May 23, 2012
--- Those who are best prepared for retirement are most likely
to work with a financial adviser, according to the Putnam Lifetime Income Score.
It is one of a number of steps participants can take to
improve their readiness for retirement and increase their confidence in their
ability to make financial decisions. Robert Reynolds, Putnam’s chief executive,
pointed out that lifetime income is only partly about actual income.
“Any 401(k) plan participant scores the same as people with
household incomes of $175,000,” Reynolds said at a Putnam forum, “Health, Wealth
and the Future of Retirement.”
Reynolds called the rapidly rising poverty of senior
Americans and the projected shortfall in Social Security trust funds “deeply
“We have to have healthy public systems, of course, and very
healthy private systems,” Reynolds said.
The company’s survey of nearly 4,000 working Americans
indicates that a critical factor in retirement readiness continues to be savings behavior. The
best-prepared are active participants in a workplace savings plan, deferring at
least 10% of income and using the services of a financial adviser. These
workers indicated higher confidence in their ability to make financial decisions.
The decision to work with an adviser also had a material
impact on Lifetime Income Scores, Reynolds said. Those who worked with an
adviser had scores of 89 this year (a rise from last year’s score of 82), while
those who did not work with an adviser scored 58 (a drop from last year’s score
The research examined behavioral tendencies, mortality
factors, retirement and non-retirement assets, such as home equity, investment
securities, annuities and cash value life insurance, to estimate the level of
income that U.S. households are currently on track to replace in retirement.