T. Rowe Price Pre-Retirement Checklist

about retirementtimeit’s to think

What’s inside

How to use this guide 1

Five years before retirement 2

One year before retirement 4

In retirement 8

T. Rowe Price resources 10

Glossary 12

We’re here to help you get started

For a complete listing of retirement resources

from T. Rowe Price, please turn to page 10.

Or speak with a retirement specialist by call-

ing toll-free at 1-800-922-9945. A dedicated

group of phone representatives is available to

answer your preretirement questions.

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it’s TIME to think about retirement

If you’re like most people, your 50sand 60s are a time to celebrate thefullness of your life and achieve-ments to date. It is also a time toreview your set of goals that comewith this period in your life—goalsthat focus on your well-being inretirement. Along with issues suchas your health and where youintend to live, your long-term finan-cial security is one topic thatdeserves your attention now.

Up to this point, your investmentconcerns have been focused prima-rily on growth and accumulation ofyour nest egg. But as you get closerto your retirement date, that focusbegins to shift to new priorities ofstable and sustainable income—inshort, being able to “pay yourself”a reliable salary.

To develop an effective strategy toachieve your goals in retirement, youreally need to consider a combina-tion of two key factors:

• First, decide what your targetretirement income should be; and

• Second, take the timely steps tohelp you reach this target by yourretirement date.

This guide will help you betterunderstand what those stepsshould be—and when you shouldconsider taking them. By using ourtime-sensitive checklist that leadsup to and past your retirementdate, you can assess your needswell in advance, rather than waitinguntil the last minute. We’ve alsoincluded a glossary in the back ofthe guide for your reference.

While the future is unpredictable,the sooner you develop a realisticplan, the greater the likelihood thatyour savings will last for as long asyou need them. Let’s get started.

Preparing For Retirement? Timing Is Everything.

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At this phase of your retirementplanning process, doing yourhomework is a good idea. To start,you will need to determine if yourcurrent investment strategy is suffi-cient to reach your retirementgoals. If there is a shortfall, now isthe time to make adjustments.

Compare your current assets toyour savings goalsSee if your current retirement nestegg is on track to fulfill your retirementgoals. T. Rowe Price’s Retirement Plan-ning Worksheet can help. You can findit on the myRetirementPlan Web site(rps.troweprice.com), or request acopy by calling 1-800-922-9945.

Calculate your income needs atretirementFinancial experts recommend thatyour benchmark for retirementincome should equal 60% to 80%of your preretirement income. With

this number in mind, the next stepis to make a rough estimate of thevarious sources of retirementincome that will be available toyou—for example: Social Security,pension payments, part-timeemployment income, and incomefrom your taxable investments.Getting this total will give you a better idea of just how much youwill need from your tax-deferredretirement savings to make up thedifference.

Review your investment allocationsWould a sudden downshift in themarket lower your savings signifi-cantly? Is most of your investmentin one company’s stock? In eithercase, a course of action may be todiversify your portfolio in order tolower risk. But that doesn’t neces-sarily mean moving your entireportfolio into income (bonds) andstability (cash) investments.

Five Years Before Retirement: Setting Goals

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1 Year before retirement

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Positioning a significant percentageof your portfolio in growth (stocks)investments is important, even asyou near retirement.

You can also use Morningstar* tools available at rps.troweprice.comto help you track your investments(see pages 10 and 11 for details).

You may want to consult a financialadviser for a strategy that suits yourneeds.

Eliminate your debts and paymentsObviously, the fewer debts or pay-ments you have in retirement, themore income you can enjoy. Reviewand consider any large debts, suchas a mortgage, credit cards, or a carpayment that can be reduced orpaid off at this time. Design a strategyfor reducing or paying off as much

debt as possible during this five-year time frame.

Meet with a tax adviserWith so much at stake, it’s a goodidea to meet with an experiencedtax adviser as soon as possible.With proper guidance, your retirement savings could providea comfortable lifestyle throughoutretirement. For a list of tax andestate planning specialists, call the American Institute ofCertified Public Accountants at1-888-777-7077.

*Morningstar, an independent provider of research and analysis for investors, is based inChicago and supplies investment information on mutual funds, stocks, and variable annuities.

Remember to plan ahead. According to theU.S. Department of Health and HumanServices, adults age 65 and over face atwo-in-five chance of needing long-termnursing home care. For that reason, long-term care insurance may be an option toinvestigate. This may seem like an extraexpense, but it actually frees up moneyyou would otherwise have to set aside forlong-term care emergencies.

