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A Newsletter for the State of Connecticut Deferred Compensation Plan

November 2000

	This issue of "Getting There' discusses how you can sharpen your retirement strategy to win the fight against inflation and reports on expected changes at Aetna.
State Comptroller  Nancy Wyman

Why You Shouldn't forget Inflation - Even When It's Low

With inflation so low - below 4% for the past five years, according to the Consumer Price Index it's probably not the first thing on the list of your retirement concerns. Still, even in good times, your retirement strategy should plan to compensate for and overcome the effects of inflation. Here's why.

How Inflation Works

Inflation occurs when demand exceeds supply. For example, suppose every kid in your neighborhood wants a scooter, but the local store has only a few in stock. The store can raise the price so that only those willing to pay the extra money can buy them. When there are more dollars to spend than there are goods and services to buy, the price of goods and services rises. When prices continue to rise over time, it's called inflation.

How You Can Beat It

Inflation is the enemy of your retirement gains, but you can beat it.  Here's what you should keep in mind as you plan your retirement strategy:

• Choose a savings goal with inflation in mind. Take inflation into account when you're working out how much money you need to live comfortably in retirement. In other words, don't just assume you can get by on your current salary. For example, if your current income is $2,500 a month, and the inflation rate continues to be a low 3%, in 30 years, you may need an income of $6,070 a month just to keep your current standard of living. You may want to consult a tax advisor to help you determine what your savings goal should be.

• Don't be too conservative with your investments. Conservative investments may guarantee that your money will be there, but they can't guarantee what your money will be worth. For example, if your investment is earning 50%, but the inflation rate is 30%, you're really earning only 20%. Remember, even with a conservative investment, the returns should be outpacing inflation.

It's important not to overlook inflation when you're preparing for your financial future. Inflation is never harmless. Even when inflation is very low - like it has been for the past few years - prices are still creeping up. You have a better chance of meeting your retirement goals if your strategy takes inflation into account.

Aetna to Sell Financial Services and International Businesses to ING Group

On July 20, 2000, Aetna Inc. announced that it had entered into a definitive agreement to sell its Aetna Financial Services and Aetna International businesses to ING Group. Aetna's goal is to close the transaction, which is subject to shareholder, regulatory and other approvals and other closing conditions, during the fourth quarter of 2000.

Aetna Life Insurance and Annuity Company, part of Aetna Financial Services, is one of the Deferred Compensation Plan's three financial services organizations. (For the Deferred Compensation Plan, Aetna Life Insurance and Annuity Company is known as "Aetna Investment Services.")

No Effect on Services or Returns on Investments

Plan participants who have investments with Aetna Life Insurance and Annuity Company should expect business as usual, with no negative effect on either the services or investment options Aetna offers.

CEO Forecasts Bright Future

"We remain fully committed to providing valuable products and services to all the customers who rely on us every day to be the company that offers them smart solutions. In fact, as part of the ING organization, we will be even stronger and will have access to greater resources that can be put to work for you and your plan participants," said Aetna Chairman and CEO William H. Donaldson.

Investment Fund Performance & Operating Fees

For the Period Ending September 30, 2000

You may invest your contributions with any one of the plan's three financial services organizations: Aetna Investment Services, Inc., Hartford Life Insurance Company and Phoenix Investment Partners.

The following charts will help you evaluate your investment choices - both mutual funds and annuity options. They show the historical rates of return for each financial services organization's available investment options and the various operating fees that may be assessed against these options for the period ending September 30, 2000.

The rates of return columns are "net of expenses" and reflect the actual returns that would be applied to your account. This means that they already exclude the operating fees a financial services organization may charge you for managing, investing or marketing a particular investment option. Operating expenses appear in separate columns.

About Your Fund Choices

To help you identify between these two types of options, variable annuities appear in italic print. When comparing two similarly styled mutual funds or annuity options. be sure to:

• Recognize that while a fund's past performance may help you understand how well or poorly it has performed over a period of time, it's no guarantee of future results.

• Consider the total expenses each fund charges as well as the kinds of services or benefits it provides. Keep in mind that you can reduce your overall investing costs by monitoring these expenses and taking them into account in your investment selection process.

Since each financial services organization offers similar investment opportunities, it's a good idea to review the materials from each of these organizations before you make your decision as to where to invest your money. Then, select the one financial services organization that offers the investment options and products that best match your personal financial goals.