Retirement Strategies, Ltd.Registered Investment AdvisorJames A. Lindner, CFP®, ChFC®,CLU®Partner5060 Parkcenter Ave Suite ADublin, OH 43017614-799-8668fax 614-799-8661jlindner@retirement-strategies.comwww.retirement-strategies.com

April 2014The Fed's Great Unwind and Your Portfolio

Spring Cleaning Your Debt

Saving through Your Retirement Plan atWork? Don't Let These Five Risks Derail YourProgress

Cartoon: Do You Know the Way toRetirement?

Spring Planning ThoughtsPreparing the way....The Fed's Great Unwind and Your Portfolio

See disclaimer on final page

We are all hoping that winter has finally ended andlooking forward to Spring and the Summer warmth. Weare also optimistically cautious regarding potentialmarket returns for this year with the expectation that theyare not likely to repeat the results of 2013.

We continue to believe that a well diversified assetallocation and a long term perspective of past results aswell as reasonable future expectations is appropriate formanaging our clients' retirement strategies. We arealways available to discuss your expectations.

Thank you for your confidence in our firm. The greatestcompliment you can provide is the referral of your friendsand loved ones. We appreciate any introductions youwould be willing to share of individuals who might benefitfrom learning about our services.

Your Advisory Team at Retirement Strategies, Ltd.

Jay, Jerry, Bob, Jeff, Nancy, Sara and Jordan

After more than five years of unprecedentedsupport for the economy, the Federal ReserveBoard has begun to reduce its purchases ofbonds. And though the Fed has said interestrates may stay low even after unemploymenthas fallen to 6.5%, higher rates increasinglyseem to be a question of timing. Both of thoseactions can affect your portfolio.

Bond purchases: the tale of the taperIn the wake of the 2008 credit crisis, the Fed'spurchases of Treasury and mortgage-backedbonds helped keep the bond market afloat,supplying demand for debt instruments whenother buyers were hesitant. Fewer purchasesby one of the bond markets' biggest customersin recent years could mean lower total overalldemand for debt instruments. Since reduceddemand for anything often leads to lowerprices, that could hurt the value of your bondholdings.

On the other hand, retiring baby boomers willneed to start generating more income from theirportfolios, and they're unlikely to abandonincome-producing investments completely.Those boomers could help replace some of thelost demand from the Fed. Also, the Fed'splanned retreat from the bond-buying businesshas roiled overseas markets in recent months;when that kind of uncertainty hits, globalinvestors often seek refuge in U.S. debt.

Rising interest ratesWhen interest rates begin to rise, investors willface falling bond prices, and longer-term bondstypically feel the impact the most. Bond buyersbecome reluctant to tie up their money forlonger periods because they foresee higheryields in the future. The later a bond's maturitydate, the greater the risk that its yield willeventually be superseded by that of newerbonds. As demand drops and yields increase toattract purchasers, prices fall.

There are various ways to manage that impact.You can hold individual bonds to maturity; youwould suffer no loss of principal unless theborrower defaults. Bond investments also canbe laddered. This involves buying a portfolio ofbonds with varying maturities; for example, a

five-bond portfolio might be structured so thatone of the five matures each year for the nextfive years. As each bond matures, it can bereinvested in an instrument that carries a higheryield.

If you own a bond fund, you can check theaverage maturity of the fund's holdings, or thefund's average duration, which takes intoaccount the value of interest payments and willgenerally be shorter than the average maturity.The longer a fund's duration, the more sensitiveit may be to interest rate changes. Note: Allinvesting involves risk, including the loss ofprincipal, and your shares may be worth moreor less than you paid for them when you sell.Before investing in a mutual fund, carefullyconsider its investment objective, risks, fees,and expenses, which are outlined in theprospectus available from the fund. Read itcarefully before investing.

For those who've been diligent about saving, orwho have kept a substantial portion of theirinvestments in cash equivalents such assavings accounts or certificates of deposit,higher interest rates could be a boon, as risingrates would increase their potential income.The downside, of course, is that if higher ratesare accompanied by inflation, such cashalternatives might not keep pace with risingprices.

Balancing competing risksBonds may be affected most directly by Fedaction, but equities aren't necessarily immuneto the impact of rate increases. Companies thatdidn't take advantage of low rates by issuingbonds may see their borrowing costs increase,and even companies that squirreled away cashcould be hit when they return to the bondmarkets. Also, if interest rates becomecompetitive with the return on stocks, that couldreduce demand for equities. On the other hand,declining bond values could send manyinvestors into equities that offer both growthpotential and a healthy dividend.

Figuring out how future Fed decisions mayaffect your portfolio and how to anticipate andrespond to them isn't an easy challenge. Don'thesitate to get expert help.

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Spring Cleaning Your DebtIt's springtime--time for you to take stock ofyour surroundings and get rid of the dirt andclutter that you've accumulated during this pastyear.

In addition to typical spring cleaning tasks, youmay want to take this time to focus on yourfinances. In particular, now may be as good atime as ever to evaluate your debt situation andtry to reduce and/or eliminate any debtobligations you may have. The following aresome tips to get you started.