InRetirement

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At one year before you plan toretire, it’s time to get down to busi-ness and develop a detailed planof action based upon the frame-work you already have in place. Inaddition to finalizing your retire-ment income needs, other issuesinvolving your estate and benefici-aries need to be addressed, alongwith short- and long-term tax impli-cations. All in all, this is the stagewhere you put the finishing toucheson your retirement strategy.

Finalize your retirement income needsand strategyIt’s a good idea to reassess yourupcoming income needs. Havethere been any significant changesto your lifestyle that would affectthe level of income you need? Haveyou taken into consideration theeffects of future inflation?

One Year Before Retirement: Getting Ready

5 Yearsbefore retirement

1 Year before retirement

T. Rowe Price has investment ser-vices available for IRA shareowners.The services provide helpful invest-ment planning. Call an investmentspecialist at 1-800-541-4986 formore information.

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If you wish to work online, T. RowePrice offers interactive planning toolsthat help you monitor your currentinvestments and plan for the future.Log in to rps.troweprice.com, andcheck out the Planning Tools tab.

Decide on the distribution of yourretirement plan assetsUpon retirement, you’ll be facedwith choices regarding youremployer-sponsored retirementplan. Most options include receiv-ing a lump-sum payment, rollingover your investments to an individ-ual retirement account (IRA), orleaving your assets in the plan.*If you are retiring soon, T. RowePrice’s distribution kit can help youdecide which option is right for you.To request a distribution kit, call1-800-922-9945.

*If you own company stock in your retirement plan, you may have other options as well. Beforemaking a decision, we suggest you seek professional advice, especially if your company stockis a significant sum or has highly appreciated. Basic information about this potential tax benefitis on the T. Rowe Price Web site at troweprice.com.

You may be able to withdraw less than youthought. Many preretirees are surprised to learnthat they have been planning to withdraw more intheir first years of retirement than most financialplanners believe is prudent. For example, someretirees think they can comfortably withdraw 8%of their nest eggs each year in retirement. Instead,T. Rowe Price suggests they consider initial with-drawals of 4% (i.e., $400 for every $10,000saved), increasing that dollar amount for infla-tion annually thereafter.

InRetirement

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If you are considering early retire-ment, you should take into accountthat, if you are under age 59 1⁄2, youwill be assessed a 10% tax penaltyon any distributions taken from aTraditional IRA, unless you meetcertain requirements. However, ifyou leave the assets in youremployer’s retirement plan and youseparate from service at age 55 orolder, you may not be assessed thesame penalty when you take with-drawals.

All of these options can be complexand should be considered carefully.Each has advantages and disadvan-tages, depending on your individualretirement needs. You can callT. Rowe Price, as well as a financialor tax adviser, to help you determinewhich distribution option is best foryour situation.

Revisit your investment allocationAs retirement approaches, youshould revisit your plan for assetallocation. However, do not makethe mistake of shifting your entireportfolio into income (bonds) andstability (cash) investments. Eventhough you may soon need to makewithdrawals from your savings,growth (stock) investments canplay an important part in your port-folio. Significant exposure togrowth investments can give yoursavings the opportunity to growthroughout retirement.

Review your beneficiariesAn important step in setting up yourretirement plan accounts involvesdeciding who will be the heirs orbeneficiaries of your assets. Mostcommon beneficiaries are spouses,but others could be children, grand-children, nonfamily members,favorite charities, or a combination

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of these. Oftentimes, employer-sponsored retirement plans and IRAaccounts provide different distributionalternatives for your beneficiaries.Be sure you understand how thesechoices may affect your beneficiar-ies’ future investment strategies.Don’t forget to select secondarybeneficiaries as well.

Reassess your insurance needsAn important element of any retire-ment strategy is insurance. The rightinsurance can protect you againstthe financial risks of events like poorhealth or long-term care needs.Identify the particular risks in yourlife that you are willing to accept, asopposed to those risks for which youwant insurance coverage. Be sure to examine insurance options—such as health (including insuranceto supplement Medicare), long-term

care, personal liability, and propertyand casualty—with licensed insur-ance agents.

Apply for Social Security threemonths prior to when you wantit to beginYour Social Security benefits are animportant supplement to yourretirement income. To ensure asmooth transition, it’s a good ideato file for your retirement benefits atleast three months before you wantthem to begin. Keep in mind thatyou cannot receive Social Securityretirement benefits until you are age62 or older; and, the older you are,the larger the benefits will be (up toage 70). To start the filing process, callthe Social Security Administration at1-800-772-1213 or visit www.ssa.gov.

