12, 2020Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. NicholsonFinancial Services, Inc. is not a registered broker/dealer, and is independent of Raymond James FinancialServices. Investment Advisory Services are offered through Raymond James Financial Services Advisors,Inc.

This information, developed by an independent third party, has been obtained from sources considered tobe reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material isaccurate or complete. This information is not a complete summary or statement of all available datanecessary for making an investment decision and does not constitute a recommendation. The informationcontained in this report does not purport to be a complete description of the securities, markets, ordevelopments referred to in this material. This information is not intended as a solicitation or an offer to buyor sell any security referred to herein. Investments mentioned may not be suitable for all investors. Thematerial is general in nature. Past performance may not be indicative of future results. Raymond JamesFinancial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should bediscussed with the appropriate professional.

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