putnam lifetime income scores iii

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In 2011, Putnam Investments, in partnership with Brightwork Partners, introduced the Lifetime Income ScoreSM (LIS), a tool for helping households estimate the level of income that they are currently on track to replace in retirement. Scores incorporated numerous variables related to earnings through employment, as well as financial behavior and confidence in financial decision making. The result is a tool that Americans can use — even early in their careers — to begin measuring their progress toward seeking a financially secure retirement.

Now in its third year, our survey compiles data provided by 4,089 working adults between the ages of 18 and 65. This survey was conducted online between December 7, 2012, and January 4, 2013, and results are weighted according to U.S. Census parameters. Once again, our research supports several key hypotheses: first, that factors like access to workplace retire-ment savings plans and higher deferral rates have an enormous impact on retirement preparedness. Second, our research suggests that having a paid financial advisor can appreciably influence investor confidence and Lifetime Income Scores. Third, our data lend support to the idea that achieving retire-ment preparedness is fundamentally a behavioral issue. Although income and investable assets tend to correlate with retirement preparedness, even lower-income households that make a habit of saving can get on track to being financially prepared for the future.

An overview of retirement preparednessResults from our survey this year show that working Americans are on track to replace 61% of their household income in retirement. As in prior years, our research indicates that the least well prepared tend to be older and less well educated, while the better prepared tend to be younger and male. LIS differences along age and gender lines have consistently emerged in our data over the last three years of our survey. That the better prepared tend to be younger — i.e., under the age of 50 — may be due to the fact that being in a workplace savings plan longer enhances one’s ability to prepare for retirement.

April 2013 » Perspectives

Lifetime Income Scores III: Our latest assessment of retirement preparedness in the United States W. Van Harlow, Ph.D., CFADirector, Investment Retirement Solutions

• WorkingAmericansareontracktoreplace61%oftheirhouseholdincomeinretirement.

• Deferring10%ormoretoaworkplacesavingsplanandusingafinancialadvisorcontinuetohaveamajorimpactonretirementpreparedness.

• Confidencedatauncoveredbyourresearchindicatethepossibilityforavirtuouscircleofplaneligibility,participation,savingsbehavior,andretirementpreparedness.

• TheLifetimeIncomeScoreaccountsforavarietyofcriticalfinancialfactors,includinghomeownership,businessvalue,andinheritance—andnow,forthefirsttime,mortalityratesassociatedwithavarietyofcommonhealthconditions.

Key

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http://www.putnam.com/?ref=DC939.pdf


APRIL 2013 | Lifetime Income Scores III: Our latest assessment of retirement preparedness in the United States

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Our data also show that the better prepared frequently have a financial advisor — 39% of those in the top LIS segments (scoring 100 or more) report having an advisor — while total household income and investable assets both tend to rise along with Lifetime Income Scores. The top two quartiles of LIS, for example, earn a median of $85,000 and $75,000, respectively, per year by household and have median investable assets of $221,000 and $81,000, respectively.

Importantly, however, our research indicates that being prepared for retirement is not solely a function of “having more money,” whether in terms of income or investable assets. When we take a closer look at the LIS distribution by household income, 15% of all households earning less than $50,000 per year manage to achieve a LIS over 100% — an encouraging point to discover (Figure 1). While the role of Social Security cannot be ignored for virtually any income level, high scores are achieved by individuals across the income spectrum, a fact that we believe highlights the significance of consistent saving behavior.

Figure 1. Lifetime Income Scores were relatively insensitive to household income levels

Total < $50K$50K to $100K

$100K to < $175K $175K+

Under 45 31% 38% 27% 31% 30%

45 to < 65 23 22 28 18 15

65 to < 100 23 25 21 25 21

100+ 23 15 24 27 35

Net under 75 62 68 63 58 52

Net 75+ 38 32 37 43 48

Median LIS 61 55 60 67 73

Percentages in each column indicate incidence among respondents.

Key drivers of retirement preparednessOur latest survey data indicate once again that some factors matter more than others on the path toward retirement preparedness. Impor-tantly, the factors that arguably matter most are things that plan sponsors, investment managers, financial advisors, and policymakers can substantially influence, whether through the crafting of better policy, the implementation of better plan design, the distribution of more robust education, or a combination of these elements. Other factors, such as home ownership, business value, and expectation of an inheritance, have a modest effect (5 points) on the total, aggregate Lifetime Income Scores for working Americans. Generally speaking, though, these factors are dwarfed in significance by factors that bear on qualified-plan access, deferral rates, and the use of an advisor.