Think you’ll be bored in retirement? While youmay welcome the thought of retirement, you willprobably need to find new uses for your time. Forsome, volunteer work can be particularly fulfilling.For others, the challenge of starting a new careeror home-based business may be attractive. Manyretirees are even heading back to college.“Institutes for Learning in Retirement” are crop-ping up on campuses everywhere. Whatever youdecide, keep in mind retirement is simply anotherphase of life, full of choices and possibilities.

InRetirement

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Though you’ve reached your retire-ment date and are ready to enjoyyour new lifestyle, several issuesstill require your attention. A majorconsideration at this time is yournest egg and how it can be investedto last throughout your lifetime andto possibly provide a benefit toyour heirs.

Determine a withdrawal planAt this time, your assets may be in avariety of accounts. Decide fromwhich accounts you’ll be taking distri-butions. Of course, you’ll also have todecide how much you will be takingand how often. Generally speaking,the longer your tax-deferredaccounts have an opportunity togrow, the longer your assets maylast. In any case, consider keepingone to two years’ worth of yourincome needs in a stability (cash)investment.

T. Rowe Price can help you determinethe tax implications of taking with-drawals. You may also want to seekthe help of a tax adviser.

Begin your RMD withdrawalsWhether you need to take moneyfrom your tax-deferred assets or notwhen you reach age 70 1⁄2, you mustbegin taking a required minimumdistribution (RMD) annually fromyour Traditional and Rollover IRAs.RMD withdrawals from qualifiedretirement plans begin at age 70 1⁄2

or retirement, whichever is later.*For more information on your distribution requirements, callT. Rowe Price at 1-800-922-9945 anybusiness day between 7 a.m. and 10 p.m. eastern time.

In Retirement: Securing Your Future

*If you are still employed, check with your plan administrator in Human Resources for details.

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1 Yearbefore retirement

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Plan the distribution of your estateIf you haven’t done so already, youshould turn your attention to put-ting all aspects of your estate planin order. Make sure that your will isup to date, that you have chosenan executor carefully, that titles foryour assets are in order, and thatbeneficiary designations are appro-priate. You may also want to con-sider having a durable power ofattorney and a living will.

You may have a situation where thecreation of a revocable living trustwould also make sense. The estateplanning process can be complex. Tolearn more about the issues involved,we recommend you order the T. RowePrice Estate Planning Guide and visitthe tools and additional informationprovided on our Web site. To ensurethat your property is distributedaccording to your wishes, you maywant to enlist the services of a quali-fied estate planning attorney.

Consider gift givingIf you are fortunate enough to haveaccumulated a wealth of assets thatyou feel sure you will never outlive,you should consider a gift-givingprogram now. Besides cash, giftscan be property, securities, or evena grandchild’s tuition. Anotheroption might be a series of dona-tions to your favorite charities.Such acts of gift giving may reducethe size of your current estate, sothat estate taxes on your remainingassets will be reduced or eliminated.In any case, it is a wise idea toreview any plans you have for making significant gifts in advancewith a financial adviser, since inmost instances your gifts will beirrevocable.

Is a will necessary? Everyone should havea will. If you don’t, the state will decidewhat to do with your assets. Estate plan-ning is not just for the wealthy. Plan inadvance for your survivors, whether they’reloved ones, institutions, or both.

InRetirement

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At T. Rowe Price, we know that retire-ment planning can seem challenging.In response, we’ve created a widevariety of resources to help answeryour questions. From personal assis-tance, to comprehensive kits, toonline tools, you have access to abroad set of services and informationto help you make confident decisions.

Investment Services• Advisory Services.* Provide

helpful investment planning,including a complimentaryportfolio analysis and investmentguidance for IRA shareholders.

• Roll over to a Retirement Fund inan IRA.** With an IRA invested in one of the T. Rowe Price Retire-ment Funds, you don’t have thecomplex task of choosingindividual funds. A RetirementFund will provide you with a pre-assembled, well-diversifiedportfolio.

And we’ll adjust the fund over timeto reflect the need for reducedinvestment risk—gradually makingthe fund’s portfolio more conser-vative as the target retirement dateapproaches.

Technology• T. Rowe Price Web site

(troweprice.com). This site is forthose who are looking for morespecific financial planning infor-mation over the Internet. TheInvestment Planning & Tools tabincludes helpful information andcalculators regarding retirement,tax, and estate planning.

