Putnam Offers Plan Level Lifetime Income Tool

To empower employers and provide them with actionable information about their plan participants’ retirement readiness, Putnam Investments is making its Lifetime Income Score available more broadly to the defined contribution marketplace.

Putnam released its Lifetime Income Score, which allows an individual to measure his individual retirement income replacement rate, earlier this year (see “Putnam Finds Discipline Can Matter as Much as Earnings”). Putnam is now building off that tool and providing employers with a view of how well their plan is working in the aggregate, as well as specific areas of focus to lead to greater plan success. Plan sponsors and their advisers will have the ability to review participant readiness by demographic groups to pinpoint those most at risk, develop targeted and measurable campaigns to educate and engage least prepared employees, showcase income calculations at the forefront of participant communications and introduce tools to help participants calculate income goals and gaps, and measure usage.

In the survey of 3,290 working adults, ages 18 to 65, earlier this year the median LIS was 64%, meaning that the average U.S. household can expect to replace 64% of its current income in retirement (including Social Security).  

“Clearly there remains a lot of work to be done to help get individuals on a more solid track to replace their current income in retirement,” said Edmund F. Murphy, III, Head of Defined Contribution, Putnam Investments. “We believe that by providing action-oriented tools, resources and information to the retirement savings community, significant inroads can be made to close the existing gap and deliver much stronger outcomes for working Americans.”

The Putnam Lifetime Income Score takes a holistic view of behavioral tendencies, demographic and mortality factors, current household income, savings and future contributions from a plan participant’s age today through age 65. The Putnam-developed methodology translates current assets, asset allocation mix, future saving deferrals, company match and Social Security, into estimated monthly retirement income, reflected in a Lifetime Income Score that helps plan participants know where they stand on retirement readiness.

“There is a rising expectation in the marketplace that plan sponsors will take a greater role in helping their participants adequately prepare for retirement,” said Murphy. “To do that, they need to know whether their employees are on track, from a future income perspective, to enjoy a dignified retirement, and how well their plans are working in readying their workers for retirement.

The Putnam Lifetime Income Score plan-level results will be available to 401(k) plan sponsor clients of Putnam and their advisers on an ongoing, real-time basis. All qualified plan sponsors—and their consultants—regardless of their client status, are eligible to receive a complimentary overview assessment if requested.