Our newly expanded formula for Lifetime Income ScoresSince 2011, we have continually sought to broaden the scope of our research to better educate individuals about the realities of retirement planning and assist plan sponsors in the development of more effective plan design. This year, in addition to including factors such as home equity, business value, and inheritance in the calculation of Lifetime Income Scores, we have added new inputs to reflect a range of health conditions commonly experienced by retirees.

To look at retirement without contemplating the prevalence of these health conditions, we felt, risks missing critical financial and personal aspects of retirement. For this reason, we revised our model to include mortality rates associated with various chronic conditions, including high blood pressure, high cholesterol, type 2 diabetes, cancer of any type, and cardiovascular disease of any type apart from high blood pressure. In this way, we increased the robustness of our methodology for calculating Lifetime Income Scores and, we believe, enhanced the effectiveness and educational impact of our Lifetime IncomeSM Analysis Tool.


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Employer plan eligibility

Our survey data continue to demonstrate that employer-sponsored plan access is a critical component in workers’ pursuit of retirement security. In our latest research, the median LIS jumps from 41 for non-eligible workers to 73 for workers who enjoy plan access. That number rises further — to 76 — for households that are eligible to participate in a defined contribution (DC) savings plan.

The significance of plan eligibility is particularly clear when we compare the median LIS for workers who are eligible but not active (54) with the median for those who are active (79). These data strongly support our conclusion that eligibility for participation in a retirement plan — especially a DC plan — is a critical factor in boosting one’s ability to prepare financially for retirement.

Analyzing the demographic composition of plan-eligible workers, we sought to identify the ways in which those who are eligible vary from those who are not. Interestingly, the key points of difference do not reside with age or gender but rather with education and level of investable assets. Nearly 50% of households that are not eligible to participate in an employer-sponsored plan have received formal education equivalent to a high school diploma or lower. Meanwhile, more than

65% of households that are eligible to participate in employer-sponsored plans have had at least some college experience. As for investable assets, households that are eligible to participate in an employer-sponsored plan find their median investable assets at $90,000, while non-eligible households struggle with median investable assets at only $5,000. Clearly, eligibility lines break across levels of education and accumulated wealth. Also, as we found in our previous year’s study, eligibility continues to vary widely by industry of employment and yet it consis-tently has a major impact on the median LIS (Figure 2).

In this year’s survey, we collected data on individuals’ confidence with respect to their knowledge and comfort with various aspects of retirement planning. Importantly, eligibility — which we know opens the door to education, participation, and higher levels of preparedness overall — appears to have a clear impact on investors’ confidence (Figure 3). In short, investors who are plan-eligible feel more confident about what they know, what they need to do, and how much retirement will cost in the long run. We would suggest that elevated levels of confidence can have a decisive impact on savings behavior, and thus go a long way toward better preparing Americans for retirement.

Figure 2. Lifetime Income Scores by industry and plan eligibility

n Total n Eligible n Not eligible

76

72

72

65

62

59

58

58

55

52

50

87

81

80

74

70

72

70

66

80

73

61

40

45

38

36

43

40

41

41

42

40

40

Financial industry (6%)

Information (5%)

Educational services (8%)

Public administration (7%)

Manufacturing (10%)

Trade, transportation, and utilities (14%)

Professional business services (16%)

Health care and social assistance (11%)

Leisure and hospitality (7%)

Construction (7%)

Other services (7%)

Median scores shown. Percentages next to industry categories indicate incidence among respondents.



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Figure 3. Plan eligibility (by household(HH)) can enhance retirement confidence

Confidence levels with different aspects of retirement — points above or below “very or somewhat confident”

HH not eligible for employer planHH eligible for employer plan

Knowing how much money you will need for

health-care expenses in retirement

Being able to count on receiving your full Social Security

benefits in retirement

Knowing how you will cover health-care

expenses in retirement

Knowing how much money you will

need for retirement

Being ready for retirement financially

-8 -8

-5 -3

-13

53 3

2 2

The importance of a financial advisor

Investors’ decision to use or not use a financial advisor continued to have a sizable impact on Lifetime Income Scores. Those who worked with a paid advisor had a median LIS of 80 while those who did not had a median LIS of 56 (Figure 4). Not surprisingly, those who have an advisor tend to have higher household income levels as well as higher investable assets. However when we neutralize all other key factors, from household income and investable assets to savings rates and demographics, having an advisor raises the LIS by 9.6 points.

