Chlebina Capital Management, LLCLarry ChlebinaPresident843 N. Cleveland-Massillon RdSuite DN12Akron, OH 44333330-668-9200lchlebina@ccapmanagement.comwww.chlebinacapital.com

Why Save for Retirement?

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Why Save for Retirement?When you envision retirement, you probablysee yourself living comfortably, doing whatmakes you happy. Your dreams could be aslofty as traveling the world or as simple asspending more time with your friends andfamily. Everyone's vision is unique.

Fortunately, whatever your dream, youremployer wants to help you make it reality--byoffering a retirement savings plan. Here's whyyou should consider taking full advantage ofyour plan.

Enhance your income strategy

Like so many other major life events, asuccessful retirement depends on advanceplanning. No matter what your age, now is thetime to start thinking about where yourretirement income will come from. Severalpossible resources may be available.

For instance, some people assume that SocialSecurity will meet all of their retirementincome needs. Others believe that SocialSecurity will dry up before they retire. While noone can say exactly what the future holds, thetruth probably falls somewhere in the middle.

According to the Social SecurityAdministration's Fast Facts & Figures AboutSocial Security, 2014, the government-runprogram provides less than 40% of the incomereceived by today's retirees. While someretirees get just a small percentage of theirincome from Social Security, others rely onthe program as their only income source. Asyou think about how Social Security will fit intoyour plan, consider that it was never intendedto be a retiree's only source of income. SocialSecurity is meant as a safety net to help keeppeople out of poverty.

Another possible income resource is atraditional pension plan. Theseemployer-provided plans, which rewardlong-term employees with a steady stream ofincome in retirement, were common during thetwentieth century. Over the past couple ofdecades, however, traditional pension planshave become increasingly scarce. Even if youare one of the lucky ones who will receivetraditional pension income in retirement, youmay still need an extra cushion to be able toretire comfortably.

The cost of waiting

The younger you are, the less likely it is thatsaving for retirement is a high priority. If you

fall into this category, consider this: Time canbe one of your greatest advantages. Delayingyour savings plan has the potential to be acostly mistake.

For example, say you invest $3,000 everyyear beginning at age 20. If your investmentsearn 6% per year, your account would beworth $680,000 at age 65. If you wait until age35 to begin saving, your account would beworth just $254,000 at age 65. And whathappens if you put off saving until age 45? Inthat case, you would accumulate just$120,000 by age 65. In this example, a25-year delay cost you more than half amillion dollars.

Of course, bear in mind that this example ishypothetical and for illustrative purposes only.It assumes a fixed 6% rate of return; however,no investment return can be guaranteed. Therate of return on your account will change overtime. This example also does not take intoaccount taxes or investment fees, which wouldreduce the performance shown if they wereincluded. Withdrawals from your retirementsavings plan are taxed at then-current rates,and distributions prior to age 59½ are subjectto a 10% penalty tax (special rules apply toRoth accounts).

Current and future benefits

When utilized wisely, an employer-sponsoredretirement savings plan can become yourmost important tool in planning for retirement.Your plan offers several benefits, includingconvenience (and possibly free money), taxadvantages, and a variety of investments tochoose from. Here's a quick snapshot:

• Convenience: When you participate in anemployer-sponsored plan, yourcontributions are deducted automaticallyfrom your paycheck. Known as "payrolldeduction," this process makes contributingto your plan easy and automatic--you payyourself first before you even receive themoney. In addition, some plans offer an

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 19.3 years.* Andsince Social Security accountsfor only 35% of total aggregateincome for aged persons,**Social Security alone may notbe enough to see you throughyour retirement years.

*Source: National VitalStatistics Reports, Volume 63,Number 9, 2014

**Source: Fast Facts &Figures About Social Security,2014, Social SecurityAdministration

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employer match, which is essentiallyfree money. If your plan offers a match,be sure to contribute at least enough toget the full amount of your employercontribution.

