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T H E B OT TO M L I N E2019 (see “The bigger picture,” below).In other words, even the market’sdarkest days—including three BlackMondays (10/28/1929, 10/19/1987, and08/24/2015) and numerous other market corrections—couldn’t knock theindex off its long-term march upward.If you have a hard time stomachingvolatility, Mark’s advice is to limithow often you check your long-termaccounts. “You shouldn’t focus on thatmoney every single day,” Mark says.“At best, you’ll drive yourself crazy. Atworst, you’ll be tempted to sell whenmarkets turn against you.”Of course, you shouldn’t completelyignore your investments, either. “Reviewyour statements and adjust your holdings as necessary in order to maintainyour target asset allocation—assumingyour financial situation hasn’t fundamentally changed,” Mark says. “If it has,revisit your financial plan.”As for external events, rememberthat, good or bad, this too shall pass.“Just as you shouldn’t make plans basedon the good times lasting forever,”Mark says, “neither should you makeplans assuming the bad times will lastforever—because they won’t.”The bigger pictureDespite nearly a century of extreme peaks and valleys, the S&P 500 has averaged an annual return of 10.2% since its inception.60%Average annual return: 10.2%50%40%S&P 500 annual 194219401938193619341932193019281926Source: Schwab Center for Financial Research. Data from 1926 through 2019. Note: Annual returns from 1926 through 1970 are represented by theIbbotson U.S. Large Stock Index, which comprised the same components as the S&P 500 and its predecessor indexes.NEXTSTEPSInvesting with a robo-advisor can helpkeep your emotions in check. Learnmore about Schwab’s robo-advisor,Schwab Intelligent Portfolios , atschwab.com/intelligent.6 C H A R L E S S C H WA B FA L L 2020See page 38 for important information. Please read the Schwab Intelligent Portfolios Solutions disclosure brochures for important information, pricing, and disclosures related to the Schwab IntelligentPortfolios and Schwab Intelligent Portfolios Premium programs. Schwab Intelligent Portfolios and SchwabIntelligent Portfolios Premium are made available through Charles Schwab & Co., Inc. (“Schwab”), a duallyregistered investment advisor and broker dealer. Portfolio management services are provided by CharlesSchwab Investment Advisory, Inc. (“CSIA”). Schwab and CSIA are subsidiaries of The Charles SchwabCorporation. Past performance is no guarantee of future results and the opinions presented cannot beviewed as an indicator of future performance. Investing involves risk, including loss of principal. Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested indirectly. For more information on indexes please see schwab.com/indexdefinitions. (0820-0G4K)

TaxWithholdingin RetirementHow to help ensure youprepay enough taxes onceyou’re no longer working.uring your working years, youtypically have one primarysource of income: your paycheck. “Inretirement, however, your incomewill likely be drawn from multiplesources—and the tax withholdingrules for each may vary,” says HaydenAdams, CPA, CFP , and director of taxplanning at the Schwab Center forFinancial Research.Here’s how federal tax withholdinggenerally works for some commonsources of retirement income (statewithholding may also apply):DI L LU S T R AT I O N B Y J O S I E P O R T I L LOn Traditional, SEP, and SIMPLENEXTSTEPSIRAs: Unless you specify otherwise,your plan’s custodian will withhold 10% on taxable distributions.Generally speaking, you can changeor eliminate your withholding atany time by reaching out to yourindividual retirement account (IRA)custodian.n 401(k), 403(b), and other qualifiedworkplace retirement plans: Planproviders typically withhold 20%on taxable distributions—unlessthe withdrawal is made to satisfythe annual required minimumdistributions (RMDs) mandatedby the IRS, which conform to IRAwithholding rules. 1n Annuities and pensions: Taxableperiodic (e.g., weekly or monthly)payments from annuities and pensionsLearn how Schwab can help you generate incomeand make tax-smart withdrawals in retirement atschwab.com/retirementincome.are treated as wages using the IRSwithholding tables in Publication 15(see irs.gov/pub/irs-pdf/p15.pdf ). Youcan set up or change your withholdingby submitting Form W-4P to the payer.n Social Security: Withholding isn’trequired on Social Security payments,but a portion of your benefits may betaxable, depending on your income.Visit ssa.gov/planners/taxes.html tosee how benefits are taxed. You canset up or change your withholding bysubmitting Form W-4V to the SocialSecurity Administration.n Taxable bank or brokerageaccounts: In most instances, taxesare not withheld from capital gains,distributions, or other income generated from such accounts.2 However,you may want to withhold moreelsewhere or pay quarterly estimatedtaxes to help cover any tax liabilitiesproduced by these assets.If you’re unsure how much youshould have withheld each year, youcan use the IRS’ Tax WithholdingEstimator (see irs.gov/individuals/tax-withholding-estimator) to calculate your overall tax obligation.“That said, your estimated tax obligation is just that—an estimate—andwill not account for any fluctuations inincome throughout the year,” Haydensays. As a result, it’s wise to work witha tax professional. He or she may evenrecommend you make quarterly estimated tax payments in addition to theamounts already being withheld. “Thatway, you won’t end up underpayingthe IRS throughout the year, whichcould result in penalties,” Hayden says.Under the Coronavirus Aid, Relief, and Economic Security Act, RMDs have been waivedfor 2020. 2Certain taxpayers may be subject tobackup withholding, which requires a payerto withhold tax from payments not otherwisesubject to withholding. Learn more at irs.gov/taxtopics/tc307.1See page 38 for important information. This information does not constitute and is notintended to be a substitute for specific individualized tax, legal, or investment planning advice.Where specific advice is necessary or appropriate, Schwab recommends consultation with aqualified tax advisor, CPA, financial planner, or investment manager. (0520-0GJR)FA L L 2020 ON INVESTING 7