Figure 4. Using an advisor boosted Lifetime Income Scores

Median Lifetime Income Scores by advised/non-advised

Do not have a paid advisor

Have a paid advisor

Total

6156

80

Using an advisor provides an even more significant boost to investor confidence than did plan eligibility (Figure 5). Those who have an advisor exhibit a 21-point advantage relative to the average respondent when asked whether they feel confident about being ready for retirement. By contrast, those who do not use an advisor betray a 6-point disadvantage relative to the average respondent.


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In response to the question of knowing how they will cover health-care costs in retirement, the advised show a 17-point advantage relative to the average, while the unadvised exhibit a 5-point disadvantage. Clearly, having an advisor contributes to investor confidence and may confer a potential advantage in terms of engendering positive financial behaviors.

The beneficial effects of a paid advisor carry over to the confidence of DC plan participants in terms of how they allocate their retirement assets. Indeed, those who have an advisor enjoy a 9-point advantage relative to the average respondent when asked how confident they are with the way they have allocated assets among stocks, bonds, and cash (Figure 6).

Figure 6. Advised DC participants had greater asset allocation confidence than non-advised participants

Confidence levels with different aspects of retirement — points above or below “very confident”

Do not have a paid advisor

Have a paid advisor

The amount of money that you are contributing

The investments you have selected

The way you have your assets allocated

among stocks, bonds, and cash

9

-4-3 -3

87

Figure 5. Advisors can enhance retirement confidence


Do not have a paid advisorHave a paid advisor

Knowing how much money you will need

for health-care expenses in retirement

Being able to count on receiving your full

Social Security benefits in retirement




for retirement


-5 -5 -5-3

-6

21

1715 15

11


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Active participation in workplace savings plans

Arguably the most important factor in the determination of retirement preparedness is financial behavior — specifi-cally, the propensity to save. Looking across deferral rates in workplace savings plans, households that defer 10% or more of their income to retirement savings are on track to replace 106% of pre-retirement income, and scores jump to 121% when deferral rates reach 15% or more (Figure 7). Notably, plans that set up auto-deferral rates in the range of 4% to 6% can expect their participants’ median LIS to fall above the overall median of 61, but possibly only by a modest amount.

Figure 7. Deferral rates can have a radical impact on Lifetime Income Scores

15%+ (7%)

10%+ (17%)

8% to < 10% (6%)

6% to < 8% (8%)

4% to < 6% (10%)

0.01% < 4% (14%)

0% (5%)

Total

61

4859

6878

88

106

121

Our data reveal that eligible non-participants are generally older than those who actively contribute to their retirement plans. In addition, we found that participants who tend to defer more of their income (10%+) also have a paid advisor, while deferral rates themselves are not particularly sensitive to level of household income.

Total savings rates

In addition to tracking data on workplace savings, our survey captures a more comprehensive view of household savings that includes non-plan-related savings activity. Looking back over the past three years of collected data, we observe that average savings rates have eroded slightly over the past year (Figure 8), quite possibly because economic uncertainty at home and abroad has continued to weigh on working Americans.

Figure 8. Total savings rates have fluctuated, but lately have eroded

201320122011

12.1%

LIS study year of publication

14.2%13.1%

Health careOur research continues to suggest that the majority of households are feeling more concerned about the economy and their investment prospects. More than 50% of respondents expect inflation will rise in the year ahead, and about a third of workers expect unemployment will rise nationally. Once again, the largest area of uncertainty pertains to health care. More than 60% of all respondents expect out-of-pocket health-care costs will rise in the next year, and 21% (versus 18% in the previous year’s survey) expect these costs will rise substantially (Figure 9).

For the second year in a row, we sought to determine the level of interest in planning tools that could bring clarity to workers over the question of health-care costs. Specifically, we gauged the level of workers’ interest in a planning tool that could help estimate these expenses and accommodate them in retirement planning. We found that a majority of workers — 60%, which matches the previous year’s result — would be interested in such a tool, with 13% of all respondents expressing strong interest.


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Significantly, the most prepared for retirement (with scores greater than 100) expressed the strongest level of interest in a health-care planning tool (Figure 10). In effect, those who know the most about planning and saving for retirement similarly want to know more about how they can plan to cover health-care costs in their later years.

