Two Paths to Saving for Retirement - Benefits Online

Your Savings Plan Resources
Northrop Grumman’s savings plans offer you a unique and valuable opportunity to save for your future on a tax-deferred
basis — and we are committed to helping you make the most of it. The Company offers a wide range of resources and
tools to help you learn about your plan and the fundamentals of investing, to estimate your future retirement needs, and
to establish a savings goal. Call or go online for more information today.
TWO PATHS TO
Saving
for Retirement
RESOURCE
HOW TO ACCESS IT
Which one is right for you
Benefits OnLine
> eLearning tutorials
> Investor education
> Summary plan descriptions
http://benefits.northropgrumman.com
For detailed
information on the
Retirement Path
portfolios and the
core investment
funds, see the
Fund Fact sheets
available on My
Benefits Access
or by calling the
NGBC.
My Benefits Access
> Personalized savings plan account information
> Calculators, planning tools, and investment fund
information
> Transactions (e.g., change your contribution rate,
reallocate your investments, etc.)
Northrop Grumman Benefits Center
> Personalized savings plan account information
> Answers to your questions (service center
representatives are available Monday through
Friday from 9:00 a.m. to 6:00 p.m. Eastern time)
http://benefits.northropgrumman.com
Click on My Benefits Access
1-800-894-4194
Outside the U.S.: 718-354-1338
PATH 1
Use a professional
investment manager
This Guide and the content on the Benefi ts OnLine and My Benefi ts
Access Web sites provide a summary of important information about
your participation in a Northrop Grumman savings plan. The Guide
is not a summary plan description, but is a summary of material
modifi cations. Complete details about the plans are contained in the
legal plan documents that govern plan operation and administration.
If there is a discrepancy between the information provided in the
Guide or enrollment Web site and the provisions of the plan
documents, the plan documents will govern.
PATH 2
Build your own
investment portfolio
Northrop Grumman reserves the right in its sole discretion to
terminate, suspend, withdraw, amend, or modify the plans at any
time and for any reason.
NGSP-FSSP/DEC 06-0230
Prepared for participants in the Northrop Grumman Savings Plan and Financial Security and Savings Program
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Path 1
Let a professional investment manager design and manage an investment portfolio based
on your target retirement age.
Path 2
Build and monitor your own investment portfolio with several core investment fund
options and the Schwab PCRA ® .
Northrop Grumman’s Retirement Path portfolios
are designed to simplify saving and investing for
retirement. If you’re too busy to actively manage your
retirement savings or you simply prefer to delegate
the task to an expert, a Retirement Path portfolio may
be right for you.
Each portfolio is managed by an investment
professional, so you can feel confi dent that your
retirement money is being managed in accordance
with sound investment principles. Under the
leadership of this professional, your portfolio will be:
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Targeted to a specific retirement date —
All you have to do is choose the portfolio that’s
closest to the year you plan to retire or withdraw
your money
Broadly diversified — The investment manager
determines the portfolio’s asset allocation, investing
among a wide range of investments from several
different asset classes to help minimize your risk
Adjusted over time — The investment manager
gradually adjusts the investment mix to maximize
your return for a given level of risk, based on your
current life stage.
Northrop Grumman offers fi ve Retirement Path
portfolios ranging from the 2040 Retirement Path
Retirement Path Portfolios
Target
Retirement Path
2010
Retirement Path
2020
Retirement Path
portfolio, designed for investors who will retire in 30
years or more, to the Target Retirement Path portfolio,
designed for investors who are approaching or have
already reached retirement. To address these two very
different investment needs, the 2040 portfolio invests
primarily in assets that offer high long-term risk and
return potential, such as stock funds, while the Target
Retirement Path portfolio allocates a larger portion to
investments that emphasize capital preservation and
the potential for medium to low risk and return, such
as bond funds and money market funds.
Over time, the asset allocation of your selected
portfolio is adjusted to refl ect your changing
objectives — slowly moving from an aggressive
investment strategy when retirement is many years
away to a conservative strategy as retirement
approaches. When a portfolio reaches its target year,
it is merged into the Target Retirement Path portfolio.
For example, the 2010 portfolio will be merged into
the Target Retirement Path portfolio in the year 2010.