• Tax advantages: Depending on thetype of plan offered, you may be able tocut your tax bill both now and in thefuture. With a traditional 401(k)-typesavings plan, contributions are deductedfrom your pay before income taxes areassessed. This method of "pretax"saving reduces your taxable income,and therefore the amount of tax you payUncle Sam each year that youparticipate in your plan. In addition, yourinvestments benefit from tax deferral,which means you don't have to paytaxes on your pretax contributions, anyemployer contributions, and anyearnings until you withdraw the money.Some employers also offer Rothaccounts as part of the plan. With Rothaccounts, you don't receive animmediate tax benefit, but qualifiedwithdrawals are tax free.*

• Investment choice: Your plan offers avariety of investment options to choosefrom, so that you can put together astrategy that pursues your goals within acomfortable level of risk. Depending onthe specific offerings in your plan, youmay be able to combine a mix ofinvestments or choose a single onedesigned to meet your investmentneeds.

*Withdrawals from non-Roth plans andnonqualified withdrawals from Roth planswill be taxed at then-current rates. Inaddition, early withdrawals will be subjectto a 10% penalty tax.

It's up to you

Your employer-sponsored plan offers animportant opportunity. Take the firstimportant step toward turning yourretirement dreams into reality by taking fulladvantage of your retirement savings plan.

How a Retirement Savings Plan WorksEmployer-sponsored retirement savings plans,such as 401(k), 403(b), and 457 plans,present an ideal opportunity to build a nestegg for retirement. You contribute to the planvia payroll deduction, which can make it easierfor you to save for retirement. In addition, youmay receive significant tax benefits along theway. Following is a brief overview of how yourplan works.

Tax advantages

"Pretax" means that your contributions arededucted from your pay and contributed intoyour plan account before federal (and moststate) income taxes are calculated. Thisreduces the amount of income tax you paynow. Moreover, you don't pay income taxes onthe amount you contribute--or any returns youearn on those contributions--until youwithdraw your money from the plan.

Example(s): Taylor earns $40,000 a year andcontributes 6% of his salary, or $2,400, to hisplan on a pretax basis. Because of his planparticipation, his taxable income is reduced to$37,600. He won't be taxed on thosecontributions or any earnings on them until hetakes money out of his plan.

Your plan might also offer a Roth account.Contributions to a Roth account are made onan after-tax basis. Although there's no up-front

tax benefit when contributing to a Roth plan,withdrawals of earnings are free from federalincome taxes as long as they are "qualified."(Note: With Roth accounts, taxes apply towithdrawals of earnings only; withdrawals ofcontribution dollars are tax free.)

Generally a withdrawal from a Roth account isqualified if:

• It's made after the end of a five-yearwaiting period (starting on January 1 of theyear you make your first contribution) AND

• It's made after you turn 59½, becomedisabled, or die

Because employer-sponsored savings planswere established to help American workersprepare for their retirement, special rules arein place to discourage people from takingmoney out of the plan prior to retirement. Withcertain exceptions, taxable withdrawals fromtraditional (i.e., non-Roth) accounts prior toage 59½ and nonqualified withdrawals ofearnings from Roth accounts are subject toboth regular income taxes and a 10% penaltytax.

Traditional or Roth?

The decision of whether to contribute to atraditional plan, a Roth plan, or both dependson your personal situation. If you think you'llbe in a similar or higher tax bracket when you

If your plan offers anemployer match, be sure tocontribute enough to takemaximum advantage of it.The match is a valuablebenefit offered by youremployer--additional moneyto invest for your future.

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retire, you may find Roth contributions moreappealing since qualified income from a Rothaccount is tax free. However, if you think you'llbe in a lower tax bracket in retirement, thencontributing to a traditional pretax accountmay be more appropriate.