Determine whether it makes sense torefinanceIf you currently have consumer loans, such as amortgage or an auto loan, take a look at yourinterest rates. If you find that you are payinghigher-than-average interest rates, you maywant to consider refinancing. Refinancing to alower interest rate can result in lower monthlypayments on a loan and potentially less interestpaid over the loan's term.

Keep in mind that refinancing often involves itsown costs (e.g., points and closing costs formortgage loans), and you should factor theminto your calculations of how much refinancingmight save you.

Consider loan consolidationLoan consolidation involves rolling smallindividual loans into one larger loan, allowingyou to make only one monthly payment insteadof many.

Consolidating your loans into one single loanhas several advantages, including making iteasier to focus on paying down your debt. Inaddition, you may be able to get a lowerinterest rate or extend the loan term on aconsolidated loan. Keep in mind, however, thatif you do extend the repayment term on aconsolidated loan, it could take you longer toget out of debt and ultimately you may end uppaying more in interest charges over the life ofthe loan.

Look into taking out a home equity loanIf you own a home and have enough equity,you may be able to use a home equity loan topay off your debt. The interest on home equityloans is often lower compared to other types ofloans (e.g., credit cards) and is usually taxdeductible.

Home equity loans can be an effective way topay off debt. However, there are somedisadvantages to consider. If you end up havingan available line of credit with a home equityloan, you'll need to be careful not to incur anynew debt. In addition, when you take out ahome equity loan, your home is potentially at

risk since it serves as collateral for the loan.

Evaluate whether you should investyour money or pay off your debtAnother effective way to reduce your debt loadis to take cash that you normally would puttoward certain investment vehicles and use it topay down your debt. In order to determinewhether this is a good option, you'll have tocompare the current and anticipated rate ofreturn on your investments with interest youwould pay on your debt. In general, if you wouldearn less on your investments than you wouldpay in interest on your debts, using your extracash to pay off your debt may be the smarterchoice.

For example, assume that you have $1,000 in asavings account that earns an annual rate ofreturn of 3%. Meanwhile, you have a credit cardbalance of $1,000 that incurs annual interest ata rate of 19%. Over the course of a year, yoursavings account earns $30 interest while yourcredit card costs you $190 in interest. In thiscase, it might be best to use your extra cash topay down your high-interest credit card debt.

Come up with a payment strategy toeliminate credit card debtIf you have a significant amount of credit carddebt, you'll need to come up with a paymentstrategy in order to help eliminate it. Someoptions include:

• Making lump-sum payments using availablefunds such as an inheritance or employmentbonus

• Prioritizing repayments toward cards with thehighest interest rates

• Utilizing balance transfers

Whenever possible, make additionalpaymentsMaking payments in addition to your regularloan payments or the minimum payment duecan reduce the length of the loan and the totalinterest paid over the life of a loan. Additionalpayments can be made periodically and at atime of your choosing (e.g., monthly, quarterly,or annually).

Making more than the required minimumpayment is especially important when it comesto credit card debt. If you only make theminimum payment on a credit card, you'llcontinue to carry the bulk of your balanceforward for many years without actuallyreducing your overall balance.

Making more than therequired minimum paymentis especially important whenit comes to credit card debt.If you only make theminimum payment on acredit card, you'll continueto carry the bulk of yourcredit card balance forwardfor many years withoutactually reducing youroverall balance.

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Saving through Your Retirement Plan at Work? Don't Let TheseFive Risks Derail Your ProgressAs a participant in your work-sponsoredretirement savings plan, you've made a veryimportant commitment to yourself and yourfamily: to prepare for your future.Congratulations! Making that commitment is animportant first step in your pursuit of asuccessful retirement. Now it's important to stayfocused--and be aware of a few key risks thatcould derail your progress along the way.

1. Beginning with no end in mindSetting out on a new journey without knowingyour destination can be a welcome adventure,but when planning for retirement, it's generallybest to know where you're going. According tothe Employee Benefit Research Institute(EBRI), an independent research organization,workers who have calculated a savings goaltend to be more confident in their retirementprospects than those who have not.Unfortunately, EBRI also found that less thanhalf of workers surveyed had actually crunchedthe numbers to determine their need (Source:2013 Retirement Confidence Survey, March2013).

Your savings goal will depend on a number offactors--your desired lifestyle, preretirementincome, health, Social Security benefits, anytraditional pension benefits you or your spousemay be entitled to, and others. By examiningyour personal situation both now and in thefuture, you can determine how much you mayneed to accumulate to provide the income you'llneed during retirement.

Luckily, you don't have to do it alone. Youremployer-sponsored plan likely offers tools tohelp you set a savings goal. In addition, afinancial professional can help you furtherrefine your target, breaking it down to answerthe all-important question, "How much should Icontribute each pay period?"