The health-care question is of particular importance for those who plan to retire prior to becoming eligible for Medicare, as the prevalence of employer-sponsored health-care coverage for retirees has declined dramatically in recent years. Among large, private-sector employers (200 or more employees), only 26% offered retiree health benefits in 2011, which was down from 28% in 2009 and 66% in 1988.1

1 “2011 Employer Health Benefits Survey,” Kaiser Family Foundation and Health Research & Educational Trust (HRET), http://ehbs.kff.org/pdf/2011/8225.pdf.

Figure 9. Economic expectations

Twelve-month forward expectations for economic indicators relative to present levels

The stock market

Home values in your area

Long-term interest rates

The unemployment rate in your area

The unemployment rate nationally

Inflation

Health-care costs that you pay

Much lower Somewhat lower Same Somewhat higher Much higher

1%

6% 37% 41% 14%2%

3% 24% 44% 20% 10%

4% 14% 47% 31% 4%

6% 19% 44% 28% 3%

3% 11% 53% 28% 6%

3% 25% 38% 23% 12%

6% 31% 41% 21%

Due to rounding, results may not equal 100%.

Figure 10. Interest in health-care planning tools

Interest in tools to help estimate out-of-pocket health-care expenses and plan accordingly, by LIS range

Total 0 to < 45 45 to < 65 65 to < 100 100 or more Net < 75Net 75 or

more

Net: Interested 61% 51% 61% 65% 69% 57% 67%

Very interested 13 10 10 14 21 10 19

Somewhat interested 47 41 51 51 49 46 49

Not very interested 23 24 25 23 19 24 21

Not interested at all 17 25 14 12 12 19 12

Net: Not interested 40 49 39 35 31 43 33

Percentages indicate incidence among respondents.


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Auto plan featuresOur survey now includes data on automatic plan features such as auto enrollment and auto escalation of deferral rates. Overall, these features of plan design, which have increasingly been adopted since the passage of the Pension Protection Act in 2006, had a substantially positive effect on Lifetime Income Scores.

Auto enrollment

Among respondents who are eligible to participate in a 401(k) plan, the majority (67%) reported having to opt in to their plan. Whether one is auto enrolled or opts in does have an impact on the LIS. Indeed, our data confirm a stark difference: The median LIS for auto-enrolled 401(k) participants was 91 versus 73 for workers who opted in.

Our survey data also suggest that this difference is not income sensitive, nor is it sensitive to the amount of workers’ investable assets. We did find, however, that expected DC plan deferral rates for auto-enrolled workers were modestly higher (mean deferral rate of 9%) than deferral rates for workers who opted in (mean deferral rate of 8%). And perhaps most importantly, we found that auto enrollment appears to have a substantial impact on workers’ attitudes toward their future, as auto-enrolled participants claim to be more secure with their progress toward retirement and future ability to meet expenses (Figure 11). Clearly, auto enrollment can have a palpable impact on retirement security for many Americans, and the large difference in LIS, which is generally insensitive to income tiers (Figure 12), may indeed come down to behav-ioral factors aided by plan design.

Figure 11. Auto-enrolled participants were more confident


Opted inAuto enrolled

0

43

0

-1

14 1413

109








for retirement


Figure 12. LIS generally insensitive to household income levels for both auto-enrolled and opt-in participants

Opted-inAuto enrolled

$100K+

< $100K

$175K+

$100K to < $175K

$50K to < $100K

< $50K

Total by auto enrollment 91% 73%

95% 72%

88% 72%

83% 76%

96% 85%

95% 72%

87% 78%

Median LIS: all workers = 61; active DC plan participants = 79.


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Auto escalation

Our survey data have a similarly positive story to tell with regard to the impact of auto escalation features on workers’ retirement preparedness. For those whose plans include this feature, the positive impact on median LIS scores is as powerful — if not more so — as that of auto enrollment.

Workers whose plans offer auto escalation had a median LIS of 95, versus 74 for workers who do not enjoy this feature. Also as with auto enrollment, the positive impact of auto escalation was detected across all income tiers. What’s more, mean expected deferral rates for workers with auto escalation (10%) were appreciably higher than rates for workers who do not have this feature in their plan (8%), which further underscores the power of modern plan design to bolster retirement preparedness.

The attitudinal impact of auto escalation is a factor worth exploring further, particularly for fiduciaries that are considering the pros and cons of incorporating this type of feature into their plan. According to our survey data, the aggregate psychological and behavioral impact of auto escalation is quite positive. Indeed, participants whose plans include this feature report on it, almost uniformly, as having beneficial effects. At once reassuring and additive to their knowledge of how to go about saving successfully for retirement, auto escalation features can give a substantial boost to workers’ confidence and sense of financial well-being (Figure 13).