Employer contributions

Employers are not required to contribute toemployee accounts, but many do throughwhat's known as a matching contribution. Youremployer can match your pretax contributions,your Roth contributions, or both. Most matchprograms are based on a certain formula--say,50% of the first 6% of your salary that youcontribute. If your plan offers an employermatch, be sure to contribute enough to takemaximum advantage of it. The match is avaluable benefit offered by your employer. Inthe example formula above, the employer isoffering an additional 3% of your salary toinvest for your future. Neglecting to contributethe maximum (and therefore not receiving thefull match) is essentially turning down freemoney.

Often, employer contributions are subject to avesting schedule. That means you earn theright to those contributions (and the earningson them) over a period of time.

There are two possible vesting schedules foran employer-sponsored plan. One is called"cliff vesting," which means you have no rightto the employer-provided portion of youraccount for your first three years with theorganization. In year four of your employment,you are 100% vested--i.e., you have access tothe entire amount of your employer'scontributions and associated earnings.

The second type of schedule is called "gradedvesting." With this type of plan, you cannotaccess the employer contributions andearnings in year one, but beginning in yeartwo, you earn 20% of the amount each year.After six years, you are fully vested--100% ofthe employer matching funds are yours.

Keep in mind that you are always fully vestedin your own contributions and the earnings onthem.

Eligibility rules and contributionlimits

You can contribute to your employer's plan assoon as you're eligible, as defined by the plandocuments. Some plans will require up to aone-year waiting period, while others allowyou to begin participating right away.

Still others provide for automatic enrollment,which means you will automatically beenrolled in the plan unless you specifically optout. The automatic contribution amount istypically low, perhaps 3% or less, and yourcontributions will be placed in the plan'sdefault investment.

If you have been automatically enrolled in yourplan, be sure to check the contribution amountand investment selection to make sure theyare appropriate for your needs.

The IRS imposes combined limits on howmuch participants can contribute to theirtraditional and Roth savings plans each year.In 2015, that limit is $18,000. Your employermay impose lower limits, however.

Participants age 50 and older can makeadditional "catch-up" contributions of $6,000per year. (Special catch-up limits apply tocertain participants in 401(k) and 457(b)plans.)

One smart move

An employer-sponsored retirement savingsplan offers a tax-advantaged opportunity tosave for your future. Participating in your plancould be one of the smartest financial movesyou make.

Choosing Investments for Your RetirementSavings PlanYour employer-sponsored retirement planoffers a variety of investments to choose from.How do you know which ones may be right foryour needs? How many investments shouldyou choose? And how much should you directto each one? The keys to answering thesequestions are to understand your options andconsider how they relate to your own personal

circumstances.

Asset classes: the buildingblocks

When choosing investments to pursue yourretirement accumulation goals, you'll need tobalance the amount of risk you take in your

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investment mix (or "portfolio") with thepotential for returns. Generally speaking, theriskier the investment, the higher the returnpotential. But with this higher return potentialcomes a greater chance of loss, including theloss of your original investment dollars (your"principal").

There are three basic asset classes to choosefrom, and each has different risk/returncharacteristics.

• Stocks: Stocks represent ownership in acompany--i.e., when you own stock in anorganization, you actually own a smallportion of that company. Stocks are theriskiest of the three asset classes, buthistorically have offered the greatest returnpotential over time. Stocks are offered inmany different categories; some tend to beriskier than others. For example, the stocksof large, well-established companies aretypically less risky than those of smaller,younger firms. Similarly, stocks ofcompanies based in developed nations,such as the United States, are typically lessrisky than stock of companies in "emergingmarket" regions, where economies are notconsidered developed. Also, differences infinancial reporting, currency exchange risk,as well as economic and political riskunique to the specific country canadversely affect the value of thesesecurities.

• Bonds: Bonds are essentially loans madeto a company or government (the"borrower") by the bondholder (you). Inreturn for the loan, the borrower promisesto pay income at a stated interest rate.However, there are no guarantees thatsteady repayments will occur or that thebond (or how much you paid for it) willmaintain its value. For this reason, bondstypically fall in the mid-range of therisk/return spectrum. Like stocks, bondscome in a variety of categories, and sometend to be riskier than others. Bonds issuedby the U.S. government tend to be morestable, while high-yield or "junk" bonds aretypically among the most risky. U.S.Treasury securities are guaranteed by thefederal government as to the timelypayment of principal and interest.