By choosing just one Retirement Path portfolio, you
can implement a diversifi ed, professionally managed
retirement strategy in just one easy step. If you prefer
to invest more aggressively or more conservatively
than others in your age group, you can simply
choose a portfolio (or a mix of portfolios) with a
higher or lower target retirement date than your own.
2030
Retirement Path
2040
Retirement Path
If you prefer to design and manage a savings and
investment strategy on your own, the Northrop
Grumman Savings Plan and Financial Security and
Savings Program offer a wide range of investment
options from which to choose, including:
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Eight core investment funds that provide a
range of risk and return potential. These core
funds provide a convenient way to diversify your
investments on the basis of your individual needs
and strategy.
The Schwab Personal Choice Retirement
Account ® (PCRA), a self-directed brokerage
account offered through Charles Schwab & Co.,
Inc. The Schwab PCRA enables you to invest
among a selection of more than 3,200 available
mutual funds and individual securities (e.g., stocks
and bonds).
Core Investment Funds
Stable
Value Fund
U.S. Fixed
Income
Fund
Lower risk/short time horizon
Balanced
Fund
Asset Class
U.S. Equity
Fund
Capital Preservation
Income
Balanced
Growth
“Do It Yourself” Investing
When you invest in the core investment funds, it’s up
to you to select the mix of investments that will best
help you reach your investment goals. This “do-ityourself”
approach may be ideal for investors who
want to personally manage their investments and
are comfortable making their own asset allocation
decisions, yet still prefer to invest in well-diversifi ed
funds rather than select individual securities.
The core investment funds give you the opportunity
to diversify your investments among a range of asset
classes, including capital preservation, income,
balanced, and growth.
International
Equity Fund
Small Cap
Fund
The position of the
various funds on the risk
spectrum does not refl ect
an absolute relation of
the funds, but only their
expected, relative ranking
over the long term.
Emerging
Markets
Equity Fund
Northrop
Grumman
Fund
Higher risk/long time horizon
Individual Investing
If you are looking for an opportunity to exercise even greater control over
your investments, the Schwab PCRA* may be right for you. It offers the
fl exibility to choose from a wide range of mutual funds and individual
stocks and bonds so you can build a portfolio uniquely customized to
you.** The Schwab PCRA is appropriate if you have time to evaluate,
select, and monitor your investments.
As you evaluate whether the PCRA approach is right for you, keep in mind
the following:
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Developing and monitoring your own investment strategy requires time
and attention.
Investing through the Schwab PCRA requires a higher level of
attentiveness and account management effort than do the other
Savings Plan options. In addition, the Schwab PCRA may charge
a fee each time you place a trade order, which may result in higher
administrative fees than you would pay if you invested solely in either
the Retirement Path portfolios or core investment funds.
To enroll in the Schwab PCRA, you must be a participant in the
Savings Plan so that you can transfer balances from your core funds
or direct new contributions to the Schwab PCRA. In addition, you
must keep a minimum balance of $1,000 in the core funds. See the
summary plan description for your savings plan on Benefits OnLine
for more information.
The Schwab PCRA is not offered under the Financial Security and Savings Program.
The Schwab PCRA offers access to more than 3,200 mutual funds from over 360 mutual fund families. More than
1,700 of these funds are Mutual Fund OneSource ® funds, which are available without loads or transaction fees.
More than 600 of the 3,200 funds are load-waived funds that are typically only available to institutional clients.
Which Investment
Approach Is Right
For You
Retirement Path
portfolios:
You don’t have the
time and/or desire
to manage your
investments and
prefer to delegate
that task to an
expert.
Core investment
funds:
You have the time
and interest to learn
about investment
fundamentals and
are comfortable
making your own
asset allocation
decisions.
Schwab PCRA:
You have the time
and interest to
actively manage
and monitor your
investments,
and want the
opportunity to
personally research
and select from
a wide range of
mutual funds,
individual stocks,
and bonds for your
portfolio.
Lower risk/short time horizon
• US Large Cap
• US Mid/Small Cap
• Developing/Emerging Markets
• US Real Estate
Higher risk/long time horizon
• US Bonds
• US Infl ation-linked Bonds
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