Retirement Roadmap | Capital Group

Retirement Roadmap

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Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Hypothetical growth calculations are not intended to reflect actual results; your results may vary.

Content contained herein is not intended to serve as impartial investment or fiduciary advice. The content has been developed by Capital Group which receives fees for managing, distributing and/or servicing its investments.

This tool assumes the following: a hypothetical annual growth rate before retirement of 8%; a hypothetical annual growth rate in retirement of 6%; a hypothetical annual inflation rate of 4%; an expected annual salary raise of 3%; you’ll need 80% of your final salary each year in retirement; annual Social Security benefits of 40% of your final year of work (current salary adjusted for inflation and raises) up to the 2019 annual maximum of $34,332 ($2,861 per month) per person; Social Security benefits are a constant amount beginning at age 67; and all money (which includes contributions and money already saved for retirement) is tax-deferred. Projected time in retirement is based on the remaining life expectancy after your planned retirement date (rounded to the nearest year). See IRS life expectancy tables.

The tool does not take certain factors into account, including early withdrawal penalties, required minimum distributions, holding periods and postretirement income taxes (which may apply to certain investment income and withdrawals). The tool compounds earnings annually and assumes that withdrawals are made at the beginning of the year.

Regular investing does not ensure a profit or protect against loss. This tool is for illustrative purposes only and is not intended to provide investment advice or portray actual investment results. Your financial situation and goals may change, so be sure to discuss your results with your financial professional.

When evaluating your retirement income needs, applying particular asset allocations to your individual situation or assessing the adequacy of an estimated income stream, you should consider your other assets, income and investments (e.g., equity in a home and savings accounts) in addition to your interests in your plan(s) or IRA(s).

The investment models used in this tool were developed by American Funds investment professionals. The models emphasize an investor’s time horizon and take into account the historic returns of different asset classes (growth, growth-and-income, equity-income/balanced and bond funds). Specifically, the models seek to balance total return and stability over time. They are designed to take on more risk (in hopes of higher returns) the further an investor is from retirement and less risk (to help preserve capital) as an investor approaches retirement. The models seek to give investors ample equity exposure as they get closer to retirement in an effort to help them outpace inflation over an expected distribution period of 20 years or more.

Investment allocations and underlying funds in the American Funds Target Date Retirement Series are updated quarterly. Underlying funds and their allocation percentages are subject to the Portfolio Oversight Committee’s discretion and will evolve over time. Underlying funds may be added or removed during the year. For quarterly updates of the underlying fund allocations, go to All Funds and then click on a target date fund name.

Most investments carry some degree of risk. For example, investing outside the United States involves risks such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be greater with investments in developing countries. Investing in smaller companies also involves additional risks. Lower-rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. The return of principal in bond funds and for the bond holdings in New World Fund, Capital Income Builder, The Income Fund of America, American Balanced Fund and American Funds Global Balanced Fund is not guaranteed. These fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Fund shares of U.S. Government Securities Fund are not guaranteed by the U.S. government.