Figure 13. Plan participants with auto-escalation were more confident about retirement


No auto escalationHave auto escalation








for retirement


0

-2

4 3

-2

1917 16

15

11


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Types of funds ownedIn our latest survey, we collected data on the propor-

tion of DC plan participants who have allocated assets to target- risk and target-date funds in their retirement port-folios. As with auto escalation features, which received policy backing by the PPA, target-risk and target-date funds have received increasingly wide acceptance as QDIAs (qualified default investment alternatives) as retire-ment policy has evolved. Among survey respondents, those who are DC plan-eligible and have a DC plan balance (44% of our base), decisive majorities have made some allocation of assets to these specialty products (Figure 14).

Figure 14. Prevalence of asset allocation funds

When asked what percentage of plan balance was held in:

Target-date fundsTarget-risk funds

None11%

Any 83%

Don’t know

7%None21%

Any 67%

Don’t know

12%

Base: Participants who are eligible to contribute and have a balance in a DC plan (44% of respondents).

Target-risk and target-date funds

Importantly for plan participants and sponsors alike, LIS generally were higher among participants who employ these investment vehicles. The median LIS for indi-viduals who have any allocation to target-risk funds is 84, substantially higher than our survey’s median LIS of 61. Individuals who take advantage of these funds typi-cally have higher levels of household income (median of $85,000) and higher levels of investable assets (median of $136,000). Similarly, the median LIS for DC plan partici-pants who have allocated a portion of their portfolio to target-date funds is 87. The same pattern with respect to income and investable assets holds for target-date funds as for target-risk funds.

Asset allocationGenerally speaking, households have heavily allocated their retirement assets to conservative investments, with an emphasis on cash. Unfortunately, but not too surprisingly given the prevailing economic uncertainty and perception of market volatility, investors have steadily put more of their assets into cash investments and a smaller proportion of their assets into stocks and stock mutual funds (Figure 15).

Within qualified plans, a revealing detail appears in a comparison of self-directed and professionally advised portfolios. Advised portfolios were more heavily weighted to equities and fixed income, while non-advised portfolios had a pronounced bias toward cash (Figure 16).

Figure 15. Asset allocation within employer-sponsored plans

Stock or stock mutual fundsBonds or bond mutual funds

Cash, money market mutual funds, or other cash equivalents

2011

2012

2013 55% 15% 30%

52% 15% 32%

43% 18% 39%

Mean asset proportions by household. Due to rounding, results may not equal 100%.


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Figure 16. Advised-plans’ asset allocation had lower cash and higher equity exposure

Mean percentages of household assets in employer-sponsored retirement plans

Not advisedAdvised


60%

Stock or stock

mutual funds 27%

Stock or stock

mutual funds 40%

Bonds or bond mutual

funds 21%

Bonds or bond mutual

funds 13%


39%

This has important implications for retirement savings, as investors who opt for the sidelines of cash — which has generated very low income for investors over the past three years due to prevailing low interest rates — may significantly limit their ability to capture the upside poten-tial of equity market rallies.

ConclusionIn our latest study, we enriched the LIS by folding in retire-ment income associated with home equity, business ownership, and inheritance. In addition, we recalibrated our methodology to accommodate mortality expecta-tions associated with five chronic health conditions plus tobacco use. With this new methodological foundation, we believe we have created a useful and highly accurate tool for assessing retirement preparedness today.

Our latest study reveals much about the psychological and behavioral dynamics of retirement saving. Notably, our study took place against a backdrop of improving economic expectations, but these did not appear to have translated into retirement confidence. While workers largely expect economic growth rather than recession in the year ahead and feel more secure in their jobs, for example, majorities lack confidence in the major aspects of retirement planning.

Importantly, our study found that the best-prepared — and most confident — workers tend to enjoy better workplace savings plan access and participate more actively in their plans. We also found that using an advisor has a material impact on the median LIS. For plan sponsors considering different aspects of plan design, we believe our study provides strong evidence to support the “automation” of workplace savings programs — from auto-enrollment to auto-escalation — as these features clearly correlate highly with improved retirement preparedness.

Survey methodology•4,089 working adults, age 18 to 65

•Conducted online, 12/7/12–1/4/13

•Weighted to Census parameters for all working adults

For Lifetime Income Score, the following applies:

IMPORTANT: The projections, or other information generated by the Lifetime Income Score regarding the likelihood of various investment outcomes, are hypothetical in nature. They do not reflect actual invest-ment results and are not guarantees of future results. The results may vary with each use and over time.

