In This Issue. pg. 01 pg. 03 pg. 05 pg. 07

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1 In This Issue pg. 01 pg. 03 pg. 05 pg Tips toward financial independence Learn strategies for taking command of personal finances and long-term financial goals. Get motivated to save for retirement No matter your age, focusing on future needs can help you save for retirement. Plan for your future family now Whether you re a new parent or hope to be one soon, it pays to consider family finances today. Shop around to save money Comparing prices can help you save money and jump-start your savings.

2 6 Tips toward financial independence Learn strategies for taking command of personal finances and long-term financial goals. What does it mean to be financially independent? Chad J. Larsen, PRP, AIF, president of Moreton Retirement Partners in Denver, Colorado, defines it as being able to meet your core financial needs and also plan for the future. If debt and day-to-day spending have taken control of your finances, following these tips could start tipping the scale back in your favor. One: Set goals. Define specific goals and determine a deadline for when you d like to achieve them. A well-defined goal gives you a clearer direction and helps guide your decisions. Two: Make a budget. Set a budget with your goals in mind, and make saving a top priority. There are two types of people: those who spend first and save what s left, and those who save first and spend what s left, says Douglas R. Peete, ChFC, owner and financial representative at Douglas R. Peete & Associates in Overland Park,

3 Plan Ahead. Get Ahead : Spring 2014 Page 2 Kansas. The second group is always more successful financially. Three: Know what you re spending. Track your spending and beware of added fees and charges. Using a credit card can rack up expenses quickly, especially when you factor in interest. Try using cash instead. A lot of times people s spending habits change when they start using cash because they realize what s going out and how hard they had to work for that money, Larsen says. Four: Practice discipline. Once you have your goals and budget set, stick to them. Financial independence has much more to do with self-discipline than how much money you make, Larsen says. Allocate your money where it s needed not wanted. Ask for help. Get the help you need to become more financially independent. Contact a financial professional to review your options. Five: Save and invest wisely. A combination of savings and investments can help create a healthier financial picture. Choose investments you believe will increase your net worth, and take advantage of pretax saving, such as an employer-sponsored retirement plan. Most important, Peete says, consider all the factors before making a decision, and consult with a financial professional you trust. Six: Reassess your situation at least annually or as significant events occur. Life changes, such as the birth of a child, or financial accomplishments, such as paying off a loan, can call for readjusting your strategy. For example, after paying off debt you may find extra money in your budget. Use that money wisely by applying it toward long-term financial goals. Chad J. Larsen and Moreton Retirement Partners are not affiliates of any company of the Principal Financial Group. Douglas R. Peete and Douglas R. Peete & Associates are not affiliates of any company of the Principal Financial Group. The subject matter in this communication is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, , Member SIPC and/or independent broker dealers. Securities sold by a Princor Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group (The Principal ), Des Moines, IA Certain investment options may not be available in all states or U.S. commonwealths Principal Financial Services, Inc. t w 1/2014

4 Get motivated to save for retirement No matter your age, focusing on future needs can help you save for retirement. For most of us still working, the topic of retirement triggers mixed emotions. While the dream of retiring is appealing, the reality of entering our golden years often is marked by uncertainty. It s not surprising that the Employee Benefit Research Institute 1 reports that only 13 percent of American workers are very confident about having enough money to retire comfortably. Whether your retirement is decades away or at hand, it s never too late to plan and save for retirement. Here are some easy ways to get and stay motivated: Picture the positive. Imagine your life in retirement. Does it start when you re 45 or 75? Do you travel to exotic destinations or spend winters at your vacation home? Perhaps you d like to help your grandchildren with their college tuition. When money isn t an issue, your retirement dreams can be unlimited. Thinking of saving for retirement as a way of achieving specific dreams puts a positive spin on the activity. Picture the opposite. Now think of your life as a retiree in a different way. We ve seen reports that the Social Security trust fund could experience a 25 percent shortfall in about 20 years. What if you can t count on that income to supplement what you ve saved for retirement? What if health problems erode your disposable income? What is retirement like if you have to take low-paying part-time jobs to subsist? Staying realistic about the possibilities positive and negative may provide the discipline you need to keep saving.

5 Plan Ahead. Get Ahead : Spring 2014 Page 4 Set milestone goals. It may be easier to save for retirement if you break it down into smaller steps. Set short-term goals, such as In one year I ll pay off a credit card and divert that money to retirement savings, or I want to double my savings in the next five years. When you achieve a milestone, celebrate your accomplishment and then set a new goal. Keep things simple. If possible, automate your retirement savings. Arrange to have a portion of your pay contributed directly into a retirement account. And consider signing up for automatic increases to keep pace with your plans for retirement. Calculate your savings. Are you on track to reach your retirement goals? Get a better idea with the My Principal Edge Milestones calculator. Make small changes. Boosting your retirement savings doesn t mean you have to make significant changes. Look for opportunities in everyday activities such as skipping the daily gourmet coffee to save around $100 each month and invest that money for your future. Small amounts contributed today have the potential to grow into much larger savings by retirement. Reinforce good habits. At least annually or as significant events occur, review the amount you re saving with our calculator to measure your progress. And work with a financial professional to periodically recharge your retirement dreams Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, March The subject matter in this communication is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, , Member SIPC and/or independent broker dealers. Securities sold by a Princor Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group (The Principal ), Des Moines, IA Certain investment options may not be available in all states or U.S. commonwealths Principal Financial Services, Inc. t w 1/2014