T H E B OT TO M L I N ESRI and Your 401(k)What to know before adding socially responsible investmentsto your retirement portfolio.nly about 3% of 401(k) planscurrently offer SRI funds 1—which use environmental, social, andgovernance (ESG) criteria to guide theirinvestment decisions—but that figuremay rise as investors push for fundsthat both align with their values anddeliver competitive returns. Indeed,one survey found that 56% of planparticipants prefer investing in sociallyresponsible companies.2“If investing with your values isimportant to you, SRI funds are a greatway to go—provided they fit yourgoals,” says Michael Iachini, vice president and head of manager research atCharles Schwab Investment Advisory.“For example, retirement plans thatoffer SRI funds typically have only oneoption, and that option may or maynot be the best fund for you.”OHere are four questions to considerwhen selecting SRI funds for yourretirement portfolio.What’s its focus? Some fundsbroadly integrate ESG criteria intotheir investing practices or focus oncompanies that aim to solve specificenvironmental or social issues,whereas others exclude certain kindsof companies—such as those that selltobacco products.12 Does it have a solid track record?“Generally speaking, you want to seea track record of at least three years toensure the fund’s strategy is sound andnot just a flash in the pan,” Michael says.Is it diversified? Because SRI fundstend to focus on a narrower slice of themarket, they may offer less diversification than, say, a broad-based indexmutual fund or exchange-traded fund(ETF). For example, the VanEck VectorsEnvironmental Services ETF—whichinvests at least 80% of its assets in thestocks of companies involved in theenvironmental services industry—allocates a whopping 41.67% to itstop five holdings.3 “At such high concentrations, a single stock could haveundue influence on the performanceof your portfolio,” Michael cautions. “Ifthat concerns you, look for funds withlower allocations to any one company.”4 What’s its annual fee? Every dollaryou pay in fees is one you can’t investfor future growth—and that’s doublyimportant when it comes to yourretirement savings. “Some SRI fundscharge astronomical fees while othersare more on par with low-cost indexfunds,” Michael says. “Be sure you knowwhat you’re paying before you invest.”3Growing goodIn 2018, 11.6 trillion in assets were managed using ESG criteria in the U.S.alone—a 43% increase over 2016.Assets under management2018 11.6 trillion 43%If your workplace retirement planoffers limited SRI choices—or noneat all—consider investing through anindividual retirement account, whichtypically provides access to the sameinvestment options as a traditionalbrokerage account.Ron Lieber, “How to Get Socially ConsciousFunds Into Your 401(k),” nytimes.com,01/10/2020. 2The Cerulli Edge—U.S. RetirementEdition, Trends to Watch in 2019, Q1 2019. 3Schwab.com, as of 05/22/2020.1 8.1 trillionSource: Report on US Sustainable, Responsible and Impact Investing Trends, US SIF, 2018.NEXTSTEPS8 To research SRI mutual funds for your portfolio, log in to schwab.com/fundscreener and select Socially Conscious under the Basic Criteriadropdown. To research SRI ETFs, log in to schwab.com/ETFscreener andselect Socially Conscious under the Portfolio dropdown.C H A R L E S S C H WA B FA L L 2020See page 38 for important information. Investors should consider carefullyinformation contained in the prospectus, or ifavailable, the summary prospectus, includinginvestment objectives, risks, charges, andexpenses. You can obtain a prospectus bycalling Schwab at 800-435-4000. Please readit carefully before investing. The informationprovided here is for general informationalpurposes only and should not be consideredan individualized recommendation orpersonalized investment advice. Theinvestment strategies mentioned here maynot be suitable for everyone. Each investorneeds to review an investment strategy forhis or her own particular situation beforemaking any investment decision. Investinginvolves risk, including loss of principal. Socially screened funds exclude certaininvestments and therefore may not be able totake advantage of the same opportunities ormarket trends as funds that do not use socialscreens.(0520-0PUR)I L LU S T R AT I O N S B Y J O S I E P O R T I L LO2016

