« Back | Press release: March 4, 2013

Putnam Health Cost Estimator is Launched To Raise Awareness of the Impact of Health Costs on Expected Monthly Retirement Income and Drive Action to Address Individuals’ Potential Shortfalls

Putnam Investments’ Enhanced Lifetime Income Analysis Tool to Provide Customized, Digestible and Actionable Information to 401(k) Advisors, Plan Sponsors, and Participants

In an ongoing effort to provide the retirement marketplace with greater levels of insight and the ability to take thoughtful, but swift action as needed, Putnam Investments today launched the Putnam Health Cost Estimator, the next generation of its enchanced Lifetime Income Analysis Tool, to offer an important, new window into what will likely be one of the largest, most burdensome expenses in retirement: health care costs.

The Putnam Health Cost Estimator will provide 401(k) plan participants with a personalized estimate of how large a slice of their expected future monthly income will be needed to cover their broad range of health-care costs in retirement, including itemized insight on medical, dental and pharmaceutical expenses, at different age points. The projections will be generated from individual participant data and cost models using proprietary actuarial-based guidelines and expressed as monthly costs, providing participants with a digestible format that lays the groundwork for action steps to address potential savings shortfalls.

“At a time when many working Americans are trying to come to grips with how much of a monthly nest egg they will need in their retirement years, there is a broad-based lack of awareness — almost a complete omission in the retirement planning process — of the enormous impact that healthcare expenses will play in helping to determine the sum total of monthly income needed to sustain a dignified retirement,” said Robert L. Reynolds, President and Chief Executive Office, Putnam Investments.

Reynolds has advocated that the retirement marketplace has a true opportunity — and obligation — to help build real awareness of some of the critical success factors affecting Americans’ ability to create better financial outcomes for themselves in their retirement, including projected monthly health-care expenses.

Added Dimension to Retirement Planning

To this end, the Putnam Health Cost Estimator was designed to bring an added dimension to the retirement planning process, through an array of features, including:

  • Estimation of personalized health care costs, including insurance premiums and out-of-pocket expenses, that reflect pre-existing health conditions and future retirement location (by State),
  • Actionable methods to help close possible savings gaps, including increasing contribution rate, postponing retirement, and/or changing investment mix, and
  • Projected health care cost for year-one of retirement, but also the percentage of income that may go to health care in that year, as well as guidance on health care costs at different ages during retirement.

Edmund F. Murphy III, Head of Defined Contribution, Putnam Investments, indicated that the firm hopes to give people a good, directional sense of a major expense that could swallow up a sizeable amount of future monthly retirement income savings, while they still have time to plan, prepare and take proactive steps, if needed, to try to bolster income for other potential financial needs in retirement.

“As large numbers of workers are increasingly extending their careers to gain access to healthcare and compensate for inadequate retirement savings levels, plan sponsors now have a vehicle to drive greater participant awareness of both the monthly income and expense sides of the retirement planning ledger and can provide the tools necessary for course correction,” Murphy explained.

“The end game for everyone involved in this process — plan sponsors, providers, advisors and, naturally, the participants themselves — is to further strengthen and fortify the chances for individuals to be able to enjoy a secure, dignified retirement after a lifetime of working,” Murphy recently discussed at an industry event. “We aim to keep aggressively moving the ball toward this ultimate goal.”

Empowering Plan Sponsors and Advisors

Murphy points to a “new fiduciary standard” that is emerging in the retirement industry, driven by a growing focus on income replacement in retirement and the various factors that impact its outcome. In discussing the concept, Murphy said, “As the 401(k) industry continues to mature and evolve at a time when a financially successful retirement for many is in question, those driving workplace savings efforts have a more critical role than ever.

“Armed with a vehicle to help individuals better grasp the relationship between their monthly health-care costs and potential income available in retirement, plan sponsors and advisors will be empowered with information that is sure to trigger much-needed dialogue, and may also spur action by participants, at a point when they can still make strategic planning decisions,” Murphy added.

Putnam Lifetime Income Analysis Tool

The Putnam’s Lifetime IncomeSM Analysis Tool was introduced in January 2010 as a new approach that changes the lens through which 401(k) plan participants view their current retirement savings activities, by placing much greater focus on future monthly income needs and shortfall planning. The online experience is designed to help participants project how much monthly income their current retirement savings may generate in retirement compared to what they may need, and then offer actionable next steps.

About Putnam Investments

Founded in 1937, Putnam Investments is a leading global money management firm with over 75 years of investment experience. The firm was recently named #1 out of 62 Mutual Fund Family by Lipper/Barron’s based on the firm’s 2012 performance across asset classes. At the end of January 2013, Putnam had $133 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Beijing, Amsterdam, Tokyo, Singapore and Sydney. For more information, visit putnam.com.

Putnam Investments Media Contacts:

Jon Goldstein — 617-760-1127 (office), 516-946-5598 (cell), [email protected]
Laura McNamara — 617-760-1108 (office), 617-850-2727 (cell), [email protected]

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. Putnam does not provide health-care advice. Putnam does not believe that HIPAA applies to the data obtained from plan participants using this new tool.

How Barron’s ranked the fund families:

The Lipper/Barron’s survey published February 9, 2013, for the 2012 award period, ranked Putnam #1 out of 62 fund families with funds in five categories: general U.S. stock, global or international, mixed-asset, taxable bond, and tax-exempt bond. Putnam Investments ranked 27 of 53 and 36 of 46 for the 5- and 10-year periods, 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.

Request a prospectus, or a summary prospectus if available, from your financial representative or by calling Putnam at 1-800-225-1581. The prospectus includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.

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