Atlantic Capital Management,Inc.William C. Newell, CFP®President and Senior Financial Advisor851 Washington St.Holliston, MA 01746Ph (508) 893-0872Fax (508) 893-8087bnewell@acminc.org

September 2016Quiz: Test Your Interest Rate Knowledge

How to Get a Bigger Social SecurityRetirement Benefit

The Importance of Saving for Retirementat a Young Age

How is GDP calculated in the U.S.?

Quiz: Test Your Interest Rate Knowledge

See disclaimer on final page

In December 2015, theFederal Reserve raised thefederal funds target rate to arange of 0.25% to 0.50%, thefirst rate increase from thenear-zero range where it hadlingered for seven years.Many economists viewed this

action as a positive sign that the Fed had finallydeemed the U.S. economy healthy enough towithstand slightly higher interest rates. Itremains to be seen how rate increases will playout for the remainder of 2016. In the meantime,try taking this short quiz to test your interestrate knowledge.

Quiz1. Bond prices tend to rise when interestrates rise.

a. True

b. False

2. Which of the following interest rates isdirectly controlled by the Federal ReserveOpen Market Committee?

a. Prime rate

b. Mortgage rates

c. Federal funds rate

d. All of the above

e. None of the above

3. The Federal Reserve typically raisesinterest rates to control inflation and lowersrates to help accelerate economic growth.

a. True

b. False

4. Rising interest rates could result in loweryields for investors who have money incash alternatives.

a. True

b. False

5. Stock market investors tend to lookunfavorably on increases in interest rates.

a. True

b. False

Answers1. b. False. Bond prices tend to fall wheninterest rates rise. However, longer-term bondsmay feel a greater impact than those withshorter maturities. That's because wheninterest rates are rising, bond investors may bereluctant to tie up their money for longerperiods if they anticipate higher yields in thefuture; and the longer a bond's term, the greaterthe risk that its yield may eventually besuperceded by that of newer bonds. (Theprincipal value of bonds may fluctuate withmarket conditions. Bonds redeemed prior tomaturity may be worth more or less than theiroriginal cost.)

2. c. Federal funds rate. This is the interestrate at which banks lend funds to each other(typically overnight) within the Federal ReserveSystem. Though the federal funds rate affectsother interest rates, the Fed does not havedirect control of consumer interest rates suchas mortgage rates.

3. a. True. Raising rates theoretically slowseconomic activity. As a result, the FederalReserve has historically raised interest rates tohelp dampen inflation. Conversely, the FederalReserve has lowered interest rates to helpstimulate a sluggish economy.

4. b. False. Rising interest rates could actuallybenefit investors who have money in cashalternatives. Savings accounts, CDs, andmoney market vehicles are all likely to providesomewhat higher income when interest ratesincrease. The downside, though, is that ifhigher interest rates are accompanied byinflation, cash alternatives may not be able tokeep pace with rising prices.

5. a. True. Higher borrowing costs can reducecorporate profits and reduce the amount ofincome that consumers have available forspending. However, even with higher rates, animproving economy can be good for investorsover the long term.

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How to Get a Bigger Social Security Retirement BenefitMany people decide to begin receiving earlySocial Security retirement benefits. In fact,according to the Social Security Administration,about 72% of retired workers receive benefitsprior to their full retirement age.1 But waitinglonger could significantly increase your monthlyretirement income, so weigh your optionscarefully before making a decision.

Timing countsYour monthly Social Security retirement benefitis based on your lifetime earnings. Your basebenefit--the amount you'll receive at fullretirement age--is calculated using a formulathat takes into account your 35 highestearnings years.

If you file for retirement benefits beforereaching full retirement age (66 to 67,depending on your birth year), your benefit willbe permanently reduced. For example, at age62, each benefit check will be 25% to 30% lessthan it would have been had you waited andclaimed your benefit at full retirement age (seetable).

Alternatively, if you postpone filing for benefitspast your full retirement age, you'll earndelayed retirement credits for each month youwait, up until age 70. Delayed retirement creditswill increase the amount you receive by about8% per year if you were born in 1943 or later.

The chart below shows how a monthly benefitof $1,800 at full retirement age (66) would beaffected if claimed as early as age 62 or as lateas age 70. This is a hypothetical example usedfor illustrative purposes only; your benefits andresults will vary.