Shopping forBondsYou comparison shop formost everything else—sowhy not for bonds?NEXTSTEPSould you ever buy a car—orW even a new pair of shoes—without looking for the best deal? Probablynot. So why don’t more investorscomparison shop for bonds?“Many investors simply don’t realizedifferent firms charge different pricesfor the exact same bond,” says KathyJones, senior vice president and chieffixed income strategist at the SchwabCenter for Financial Research.The problem stems from the factthat bonds don’t trade on centralizedmarkets like stocks, which makestheir true cost difficult, if not impossible, to ascertain. Instead, most arepurchased “over the counter” througha brokerage firm that buys a bond onyour behalf—and tacks on a fee, ormarkup, that can range from a fractionof a percent to several percentagepoints, depending on factors such asbond liquidity and the firm executingthe trade.Schwab BondSource gives you access to a broadselection of bonds, including new-issue municipaland corporate bonds, at the best price availableto Schwab. Log in to schwab.com/bondsource toget started.“Too many brokerages not onlycharge far too much but also concealsuch costs from investors,” Kathy says.So, before you buy your next bond,ask your broker these important questions—and be sure you’re satisfied withthe answers.1 What’s the market price? This willreflect the actual price it costs yourbroker to buy a bond from anotherdealer (which may include fees paid tothe dealer).2 What’s the markup? Markups referto the difference between the marketprice of a bond and the price a brokerdealer charges to sell it. Markups aregenerally wrapped into the price—andmay or may not be disclosed. (For moreon Schwab’s fixed income pricing, visitschwab.com/fixed-income-pricing.)3 Are there additional fees? In addition to markups, brokers may chargemiscellaneous fees to cover administrative services, clearing fees, overhead,etc.—which, as with the markup, theymay or may not be required to disclose.4 What’s the accrued interest? Whenyou buy a bond between coupon payment dates, you’ll owe the seller anyaccrued interest since the last paymentdate. This cost has nothing to do withyour broker but does factor into thetotal cost.5 What’s the overall cost? This willinclude all of the above: the marketprice, plus any markup, additional fees,and accrued interest.“Be wary of firms that fail to give youdirect answers about their fees,” Kathysays. “They’re probably being opaquefor a reason.”Indeed, even seemingly small differences in markups can mean giving uphundreds, if not thousands, of dollarsin total returns over time. And withprices and yields fluctuating to thedegree they have recently, it pays toshop around.See page 38 for important information. Fixed income securities are subject to increased loss ofprincipal during periods of rising interest rates. Fixed income investments are subject to variousother risks, including changes in credit quality, market valuations, liquidity, prepayments, earlyredemption, corporate events, tax ramifications, and other factors. Lower-rated securities aresubject to greater credit risk, default risk, and liquidity risk. In the bond market, there is nocentralized exchange or quotation service for most fixed income securities. Prices in the secondarymarket generally reflect activity by market participants or dealers linked to various trading systems.Bonds available through Schwab may be available through other dealers at superior or inferiorprices compared to those available at Schwab. All prices are subject to change without prior notice. Schwab reserves the right to act as principal on any fixed income transaction, public offering, orsecurities transaction. When Schwab acts as principal, the bond price includes our transaction feeand may also include a markup that reflects the bid-ask spread and is not subject to a minimum ormaximum. When trading as principal, Schwab may also be holding the security in its own accountprior to selling it to you and, therefore, may make (or lose) money depending on whether theprice of the security has risen or fallen while Schwab has held it. When Schwab acts as agent, acommission will be charged on the transaction. (0820-06TJ)FA L L 2020 ON INVESTING 9