2. Investing too conservatively...Another key to determining how much you mayneed to save on a regular basis is targeting anappropriate rate of return, or how much yourcontribution dollars may earn on an ongoingbasis. Afraid of losing money, some retirementinvestors choose only the most conservativeinvestments, hoping to preserve theirhard-earned assets. However, investing tooconservatively can be risky, too. If yourcontribution dollars do not earn enough, youmay end up with a far different retirementlifestyle than you had originally planned.

3. ...Or aggressivelyOn the other hand, retirement investors strivingfor the highest possible returns might selectinvestments that are too risky for their overall

situation. Although it's a generally acceptedprinciple to invest at least some of your moneyin more aggressive investments to pursue yourgoals and help protect against inflation, theamount you invest should be based on anumber of factors.

The best investments for your retirementsavings mix are those that take intoconsideration your total savings goal, your timehorizon (or how much time you have untilretirement), and your ability to withstandchanges in your account's value. Again, youremployer's plan likely offers tools to help youchoose wisely. And a financial professional canalso provide an objective, third-party view.

4. Giving in to temptationMany retirement savings plans permit planparticipants to borrow from their own accounts.If you need a sizable amount of cash quickly,this option may sound appealing at first; afterall, you're typically borrowing from yourself andpaying yourself back, usually with interest.However, consider these points:

• Any dollars you borrow will no longer beworking for your future

• The amount of interest you'll be required topay yourself could potentially be less thanwhat you might earn should you leave themoney untouched

• If you leave your job for whatever reason, anyunpaid balance may be treated as a taxabledistribution

For these reasons, it's best to carefully considerall of your options before choosing to borrowfrom your retirement savings plan.

5. Cashing out too soonIf you leave your current job or retire, you willneed to make a decision about your retirementsavings plan money. You may have severaloptions, including leaving the money where it is,rolling it over into another employer-sponsoredplan or an individual retirement account, ortaking a cash distribution. Although receiving apotential windfall may sound appealing, youmay want to think carefully before taking thecash. In addition to the fact that your retirementmoney will no longer be working for you, youwill have to pay taxes on any pretaxcontributions, vested employer contributions,and earnings on both. And if you're under age55, you will be subject to a 10% penalty tax aswell. When it's all added up, the amount left inyour pocket after Uncle Sam claims his sharecould be a lot less than you expected.

Keep in mind that noinvestment strategy canguarantee success. Allinvesting involves risk,including the possible lossof your contribution dollars.

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Retirement Strategies, Ltd.Registered Investment AdvisorJames A. Lindner, CFP®, ChFC®,CLU®Partner5060 Parkcenter Ave Suite ADublin, OH 43017614-799-8668fax 614-799-8661jlindner@retirement-strategies.comwww.retirement-strategies.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014

IMPORTANT DISCLOSURES

Retirement Strategies, Ltd. is aRegistered Investment Adviser.Advisory services are only offeredto clients or prospective clientswhere Retirement Strategies, Ltdand its representatives are properlylicensed or exempt from licensure.No advice may be rendered byRetirement Strategies, Ltd. unlessa client service agreement is inplace.

Retirement Strategies, Ltd. doesnot provide tax, accounting or legaladvice. Past performance is noguarantee of future returns.Investing involves risk and possibleloss of principal capital. Thispresentation or resource is solelyfor informational purposes

Will rising interest rates impact my pension benefits?If you're nearing retirementand plan to elect lifetimepayments from your pensionplan, rising interest rates won'thave any impact on your

benefits. But if you're considering a lump-sumpayment, rising interest rates can be critical.

Pension plans calculate your lump sum bydetermining the present value of your futurepension payments. The two primarycomponents in this calculation are your lifeexpectancy, and interest rates. Life expectancyis determined using IRS tables. These tablesare unisex (that is, the same life expectancyfactors apply to both men and women). Thisresults in women getting lump sums that areslightly smaller than they would otherwise getbased on true gender-based factors, and mengetting slightly larger lump sums.

Until recently, the interest rate plans used tocalculate lump-sum payments was the U.S.30-year Treasury bond rate. However,employers can now use a higher corporatebond rate. What's important to understand isthat the amount of your lump sum payment isinversely proportional to interest rates--that is,the higher the rate, the smaller your lump sum.

If your plan offers lump-sum payments, thereare two questions you need to ask yourself.First, "Is a lump-sum right for me?" This is adifficult question, and the answer depends on anumber of factors. Is the pension your primarysource of retirement income? How is your (andyour spouse's) health? Will you be giving upvaluable subsidized benefits built into the plan'sbenefit payments, or cost-of-living increases? Alump sum gives you control over yourretirement dollars and removes the risk of earlydeath, but shifts the investment risk from theplan to you. Remember that you'll be giving upa benefit payment that's guaranteed for your(and if you're married, your spouse's) life. Willyou be able to make your lump sum last for aretirement that may last 30 years or more?

If you decide a lump sum is the right choice, thesecond question is, "When should I take themoney?" Interest rates remain near historiclows, and it's only a matter of time before theystart heading back up. If you're approachingretirement and believe interest rates will rise inthe near future, you may want to considertaking the lump sum sooner rather than later.Your plan can provide you with an estimate ofyour lump sum based on various interest rates.

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