Data and Research

Adviser Access Has ‘Material’ Impact on Savings

 Americans are on track to replace 61% of their current income in retirement, according to the third annual Lifetime Income Survey by Putnam Investments.   

By Corie Russell | April 25, 2013
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“We were sort of surprised it was as high as it was,” Van Harlow, director of investment retirement solutions at Putnam Investments, told PLANADVISER. In an ideal world, he added, the number would be about 75%.

Social Security also plays a large role in the income replacement projection, which would fall to 22% without it. “Social Security is a critical underpinning in most Americans achieving retirement security, retirement preparedness,” said Ed Murphy, head of defined contribution at Putnam Investments.

In addition to Social Security, the Putnam Lifetime Income Score (LIS) survey takes into account a variety of financial factors including defined benefit and defined contribution assets, personal savings, home equity, business value and potential inheritance. This year’s survey, for the first time, also incorporated mortality rates associated with a variety of common health conditions.

Those best positioned for retirement success share three characteristics, according to the LIS research report: having access to workplace savings plans, working with a financial adviser and deferring 10% or more of their income.

Access to Workplace Retirement Plan

Workers who are eligible for a workplace retirement plan are on track to replace 73% of their income versus 41% for those who do not have such access, according to the LIS survey. Active participants in a 401(k) plan are currently on track to replace 79%. 

Workers in the educational services industry are likeliest to be eligible for a workplace plan (82%), and are collectively on track to replace 72% of current income, while those in the leisure and hospitality industry—the least likely to have access to workplace savings (54%)—are only on track to achieve 55% replacement.