Birth year Full retirementage

Percentagereduction atage 62

1943-1954 66 25%

1955 66 and 2months

25.83%

1956 66 and 4months

26.67%

1957 66 and 6months

27.50%

1958 66 and 8months

28.33%

1959 66 and 10months

29.17%

1960 or later 67 30%

Early or late?Should you begin receiving Social Securitybenefits early, or wait until full retirement age oreven longer? If you absolutely need the moneyright away, your decision is clear-cut;otherwise, there's no ''right" answer. But taketime to make an informed, well-reasoneddecision. Consider factors such as how muchretirement income you'll need, your lifeexpectancy, how your spouse or survivorsmight be affected, whether you plan to workafter you start receiving benefits, and how yourincome taxes might be affected.

Sign up for a my SocialSecurity account at ssa.govto view your online SocialSecurity Statement. Itcontains a detailed record ofyour earnings, as well asbenefit estimates and otherinformation about SocialSecurity.

1 Social SecurityAdministration, AnnualStatistical Supplement, 2015

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The Importance of Saving for Retirement at a Young AgeIf you're an adult in your 20s, you are enteringan exciting stage of life. Whether you've justgraduated from college or are starting a newcareer, you will encounter many opportunitiesand challenges as you create a life of your own.

As busy as you are, it's no surprise thatretirement may seem a long way off, especiallyif you're just entering the workforce. What youmay not realize, however, is that there are fourvery important advantages to begin planningand saving for retirement now.

1. Money management skillsNow that you're out on your own, it's importantto start taking responsibility for your financeslittle by little. Part of developing financialresponsibility is learning to balance futuremonetary needs with present expenses.Sometimes that means saving for a short-termgoal (for example, buying a new car) and along-term goal (for example, retirement) at thesame time.

Once you become used to balancing yourpriorities, it becomes easier to build a budgetthat takes into account both fixed anddiscretionary expenses. A budget can help youpursue your financial goals and develop strongmoney management skills. If you establishhealthy money habits in your 20s and stick withthese practices as you grow older, you'll have amajor advantage as you edge closer toretirement.

2. Time on your sideWhen you're young, you have the benefit oftime on your side when saving for long-termgoals (like retirement). You likely have 40-plusyears ahead of you in the workforce. With thatmuch time, why not put your money to workusing the power of compounding?

Here's a hypothetical example of howcompounding works. Let's say that at age 25,you start putting $300 each month into youremployer's retirement savings plan, and youraccount earns an average of 8% annually. Ifyou continued this practice for the next 40years, you would have contributed $144,000 toyour account, accumulating just over $1 millionby the time you reached age 65. But if youwaited 10 years until age 35 to start makingcontributions to your plan, you would haveaccumulated only $440,000 by age 65.

Note: This hypothetical example ofmathematical compounding is used forillustrative purposes only and does notrepresent any specific investment.

Taxes and investment fees are not considered.Rates of return will vary over time, especiallyfor long-term investments. Investments offeringthe potential for higher rates of return alsoinvolve a higher degree of risk. Actual resultswill vary.

3. Workplace retirement benefitsIf your employer offers a workplace retirementplan such as a 401(k) or 403(b), you may findthat contributing a percentage of your salary(up to annual contribution limits) will makesaving for retirement easier on your budget.Contributions are typically made on a pre-taxbasis, which means you can lower your taxableincome while building retirement funds for thefuture. You aren't required to pay any taxes onthe growth of your funds until you takewithdrawals. Keep in mind that distributionsfrom tax-deferred retirement plans are taxed asordinary income and may be subject to a 10%federal income tax penalty if withdrawn beforeage 59½.

Depending on the type of plan, your employermay offer to match a percentage of yourretirement plan contributions, up to specificlimits, which can potentially result in greatercompounded growth and a larger sum availableto you in retirement.

If you don't have access to a workplaceretirement savings plan, consider opening anIRA and contribute as much as allowable eachyear. An IRA may offer more investmentoptions and certain tax advantages to you.

If you have both a workplace plan and an IRA,one strategy is to contribute sufficient funds toyour workplace plan to take advantage of thefull company match, and then invest additionalfunds in an IRA (up to annual contributionlimits). Explore the options available to find outwhat works best for your financial situation.