Be atrue-bluefriend.Refer your friends and family,and they can get up to 500.Friends and family earn a Bonus Awardwhen they make a qualifying net depositof cash or securities.Net DepositVisit schwab.com/referor call 800-398-8640 for details.Bonus Award 1,000– 24,999 100 25,000– 49,999 200 50,000– 99,999 300 100,000 500Brokerage Products: Not FDIC-Insured No Bank Guarantee May Lose ValueNew-to-firm clients who are referred, open an eligible account, enroll in the offer, and make a qualifying net deposit of 1,000– 100,000 within 45 days can earn a Bonus Award of 100– 500. Schwab may change the terms or terminatethis offer at any time. See schwab.com/refer for details.While we greatly appreciate all client business, we are unable to accept referrals from clientswho hold only a PCRA or CRA with Schwab. 2020 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.CC4260847 (0820-049K) ADP110412-01 (06/20) 00247391ADP110412-01.indd 16/23/20 8:54 AM

B Y CAR R I E SCHWAB - POM E RANT ZSocialSecurity forFamiliesADear Carrie,Dear Reader,I’m 62, my wife is 53, and we have14-year-old twins. My income hasdropped precipitously, and I’mlooking for a way to fill in the gap.Could applying now for SocialSecurity benefits make sense?I’m glad you raised this question becauseit touches on a widely misunderstoodcomponent of the Social Securitysystem: family benefits. Unlike survivorbenefits—which are paid to eligiblebeneficiaries upon your passing—family benefits are paid to eligible familymembers during your lifetime. EvenI L LU S T R AT I O N B Y S H O U TThe benefit beginswith you—but itdoesn’t end there.QFA L L 2020 ON INVESTING 11

A S K CA R R I EWho’s eligible—and whenFirst things first: You have to file foryour own benefit before your familymembers can collect against it. Fromthere, your family members can collect against your Primary InsuranceAmount (PIA)—or what your SocialSecurity benefit would be at fullretirement age (between 66 and 67 fortoday’s retirees)—provided they fallinto one of three categories:Spouses age 62 or older, who cancollect from 32.5% to 50% of your PIAbased on when they file (see “Patiencepays,” above right).Spouses of any age, who can collect50% of your PIA, provided you’ve beenmarried at least one year and have achild under the age of 16 (or a child ofany age in your care who was disabledbefore age 22).Children—including adopted,biological, and stepchildren, as wellas grandchildren for whom you’re thelegal guardian—who can collect 50%of either parent’s PIA, provided they’reunmarried and: Younger than 18. Younger than 19 and a full-timeK–12 student. Any age, if disabled before age 22.NEXTSTEPSSo, assuming you filed for SocialSecurity at age 62, your spouse at age 53would be eligible to receive 50% of yourRead more insights about Social Security atschwab.com/socialsecurity.12 C H A R L E S S C H WA B FA L L 2020Patience paysThe longer your spouse waits to collect either 50% of your benefit or 100% ofher own, the bigger her benefit will be.Full retirement ageWife’s spousal benefit 1,200 1,000Wife’s personal benefit 800 900 400 06263646566676869Monthly benefit amountbetter, family benefits don’t eat intoyour benefit; on the contrary, theycan significantly boost your family’stotal payout.While it generally makes the mostsense to delay claiming Social Securitybenefits if you can afford to wait and arein good health, family benefits can makeclaiming early an attractive option. Thatsaid, the rules regarding family benefitsare complex—but understanding thebasics can help you and your familycapture all available benefits.70Age at which she begins collectingSource: Social Security Administration. The example is hypothetical and provided for illustrativepurposes only. Assumes a PIA of 2,000 for the higher-earning spouse and a PIA of 900 for his wifebased on her own work record. Note: Unlike benefits earned against an individual’s own workrecord, spousal benefits do not increase past full retirement age. Figures are in today’s dollars andassume no future increases in prices or earnings.PIA un

Schwab clients can save on home loans with exclusive discounts. 250K - 999K in qualifying assets1 0.250% interest rate discount 1M - 4.9M in qualifying assets1 0.500% interest rate discount 5M in qualifying assets1 0.750% interest rate discount. Fall 2020 CONTENTS