« Back | Press release: May 13, 2014
Comparison to top saving peers inspires workers to increase retirement savings, putnam investments analysis finds
Early Results of Putnam "How Do I Compare" Feature Show Users Dramatically Increasing 401(k) Savings
BOSTON, May 13, 2014 — Putnam Investments today released preliminary results from an analysis of its new "How Do I Compare" feature, which enables participants in Putnamadministered 401(k) plans to compare their progress in saving for retirement with the top savers in their peer group. Early results over the past month were based on nearly 10,000 workers who have used the feature to evaluate their progress in saving for retirement found that social comparison had a sizeable, 28 percent lift in deferral rates from 7.5 percent to 9.6 percent.
Launched last month, the new "How Do I Compare" feature is integrated into Putnam's Lifetime IncomeSM Analysis Tool (LIAT), which projects workers' current savings into estimated future monthly income and offers actionable steps to potentially improve outcome in retirement. The social comparison component enables workers to measure their estimated future monthly income trajectory against their peer averages –– based on several criteria, including age, salary and gender — as well as to the top 10 percent of savers in each category. Initial data of the peer feature indicates a participant deferral boost even beyond the positive increase shown by participants who used the firm's core LIAT experience.
"We recognize that it is human nature to want to know how you stack up with those who save the most and have tried to harness this engrained behavior to help motivate and drive positive action when it comes to retirement savings," said Edmund F. Murphy III, Head of Defined Contribution, Putnam Investments. "Our initial results point to the power of social comparison in providing workers with an incentive to raise their own deferral rates."
The "How Do I Compare" social comparison feature works in combination with several elements already incorporated in the Putnam Lifetime Income Analysis Tool, including the firm's Health Cost Estimator and its Financial Wellness tool. Over the last month, 20% of Putnam plan participants accessing the Putnam LIAT experience made direct use of the social comparison tool.
"We are focused on providing our participants with an enhanced experience that makes it easier for workers to gauge their progress towards pursuing their retirement goals and take immediate steps to change their retirement savings rates as needed," said Murphy. "Our ultimate objective is to help plan sponsors and their participants reach their goals in a meaningful way." said Murphy.
Putnam and Social Media
"Asset management firms –– like Putnam — will increasingly play a role in providing education and forward-thinking content to the broader industry," McKenna explained.
Putnam Lifetime Income Analysis Tool
Introduced in January 2010, Putnam's Lifetime IncomeSM Analysis Tool changed the lens through which 401(k) plan participants view their current retirement savings activities, emphasizing not simply asset accumulation but actual future monthly income needs and shortfall planning. The online experience is intended to help defined contribution plan participants estimate how much monthly income their current retirement savings could generate in retirement compared to what they may need, and then offer actionable steps to help improve their prospects.
Putnam Health Cost Estimator
The Putnam Health Cost Estimator, launched in the spring of 2013, provides 401(k) plan participants with a personalized assessment of how much of their expected future monthly income is likely to be needed to cover their healthcare costs at different ages in retirement, including itemized insights on medical, dental and pharmaceutical expenses. The projections are generated from individual participant data and cost models using proprietary, actuarialbased guidelines and are shown as monthly costs, providing workers with easy-to-understand information that can help them to address potential savings shortfalls.About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 75 years of investment experience. In February 2014, for the third time in five years, the firm was named one of the top two mutual fund families by Lipper/Barron's based on the firm's performance across asset classes in the previous year. In 2014, Putnam also was ranked #2 out of 55 fund families for its performance over the past five years. At the end of April 2014, Putnam had $153 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Beijing, Amsterdam, Tokyo, Singapore and Sydney. For more information, visit http://www.putnam.com.
IMPORTANT: The projections, or other information generated by the Lifetime Income Analysis Tool regarding the likelihood of various investment outcomes, are hypothetical 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 investment 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 participant'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 estimates. Putnam does not believe that HIPAA applies to the data obtained from plan participants using this new tool.
Putnam has partnered with LearnVest to provide access to a full range of budgeting and planning tools — including access to a LearnVest financial wellness expert. Fees may apply to certain LearnVest services. Use LearnVest to get a better handle on your day-to-day finances, and to get the help you need to make progress toward all your financial goals.How Barron's ranked the fund families:
The Barron's/Lipper Fund Family Ranking published February 8, 2014, ranked Putnam 1 out of 61 for 2009, 14 out of 57 for 2010, 57 out of 58 for 2011, 1 out of 62 for 2012, and 2 out of 64 for 2013 for the 1-year period with funds in five categories: U.S. equity, world equity, mixed asset, taxable bond, and tax-exempt bond. Putnam ranked 43 out of 54 and 46 out of 48 for the 5- and 10-year periods ending 2009, 41 out of 53 and 38 out of 46 for the 5- and 10-year periods ending 2010, 49 out of 53 and 41 out of 45 for the 5- and 10-year periods ending 2011, 27 out of 53 and 36 out of 46 for the 5- and 10-year periods ending 2012, and 2 out of 55 and 32 out of 48 for the 5- and 10-year periods ending 2013, respectively. Only funds with at least one year of performance were included. Returns were calculated minus the effects of sales charges and 12b- 1 fees. Rankings were asset weighted, so larger funds had a greater impact on a fund family's overall ranking, and then weighted by category, with each category assigned a percentage. Past performance is not indicative of future results. Barron's is a registered trademark of Dow Jones & Company.
Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial representative or call Putnam at 1-800-225-1581. Please read the prospectus carefully before investing.