4. Flexibility of youthAlthough there's a good chance you havestudent loans, you probably have fewerfinancial responsibilities than someone who isolder and/or married with children. This meansyou may have an easier time freeing up extradollars to dedicate toward retirement. Get intothe retirement saving habit now, so that whenfuture financial obligations arise, you won't haveto fit in saving for retirement too--you'll alreadybe doing it.

Millennials and RetirementPlanning

A September 2015 studyfound that 60% ofmillennials think planningfor retirement is harder thansticking with a diet andexercise plan. By contrast,61% of baby boomers thinkdieting/exercising is harder,and 51% of Gen Xers thinkretirement planning isharder.

Source: "Will MillennialsEver Be Able to Retire?"Insured Retirement Instituteand The Center forGenerational Kinetics,September 2015

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Atlantic CapitalManagement, Inc.William C. Newell, CFP®President and Senior FinancialAdvisor851 Washington St.Holliston, MA 01746Ph (508) 893-0872Fax (508) 893-8087bnewell@acminc.org

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

IMPORTANT DISCLOSURES

Broadridge Investor CommunicationSolutions, Inc. does not provideinvestment, tax, or legal advice. Theinformation presented here is notspecific to any individual's personalcircumstances.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

What is the most important component of GDP in theUnited States?We often hear in the mediathat consumer spending iscrucial to the overall health ofthe U.S. economy, but exactly

how important is it? Representingapproximately two-thirds of overall GDP,consumption--the almighty consumer--is thelargest driver of economic growth in the UnitedStates. Of the nearly $18 trillion in U.S. GDP(2015), American shoppers are responsible fora piece of the pie worth about $12 trillion.

Consumption is tracked by the Bureau ofEconomic Analysis, and is reported as PersonalConsumption Expenditures (PCE) in its monthly"Personal Income and Outlays" news release.Since the late 1960s, PCE as a percentage ofoverall GDP has crept up from a low ofapproximately 58% to nearly 70% today.

PCE is divided into goods and services. Theservices category typically represents thelargest part of PCE, accounting for more than65% over the past two years. Examples ofservices include health care, utilities,recreation, and financial services.

Goods are broken down further into durableand nondurable goods. Durable goods arethose that have an average life of at least threeyears. Examples include cars, appliances andfurniture. Nondurable goods are those with anaverage life span of less than three years andinclude such items as clothing, food, andgasoline.

Durable goods represent approximately 10% oftotal PCE, while nondurable goods make upabout 20%.

So the next time you're out shopping, foranything from a bottle of ketchup to a new car,consider that you're doing your part to fuel ournation's growth.

Sources: World Bank.org, accessed June 2016;Federal Reserve Bank of St. Louis, 2016;Bureau of Economic Analysis, 2016

How is GDP calculated in the U.S.?GDP, or gross domesticproduct, is a measurement ofthe total value of all goods andservices produced in theUnited States over a given

time period. It is used by economists,government officials, market forecasters andothers to gauge the overall health of the U.S.economy.

Although there are several ways of calculatingGDP, the expenditures approach is the mostcommon. It focuses on final goods and servicespurchased by four groups: consumers,businesses, governments (federal, state, andlocal), and foreign users.

The calculation and a description of itscomponents follow:

C+I+G+(X-M)

Consumption (C): Also known as personalconsumption, this category measures howmuch all individual consumers spend in theU.S.

Investment (I): Not to be confused withinvestments in the stock and bond markets, thisis the amount businesses spend on fixedassets (e.g., machines and equipment) and

inventories, as well as the amount spent onresidential construction.

Government (G): This category tracks theamount the government spends on everythingfrom bridges and highways to militaryequipment and office supplies. It does notinclude "transfer payments"--for example,Social Security and other benefit payments.

Exports (X): This is the value of goods andservices produced in the U.S. and purchased inforeign countries.

Imports (M): This is the value of goods andservices produced in foreign countries andpurchased in the U.S.

Historically, the U.S. has run a "trade deficit,"which means imports have outpaced exports.

Once the final GDP values are calculated, thepercentage change is calculated from one timeframe to the next, generally quarter to quarteror annually. Reported quarterly by the Bureauof Economic Analysis, these percentages caninfluence both investment markets and policydecisions.

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