The Putnam Lifetime Income ScoreSM represents an estimate of the percentage of current income that an individual might need to replace from savings in order to fund retirement expenses. For example, consider an individual, 45 years old, with an income of $100,000 per year. A Lifetime Income Score of 65% indicates that the individual is on track to be able to generate $65,000 in retirement income (in today’s dollars), i.e., 65% of current income. This income estimate is based on the individual’s amount of current savings as well as future contributions to savings (as provided by participants in the survey) and includes investments in 401(k) plans, IRAs, taxable accounts, variable annuities, cash value of life insurance, and income from defined benefit pension plans. It also includes future wage growth from present age (e.g., 45) to the retirement age of 65 (1% greater than the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)) as well an estimate for future Social Security benefits.


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DC939 280859 4/13

Beginning with this year’s survey, our calculation also takes into account mortality rates for a variety of commonly diagnosed health conditions, including high blood pressure, high cholesterol, type 2 diabetes, cancer of any type, and cardiovascular disease of any type apart from high blood pressure. In addition, the model also takes into account the consistent use of tobacco on a household basis.

The Lifetime Income Score estimate is derived from the present value discounting of the future cash flows associ-ated with an individual’s retirement savings and expenses. It incorporates the uncertainty around investment returns (consistent with historical return volatility) as well as the mortality uncertainty that creates a retirement horizon of indeterminate length. Specifically, the Lifetime Income Score procedure begins with the selection of a present value discount rate based on the individual’s current retirement asset allocation (stocks, bonds, and cash). A rate is determined from historical returns such that 90% of the empirical observations of the returns associated with the asset allocation are greater than the selected discount rate. This rate is then used for all discounting of the survival probability-weighted cash flows to derive a present value of a retirement plan.

Alternative spending levels in retirement are examined in conjunction with our discounting process until the present value of cash flows is exactly zero. The spending level that generates a zero retirement plan present value is the income estimate selected as the basis for the Lifetime Income Score. In other words, it is an income level that is consistent with a 90% confidence in funding retirement. It is viewed as a “sustainable” spending level and one that is an appropriate benchmark for retirement planning.

The survey is not a prediction, and results may be higher or lower based on actual market returns.

For Lifetime Income Analysis Tool, the following applies:

IMPORTANT: The projections, or other information gener-ated by the Lifetime Income Analysis Tool regarding the likelihood of various investment outcomes, are hypothet-ical in nature. They do not reflect actual investment results and are not guarantees of future results. The results may vary with each use and over time. The analyses present the likelihood of various investment outcomes if certain invest-ment strategies or styles are undertaken, thereby serving as an additional resource to investors in the evaluation of the potential risks and returns of investment choices.

Each simulation takes into account the participant’s current plan balance and investment mix, as well as his or her age, income, retirement date, contribution rate, likely future savings, and estimated Social Security benefit. The tool runs over 50 billion market simulations to provide an estimate of a monthly income likely to be generated at retirement. The Lifetime Income Analysis Tool is an interactive investment tool designed for Putnam 401(k) participants to illustrate the estimated impact of a partici-pant’s plan balances and projected savings on income in retirement. The tool takes into account both before-tax and after-tax accumulated balances and future regularly scheduled contributions for estimated projections. It cannot account for dramatic changes in a participant’s personal situation, including unexpected expenses and other financial situations that may negatively affect one’s estimated monthly income in retirement. You are advised to consider your other assets, income, investment options, investment time horizon, income tax bracket, and risk tolerance when planning for specific investment goals. It is recommended that you consult a financial advisor for more information. It is important to note that the results from this tool are estimates based on what you input today. The results are not a guarantee of actual outcomes and will change as your inputs change.

Health-care costs and projections are provided by HealthView Services, Inc., a third-party vendor. They provide broad, general estimates and information that may help you consider your retirement income needs by better understanding potential health-care costs. This estimate is provided for educational purposes only, and you should not rely on it as the primary basis for your medical, insurance, investment, financial, retirement, or tax planning decisions. Costs are estimated, hypothetical in nature, and not guaranteed. Your actual medical costs will likely vary (sometimes significantly) from the esti-mates. Putnam does not believe that HIPAA applies to the data obtained from plan participants using this new tool.


putnam lifetime income scores iii

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