• Stable value/cash: These investments aredesigned to protect your investment dollarswhile pursuing modest returns. They're alsoused as a place to temporarily "park" yourmoney while you decide on an investmentstrategy. Although this asset classgenerally carries a lower risk of loss toprincipal, it does have the risk that yourinvestment returns won't beat the risingcost of living, potentially reducing your

purchasing power over time. And althoughmany cash investments strive to preserveyour principal, there is no guarantee thatthey will be able to do so.

Mutual funds: instantdiversification

For the most part, investors cannot purchaseindividual stocks, bonds, and other "securities"through a retirement plan. Rather, they canaccess them by choosing from a variety ofmutual funds.

Mutual funds pool the money of many differentinvestors to buy a series of securities. Byinvesting in a fund or several funds, you ownsmall portions of each individual security. Thefund's manager chooses securities for thefund based on its stated objective, which isusually growth, income, or capitalpreservation. Generally, growth funds invest instocks; income funds, in bonds (ordividend-paying stocks); and capitalpreservation funds, in stable value or cashsecurities. (Please note that whiledividend-paying stocks are intended to provideincome, the amount of a company's dividendcan fluctuate with earnings, which areinfluenced by economic, market, and politicalevents. Dividends are typically not guaranteedand could be charged or eliminated.)

Investing through mutual funds is an ideal wayto utilize an investing principle known asdiversification, which is the process ofcombining different types of investments inyour portfolio to help manage risk. Thethinking is that when one investment performspoorly, another may be holding steady orgaining in value.

Asset allocation: putting thepieces together

After familiarizing yourself with the investmentoptions in your plan, the next step is to puttogether your mix, or "asset allocation."Although many factors will contribute to yourasset allocation, three are particularlyimportant--your savings goal, risk tolerance,and time horizon.

• Savings goal: How much do you need toaccumulate in your plan to potentiallyprovide the income you'll need throughoutretirement? Targeting a goal will help youdevelop your strategy. After all, beforemapping a route, you should first knowwhere you're going.

• Risk tolerance: How much loss--5%, 10%,15%--would it take to make you worry?

The investments you select foryour retirement savings planwill be based on your ownpersonal circumstances.

Before investing in any mutualfund, be sure to request aprospectus, which containsmore information aboutobjectives, risks, fees, andexpenses, and should be readcarefully before investing.

Asset allocation anddiversification cannotguarantee a profit or protectagainst a loss. All investinginvolves risk, including thepossible loss of principal.

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Risk tolerance refers to your financialand emotional ability to withstand dips inyour account value as you pursue yourgoal, and also helps you determine howto allocate your plan contribution dollarsamong the investments you select.

• Time horizon: How much time do youhave until you will need to tap themoney in your account? The longer youhave, the more time you may have toride out those dips in pursuit oflong-term results.

Generally speaking, a large goal, a hightolerance for risk, and a long time horizon

In many cases, your plan's educationmaterials will provide tools to help you set agoal, gauge your risk tolerance, andchoose investments for your strategy. Youmight also seek the assistance of afinancial professional, who can provideexpertise and an objective viewpoint.

might translate into an ability to take onmore risk in a portfolio. The opposite is alsotrue: smaller goals, a low tolerance for risk,and a shorter time horizon might warrant amore conservative approach.

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Chlebina Capital Management,LLC

Larry ChlebinaPresident

843 N. Cleveland-Massillon RdSuite DN12

Akron, OH 44333330-668-9200

lchlebina@ccapmanagement.comwww.chlebinacapital.com

December 28, 2015Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015

IMPORTANT DISCLOSURES

Securities offered through Securities Service Network, Inc., Member FINRA/SIPC. Fee-based advisoryservices are offered through Chlebina Capital Management, LLC., a registered investment advisor.

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