Investing for your retirement is an important step in helping you build a more secure financial future. In this short presentation, you’ll learn more about how Schwab Target Date Funds can help make retirement investing more convenient. These funds offer a complete retirement investment portfolio in a single fund.

Today, we will look at the benefits of target date funds, how Schwab’s Target Date Funds are managed up to and after your retirement date, and how to select the right fund for you. Let’s get started.

Think of investing for retirement as a journey similar to an airline trip. You don’t need to know how to fly the plane to make that trip, what altitude is best for turbulence or when to call the control tower. You just need to buy your ticket, board, and go, and maybe enjoy a movie on the way. For your all important journey to retirement, a target date fund offers the convenient transportation vehicle to help you get to where you want to go, much like an airplane helps travelers efficiently cover large distances that would be difficult to reach on their own.

No matter where you are in your retirement journey, whether it’s early career, mid-career, pre-retirement, or already enjoying retirement, you don’t need to decide which type or how many funds to include in your portfolio, nor when to adjust your holdings. Schwab’s Target Date Funds handle that for you. Your job is to prepare for the trip by saving early and often, monitoring your investments, and staying the course through the years.

Let’s start with the basics. What is a target date fund?

A target date fund is a complete retirement portfolio in a single fund, based on typical investment objectives and needs of people in your age group. These types of funds invest in a broad mix of stocks, bonds, and cash-equivalent investments, which not only diversify your investments. These allocations are adjusted for you as you move through varying life stages. As the plane for your retirement journey, a target date fund allows you to select your destination, in this analogy, your target retirement date, and let the pilot and airline, in this case, a professional investment management team, build and oversee the fund’s retirement investment portfolio for you.

When considering an airline for such an important trip, you want one with experience, a trusted reputation, and a strong commitment to providing quality client service at an attractive value. Your company’s retirement plan has selected the experienced team at Schwab as the airline to manage your target date fund.

Choosing a Schwab Target Date Fund offers you the peace of mind of knowing that you have the experience of one of the most well-known names in personal investing managing your retirement portfolio. Schwab has a history of innovative target date fund management, and a fund to meet your retirement investing needs.

The Schwab Indexed Retirement Trust Funds can help in many ways on your trip to and through retirement.

First, convenience. The funds provide a retirement investing solution that is rebalanced for you throughout the years to help keep you on track. There’s no need for you to throttle up or down your own market exposure.

Second, broad diversification. This means Schwab Asset Management’s investment team has worked with Charles Schwab Trust Bank to evaluate the markets and select a mix of asset classes that we think will help you on your journey toward retirement. The levels of diversification are intended to help smooth your ride and limit the dramatic ups and downs that a less diversified portfolio might bring.

Third, professional management. There is no need for you to learn to pilot the plane, or in this case, become an investment manager to get to retirement. The Schwab Indexed Retirement Trust Funds are maintained by Schwab Trust Bank, and managed by a team of experienced professionals, with underlying assets composed of carefully selected strategies.

And fourth, a focus on fees. Fees are like headwinds that can keep you from reaching your destination efficiently and quickly. The funds are designed as competitively priced target date funds, which can help keep more of your hard earned money working for you. See your fund fact sheet for cost details.

Of course, it’s important to remember that you’ll still need to contribute to and monitor your account on an ongoing basis to make sure you’re on track to reach your destination.

Let’s look at the diversification benefits of the funds in a bit more detail. Diversification refers to spreading your investment mix across different types of investments. This can directly influence the amount of fluctuations you may see in your balance. A less diversified portfolio may have large changes in your balance, while a more diversified portfolio can provide a smoother experience.

Being diversified helps you avoid putting all your eggs in one basket, as the saying goes, since different markets and different types of investments can often move in different directions and involve various levels of risk and reward potential. Stocks have historically offered higher long-term returns, but with a higher degree of risk. So with a portfolio full of stocks, you may expect to see your balance fluctuate much more than one with other investments, like bonds.

Bonds have historically provided higher income and principal stability relative to stocks, but with lower return potential. A portfolio full of bonds may have a more stable balance, but less opportunity to grow relative to other assets.

Cash equivalent investments seek stability of principal and liquidity, but have the lowest return potential.

Think of these broad categories as the basic building blocks that go into Schwab’s Target Date Funds portfolios. Every contribution you make is diversified across the fund’s carefully developed mix that matches the investment profile of your age group. Spreading your investment across this mix is designed to help you ride out any market turbulence you might experience on your trip toward retirement.

One feature that makes target date funds unique is that the asset allocation mix between equities, fixed income, and other investments periodically changes based on the number of years remaining until your target retirement date. Here’s how the Schwab Target Date Fund allocations shift over time. These adjustments which are done for you keep your retirement investments properly diversified as you move through different life stages.

