PUTNAM INVESTMENTS INTRODUCES CUSTOMIZED RETIREMENT INCOME WITHDRAWAL STRATEGIES
New Suite of Retirement Income Funds, Working in Tandem with Unique Planning Tool, Brings Critically Needed Focus to Withdrawal Side of Retirement Savings Equation
BOSTON, October 24, 2011 — In an effort to help retirees and their advisors develop and implement strategies that seek to fulfill lifetime income needs in retirement — and potentially address legacy goals — Putnam Investments today announced the official launch of its Putnam Retirement Income Lifestyle Funds, a suite of three income-oriented mutual funds, along with a powerful Retirement Income Tool (publicly available at www.putnam.com/retirementincome), which may be used in tandem to confront the unique set of complexities presented by the savings withdrawal phase of retirement.
“The biggest hurdles Americans face in securing a quality retirement is first accumulating sufficient assets, and then ensuring that those assets generate sustainable income for life,” said Robert L. Reynolds, President and Chief Executive Officer, Putnam Investments. “Putnam is offering the marketplace a thoughtful and intuitive approach that tries to provide a solid and sufficiently long runway for people to experience a dignified, financially-secure retirement after a lifetime of working.
Reynolds explained that in launching its new offering, Putnam is seeking to address a critical piece of the nation’s retirement challenge, which has become more complex as the number of Americans reaching age 65 grows every day, the potential vitality of traditional sources of “guaranteed” income such as pensions and Social Security diminishes, and the retirement savings industry braces for a massive influx of assets into end-stage “one-size-fits-all” lifecycle funds.
The Putnam product suite, working in coordination with the new planning tool, is designed to help provide financial advisors with the potential to develop a variety of income strategies for their clients’ retirement years, including possible sources for income while waiting for Social Security benefits to commence, suggestions for a stream of lifetime income that can be more sustainable to serve expected longevity, estimates of related assets that may be earmarked for heirs.
The Putnam Retirement Income Tool offers the potential to make customized lifetime income projections, utilizing scenario-planning that incorporates a number of determining factors: income needs, life expectancy, risk tolerance, and other key financial variables.
The Putnam Retirement Income Lifestyle Funds Suite
Based on input provided from the Putnam Retirement Income Tool, advisors will be able to seek possible solutions from the Putnam suite of products being officially launched today:
“The Lifestyle Funds” are expected to have broad applicability for defined contribution, IRA, and other retirement assets, as either stand-alone solutions or in conjunction with other retirement investment vehicles. The suite complements the Putnam RetirementReady® Funds, the firm’s 10-fund series of target-date/lifecycle funds, which seek to help investors in their savings phase.
The funds are managed by a highly experienced team of veteran portfolio managers including Jeffrey L. Knight, CFA, Putnam’s Head of Global Asset Allocation; Robert J. Kea, CFA, a 23-year industry veteran who joined Putnam in 1988; Robert J. Schoen, a 22-year industry veteran who joined Putnam in 1997; and Joshua Kutin, CFA, who joined Putnam in 1998.
The Retirement Income Tool
The Retirement Income Tool has an easy-to-use and easy-to-understand interface that requires investors to input only the most important data and variables, including current assets, the age at which an investor expects to begin drawing down income; income need and retirement time horizon. The planning tool, which runs billions of market simulations of possible outcomes, generates customizable projections of expected monthly income for model portfolios of varying aggressiveness.
Putnam Investments and Retirement
In January 2009, Putnam introduced its proprietary Lifetime Income Analysis Tool, which helps workers model how much monthly income their savings — as they continue through the accumulation process — might generate in retirement and determine their current retirement preparedness. Early use of the tool by participants in Putnam-managed 401(k) plans demonstrated its effectiveness, with up to 34 percent of 401(k) participants who interacted with the tool, making changes to the amount of income they deferred to retirement savings; 80 percent of the changes were deferral increases; and the average savings rate increase was approximately 23 percent, from 7 percent of income to 8.6 percent.*
Putnam RetirementReady® Funds, the firm’s suite of 10 target-date/lifecycle retirement funds, were the first suite of lifecycle funds to integrate Putnam Absolute Return Funds, which seek positive returns above inflation over three years with lower volatility than has been associated with traditional asset classes that have earned similar rates of return. Employed in retirement portfolios, Putnam Absolute Return Funds are intended to pursue positive returns in up and down markets, to help protect against the harmful effects of adverse investment returns and to seek to reduce volatility.
About Putnam Investments
* Research is based on initial data gathered from the activity of 10,000 participants in Putnam defined contribution retirement plans, including nearly 3,000 participants that interacted with the Putnam Lifetime Income Analysis Tool at the end of December 2010.
Consider these risks before investing: It is important to understand that you can lose money by investing in the fund. There is no guarantee that the fund will provide adequate income at and through an investor’s retirement.
International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. The fund may invest a portion of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. The use of derivatives involves additional risks, such as the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Our allocation of assets among permitted asset categories may hurt performance.
IMPORTANT: The projections, or other information generated by the Retirement Income Tool regarding the likelihood of various investment outcomes are hypothetical in nature, 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 distribution outcomes if certain investment strategies or styles are undertaken, thereby serving as an additional resource to investors and their advisors in the evaluation of the potential risks and returns of investment choices and distribution strategies.
Each simulation takes into account the investor’s current assets, age at which distributions would start, income need, and retirement time horizon. The tool runs over 50 billion market simulations to provide an illustration of potential monthly income streams in retirement, how those income levels may change with different risk parameters, and how long the income might last. The tool does not take into account post-tax contributions to savings. It also 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. Stock performance shown in the tool portfolios is based on the S&P 500 Index, an unmanaged index of common stocks. Bond performance is based on the Barclays Capital U.S. Aggregate Bond Index, an unmanaged index of U.S. investment-grade fixed-income securities. Cash is represented by the BofA Merrill Lynch US 3-month Treasury Bill Index, an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace. While other investments may have characteristics that are similar or superior, these indexes are the most common means of measuring the performance of these asset classes.This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions.
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 does not take into account post-tax contributions to savings. It also 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.
Each RetirementReady Fund has a different target date indicating when the fund’s investors expect to retire and begin withdrawing assets from their account, typically at retirement. The dates range from 2015 to 2055 in five-year intervals, with the exception of Putnam Retirement Income Fund Lifestyle 1, which is designed for investors at or near retirement. The funds are generally weighted more heavily toward more aggressive, higher-risk investments when the target date of the fund is far off, and more conservative, lower-risk investments when the target date of the fund is near. This means that both the risk of your investment and your potential return are reduced as the target date of the particular fund approaches, although there can be no assurance that any one fund will have less risk or more reward than any other fund. The principal value of the funds is not guaranteed at any time, including the target date.
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.Putnam Retail Management