• T. Rowe Price myRetirementPlanWeb site (rps.troweprice.com).This site is for those who are lookingfor retirement plan information overthe Internet, including tips, calcula-tors, worksheets, and analyzers.

The Morningstar tools on themyRetirementPlan site can help youchoose and track your investments.

With T. Rowe Price, Time Is On Your Side

Call 1-800-922-9945 to request a prospectus, which includes investment objec-tives, risks, fees, expenses, and other information that you should read and consider carefully before investing.*Services of T. Rowe Price Associates, Inc., a federally registered investment adviser.There may be costs associated with these services.

**There are many considerations when planning for retirement. Your retirement needs, expenses,sources of income, and available assets are some important factors for you to consider in additionto the Retirement Funds. Before investing in one of these funds, also be sure to weigh yourobjectives, time horizon, and risk tolerance. The funds’ investment in many underlying fundsmeans that they will be exposed to the risks of different areas of the market.

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Morningstar® RetirementManagerSM† helps you develop aninvestment strategy with free, objec-tive guidance.

Morningstar® Portfolio X-RaySM

shows you an in-depth view ofyour portfolio’s investments.

Morningstar® Portfolio TrackerSM

lets you keep track of your invest-ments’ daily performance.

Morningstar® Portfolio WatchlistSM

provides experienced investorswith dollar target highs, lows, andvolumes.

Kits and Guides• Retirement Planning Kit. If you

have more than five years untilretirement, this kit can help youdetermine how much you shouldbe saving and provides tips onhow to increase savings.

• Distribution Kit. If you are retiringsoon and will be eligible to receivea distribution from your employer’sretirement plan, this kit providesinformation on various distributionoptions available to you.

• Estate Planning Guide. If youneed help creating an estateplan, this guide introduces you toimportant estate planning con-cepts in a way that will enableyou to evaluate and apply them to your situation.

Articles• Insights Reports. These reports

offer valuable information aboutretirement planning, financialplanning in retirement, and invest-ment strategies.

For More InformationTo receive or discuss any of ourproducts or services, please callT. Rowe Price at 1-800-922-9945.Our retirement specialists areavailable business days between 7 a.m. and 10 p.m. eastern time.T. Rowe Price Advisory Services andT. Rowe Price Investment Services are affiliated companies.

†The Morningstar name and trademarks are used under license from Morningstar Associates, LLC.Investment advisory products and services are provided solely by Morningstar Associates, LLC, aregistered investment advisor and a wholly owned subsidiary of Morningstar, Inc. MorningstarAssociates, LLC, is not affiliated with, nor is it an employee or agent of, T. Rowe Price. Plansponsors must elect to make the Morningstar services available.

Beneficiary (primary) – A person(s) or entity that receives the assets held inan employee’s retirement account upon the employee’s death.

Beneficiary (secondary) – A person(s) or entity that receives the assets heldin an employee’s retirement account upon the employee’s death if no primarybeneficiary is living.

Distribution – 1. Taking money out of a qualified retirement plan. 2. Paymentto mutual fund shareholders of dividends and realized capital gains earnedon securities in a fund’s investment portfolio.

Durable Power of Attorney (POA) – An instrument you use to grant anotherperson power to manage your financial affairs, even in the event of yourincapacity or incompetency. (Ask us about adding POAs to specific accountsyou have at T. Rowe Price.)

Estate – Total property owned by an individual; usually includes both assetsthat will avoid probate and those that will not.

Executor – The person appointed to carry out the directions and requests in awill. This person shall also dispose of all probate property of the deceased.

Living Will – A document that states that if the situation should arise inwhich it is not reasonable to expect recovery from severe or extreme physicalor mental disability, the person shall not be kept alive by extraordinarymeans. A living will is not considered a legal document in all states.

Required Minimum Distribution (RMD) – As of an employee’s required begin-ning date (RBD), the employee must start to take annual distributions from hisor her retirement plan(s), including IRAs. This minimum amount, which must bedistributed, is based upon a uniform lifetime table or, in certain circumstances,a joint life table for the participant and his or her spouse. Generally, the RBD forqualified plans (including governmental 457 plans) is April 1 following the laterof the year the employee turns age 70 1⁄2, or the employee’s retirement.

Revocable Living Trust – A trust that you create that enables you to maintainfull control over your trust assets during your lifetime and, when you die,have them disposed of according to your predetermined designations(some exceptions apply). However, you (i.e., the grantor) reserve the right torevoke or recall all or part of the trust at any time.

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Glossary

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T. Rowe Price Investment Services, Inc., distributor