®
Successful
outcomes
First Quarter | 2011
Give your retirement a 2% boost
Social Security taxes have been reduced by 2% in 2011. Consider investing that extra 2% into your retirement
plan account. It may make a big difference at retirement and you’ll see little to no difference in your net pay.
Take a look at this example. A person making $50,000 a year could save $38.50 biweekly. After 20 years,
that could mean an additional $3,251 in his or her retirement account. This is investing that extra 2% in 2011
alone! If the additional 2% is continued for the next 20 years, it could mean an extra $39,438 at retirement.
Source: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 [HR 4853]
Effect of contributing 2011 tax savings
Annual income
Tax saving for 2011
Amount per pay
Assets after 20 years of extra 2% contributions
$30,000
$600
$23.00
$22,677
$50,000
$1000
$38.50
$39,438
The example assumes a hypothetical 6% annual return compounded daily and is based on bi-weekly contributions. It’s intended to illustrate
effects of time and compounding on investments. It doesn’t represent the actual performance of any investment or retirement program or
reflect any applicable fees or taxes. If these were included, the results would be lower. It is not intended to predict or protect investment
results. Investing involves market risk, including possible loss of principal.
Help battle the market’s ups and downs
Do you worry about fluctuating prices in the investments in your retirement plan? If you contribute to your retirement plan
in fixed amounts in regular intervals, you’re helping your account withstand these changes in prices. If you aren’t, we’ll take a
look at some reasons you might want to consider doing it. It’s called “dollar cost averaging” and what it really means is that
you buy different amounts of your investments depending on the price at the time. When prices are high, you are buying
less. When they’re low, you’re buying more.
Let’s take a look at why it works. Here’s an example using egg purchases. In one given week, a dozen eggs may cost $2.
The next week they cost $3 and the following week, only $1. If you purchase a set number of eggs each week regardless
of the price, you would have spent $6 for three dozen eggs in three weeks. This results in each egg costing $.17.
But, if you dollar cost averaged and spent a set amount of money, rather than purchased a set amount of eggs, you would
have eight more eggs for the same cost with each egg costing only $.14.
Here’s how it works:
Week
Cost per dozen
Buying a set number
1
$2
$2 12 eggs
2
$3
$3 12 eggs
$2 8 eggs
3
$1
$1 12 eggs
$2 24 eggs
$6 36 eggs
$6 44 eggs
Total
Dollar cost averaging
$2 12 eggs
Contributing to your retirement plan works in a similar way. Keep in mind that dollar cost averaging does not guarantee a profit or protect
against loss in a declining market. Dollar cost averaging can be an effective strategy only when money is invested at regular intervals over
a period of time. If you want it to work, you’ll need to consider your financial ability to continue to invest ongoing.
Log into your account today to set up your contributions for a set amount at regular intervals!
© 2011 All Rights Reserved.
Nationwide, the Nationwide framemark, Nationwide Financial, and On Your Side are service marks of
Nationwide Mutual Insurance Company. Nationwide Investment Services Corporation, member FINRA.
NFM-1819AO.31 (04/1 1)
Successful
outcomes
First Quarter | 2011
Give your retirement a 2% boost
Social Security taxes have been reduced by 2% in 2011. Consider investing that extra 2% into your retirement
plan account. It may make a big difference at retirement and you’ll see little to no difference in your net pay.
Take a look at this example. A person making $50,000 a year could save $38.50 biweekly. After 20 years,
that could mean an additional $3,251 in his or her retirement account. This is investing that extra 2% in 2011
alone! If the additional 2% is continued for the next 20 years, it could mean an extra $39,438 at retirement.
Source: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 [HR 4853]
Effect of contributing 2011 tax savings
Annual income
Tax saving for 2011
Amount per pay
Assets after 20 years of extra 2% contributions
$30,000
$600
$23.00
$22,677
$50,000
$1000
$38.50
$39,438
The example assumes a hypothetical 6% annual return compounded daily and is based on bi-weekly contributions. It’s intended to illustrate
effects of time and compounding on investments. It doesn’t represent the actual performance of any investment or retirement program or
reflect any applicable fees or taxes. If these were included, the results would be lower. It is not intended to predict or protect investment
results. Investing involves market risk, including possible loss of principal.
Help battle the market’s ups and downs
Do you worry about fluctuating prices in the investments in your retirement plan? If you contribute to your retirement plan
in fixed amounts in regular intervals, you’re helping your account withstand these changes in prices. If you aren’t, we’ll take a
look at some reasons you might want to consider doing it. It’s called “dollar cost averaging” and what it really means is that
you buy different amounts of your investments depending on the price at the time. When prices are high, you are buying
less. When they’re low, you’re buying more.
Let’s take a look at why it works. Here’s an example using egg purchases. In one given week, a dozen eggs may cost $2.
The next week they cost $3 and the following week, only $1. If you purchase a set number of eggs each week regardless
of the price, you would have spent $6 for three dozen eggs in three weeks. This results in each egg costing $.17.
But, if you dollar cost averaged and spent a set amount of money, rather than purchased a set amount of eggs, you would
have eight more eggs for the same cost with each egg costing only $.14.
Here’s how it works:
Week
Cost per dozen
Buying a set number
1
$2
$2 12 eggs
2
$3
$3 12 eggs
$2 8 eggs
3
$1
$1 12 eggs
$2 24 eggs
$6 36 eggs
$6 44 eggs
Total
Dollar cost averaging
$2 12 eggs
Contributing to your retirement plan works in a similar way. Keep in mind that dollar cost averaging does not guarantee a profit or protect
against loss in a declining market. Dollar cost averaging can be an effective strategy only when money is invested at regular intervals over
a period of time. If you want it to work, you’ll need to consider your financial ability to continue to invest ongoing.
Log into your account today to set up your contributions for a set amount at regular intervals!
© 2011 All Rights Reserved.
Nationwide, the Nationwide framemark, Nationwide Financial, and On Your Side are service marks of
Nationwide Mutual Insurance Company. Nationwide Investment Services Corporation, member FINRA.
NFM-1819AO.31 (04/1 1)