6 Plan for your future family now Whether you re a new parent or hope to be one soon, it pays to consider family finances today. Starting a family may be one of the happiest events in your life and possibly the most expensive. According to the U.S. Department of Agriculture, a middleincome family with a child born in 2012 can expect to spend about $241,080 for food, shelter and other necessities over the first 17 years and that doesn t include college costs. But you can ease the impact of expenses by getting serious about your family budget even before your baby arrives. Here are some key considerations: Start saving. Most important is to have an emergency fund in place, says Robert Payne, senior financial services representative with the Principal Financial Group in Greensboro, North Carolina. He suggests saving three to six months worth of your take-home pay. Get budget-wise. Develop a family budget that takes into account current living expenses plus new-baby-related expenses. Besides ongoing costs including health insurance, copays for doctors visits, diapers, formula, food, clothing and day care factor in onetime costs for outfitting the nursery and stocking up on baby gear. Avoid going overboard with these purchases. Consider college. It s never too early to start saving for college. Payne suggests learning about your state s college savings program, which may offer preferential tax treatment. Remember retirement. You need to make sure you continue to fund your

7 Plan Ahead. Get Ahead : Spring 2014 Page 6 retirement at least up to the plan s matching contribution, Payne says. Skimping on contributions to save for future college expenses can be detrimental to your retirement. Employer-sponsored retirement plan savings don t count against financial aid benefits. Estimate expenses. Get an idea of how much it might cost to have a child with our calculator. Be smart about benefits. Contact your corporate benefits department to determine which changes you are allowed to make after welcoming a new child into your family. You may want to enroll in benefits you previously skipped, such as long-term disability, or a flexible spending account to pay for day care. Plan ahead. Payne suggests meeting with a financial professional to help ensure you have adequate life insurance coverage, and consulting with your attorney to draw up a will. Although you may not want to think about worst-case scenarios during such a happy time, you can rest easier knowing your family is provided for if you aren t around. The subject matter in this communication is provided with the understanding that The Principal is not rendering legal, accounting or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax or accounting obligations and requirements. Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, , Member SIPC and/or independent broker dealers. Securities sold by a Princor Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group (The Principal ), Des Moines, IA Certain investment options may not be available in all states or U.S. commonwealths Principal Financial Services, Inc. t w 1/2014

8 Shop around to save money Comparing prices can help you save money and jump-start your savings. Even with the best budgeting skills, you may spend unnecessary money if you aren t smart about where you buy your goods and services. By taking time to compare the prices and details of purchases, you can divert saved dollars into helping fund your financial goals. Here are four purchases we see as worthy of comparison shopping: 1. Cell phone carriers: There is an abundance of carriers and plans. Find the best price by reviewing your usage and choosing a plan that fits your needs. For example, people with low usage might consider prepaid plans. Be sure to look into available carriers before settling on one. 2. Check into multiple banks: When choosing a bank, consider the extra services offered and any hidden fees. Some banks charge maintenance or ATM fees that can quickly add up. Look for a bank that offers those services for free along with other perks, such as online banking, and competitive interest rates. 3. Avoid overpaying for prescription drugs: By 2020, annual spending on prescription drugs in the U.S. is projected to top $512 billion, according to the government s Centers for Medicare & Medicaid Services. Keep your costs down by being smart about what you pay. Shop around to find the lowest price, and if you have a regular pharmacy, see whether it matches the cost. Also ask about generic options often they are just as effective but cost much less.

9 Plan Ahead. Get Ahead : Spring 2014 Page 8 4. Research your loan: Interest rates on loans can be costly. Compare all of your options to find a loan with the right terms for you. You should look at lenders too and choose one with a good reputation. Stay on top of your budget. Do you know where your money goes? Track your spending with the help of our budgeting calculator. Although shopping around may sound like a lot of work, you can make it easier by comparing prices online rather than in the store. Once you ve found the best deal, you can apply the money you ve saved to retirement. Even a small amount can potentially make a big difference years down the road, thanks to compounding earnings. And always keep an eye out for additional ways to save. WE LL GIVE YOU AN EDGE The subject matter in this communication is provided with the understanding that The Principal is not rendering legal, accounting or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax or accounting obligations and requirements. Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, , Member SIPC and/or independent broker dealers. Securities sold by a Princor Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group (The Principal ), Des Moines, IA Certain investment options may not be available in all states or U.S. commonwealths Principal Financial Services, Inc. PT347F t w 1/2014