Early in your career, a higher percentage is dedicated to stock investments. This offers greater return potential when you have the most time to ride out any market fluctuations. Think of it as helping your investment reach the potential higher speed acceleration needed to take off and ensure your investment lifts to the altitude necessary to help better reach the long-term investment returns for a safer level of retirement savings. This stock allocation is slowly reduced over time, and the allocation to bond and cash equivalent investments is steadily increased to help lower portfolio risk, and may provide more stability later in your career and prior to retirement. This is designed to help you have a smooth landing into retirement by focusing on protecting your savings, while still pursuing a degree of growth for your account.

Of course, target date funds like all investments, are not immune to market volatility, but this professional oversight offers a way for your investment to remain well balanced across asset classes as you move to and through retirement. It’s always important to remain aware of your allocation, and check in regularly so that you can make updates as your circumstances change.

The term target date refers to your target retirement date. Because the underlying asset allocation makes changes, the target date funds actually consist of a series of funds to choose from based on your target retirement date, which is included in each fund’s name.

Which fund should you select? The chart shows what we think is the appropriate fund based on the year you were born, and an assumed retirement age of 65. Find your birth year range and the fund listed which may be the most suitable for your journey. So someone born in 1971 would have a target retirement date of 2036. In this example, the 2035 Fund is the fund closest to that date. If you plan to retire at a different age, simply select the fund closest to that year.

We hope you found this information useful in learning more about how Schwab Target Date Funds can help get you where you want to go. They are designed as a convenient investment choice for retirement. The funds provide broad diversification across stocks, bonds, and cash equivalent investments in a single portfolio solution that becomes more conservative as you prepare for and enter retirement. Schwab Asset Management’s team handles the rebalancing and other details of your retirement investing for you. To get started, consider selecting the fund with the date closest to your expected retirement date in its name.

And now we’re ready to fly. Sit back and enjoy the flight. Thank you for watching. Please take a moment to view the following important disclosures.

Disclosures

Target date funds are built for investors who expect to start gradual withdrawals of fund assets on the target date to begin covering expenses in retirement. The values of the target date funds will fluctuate up to and after the target date. There is no guarantee the funds will provide adequate income at or through retirement.

Target date funds’ asset allocations are subject to change over time in accordance with each fund’s offering document. The funds are subject to market volatility and risks associated with the underlying investments. Risks include exposure to international and emerging markets, small company and sector equity securities, and fixed income securities subject to changes in inflation, market valuations, liquidity, prepayments, and early redemption.

Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Schwab Trust Bank Collective™ Investment Trust Funds The Schwab Managed Retirement™ Trust Funds, Schwab Indexed Retirement™ Trust Funds, and Schwab Institutional™ Trust Funds (each a “Fund”, collectively the “Funds” or “Collective Trust Funds (CTFs)”) are collective trust funds maintained by Charles Schwab Trust Bank (CSTB), as trustee. They are available for investment only by eligible retirement plans and entities. Charles Schwab Trust Bank’s Collective Trust Funds are not insured by FDIC or any other type of deposit insurance; are not deposits or other obligations of and are not guaranteed by CSTB or any of its affiliates; and involve investment risks, including possible loss of principal invested. The Funds are not mutual funds and are exempt from registration and regulation under the Investment Company Act of 1940 (the “1940 Act”), and their units are not registered under the Securities Act of 1933, or applicable securities laws of any state or other jurisdiction. Unit holders of the Funds are not entitled to the protections of the 1940 Act. The decision to invest in the Funds should be carefully considered. The Funds’ unit values will fluctuate and may be worth more or less when redeemed, so unit holders may lose money. The Funds are not sold by prospectus and are not available for investment by the public. The Funds’ prices are not quoted in newspapers.

The Charles Schwab Corporation provides services to retirement and other employee benefit plans and participants through its separate but affiliated companies and subsidiaries: Charles Schwab Trust Bank (CSTB); Charles Schwab & Co., Inc.; and Schwab Asset Management®, the dba name for Charles Schwab Investment Management, Inc.; and Schwab Retirement Plan Services, Inc. Trust, custody and deposit products and service are available through CSTB, Member FDIC. Brokerage products and services are offered by Charles Schwab & Co., Inc. (Member SIPC). Schwab Retirement Plan Services, Inc. is not a fiduciary to retirement plans or participants and only provides recordkeeping and related services to retirement plans. Schwab Asset Management provides investment research, non-discretionary advisory and fund administration services to CSTB and the Funds. Schwab Asset Management is an investment adviser registered with the Securities and Exchange Commission.