Putnam Investments: Pathway to Independence
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Retirement strategies for women
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Putnam Investments: Pathway to Independence
- 1. Not FDIC May Lose No Bank Insured Value Guarantee EO013 270090 10/11 |1
- 2. A strong foundation Nearly half of the U.S. 47% labor force More than half of management and professional 51% jobs More likely (than men) to attend college 74% Source: Bureau of Labor Statistics, Women in the Labor Force: A Databook, 2010. EO013 270090 10/11 |2
- 3. The challenges • Earnings (still) tend to be lower overall • Likely to live longer • Often in the role of caregiver • Investment behavior is more cautious EO013 270090 10/11 |3
- 4. Receiving lower overall pay Today At retirement This estimated wage gap could cost the average Women are paid full-time woman worker 77 cents for $700,000 to every dollar earned by a man $2 million over the course of her work life Source: National Committee on Pay Equity, September 2010. EO013 270090 10/11 |4
- 5. Enjoying a long retirement Health-care costs The average woman will outpace the who retires at age 65 rate of inflation today can expect to live A longer lifespan 21 years in retirement means more years in retirement Source: Social Security Administration, 2011. EO013 270090 10/11 |5
- 6. Taking care of others 61% More than half of those who of employed provide unpaid women caregivers care to an elderly adjust their work or disabled adult schedules to are women provide care Source: U.S. Department of Health and Human Services, Office on Women’s Health, May 2008, which is the most recent data available. . EO013 270090 10/11 |6
- 7. Being too conservative However, being too Women’s patience conservative can in investing is negatively affect your retirement often rewarded savings goals Sources: Hewitt Associates, "Total Retirement Income at Large Companies: The Real Deal," July 2008; Society of Actuaries, “Risks and .Process Retirement Survey Report,” May 2008, which is the most recent data available. EO013 270090 10/11 |7
- 8. Strategies to move your retirement plan in the right direction EO013 270090 10/11 |8
- 9. Will you need more income in retirement? The average household Expenses requires $49,067 annually, or $981,340 over 20 years, before inflation* Wealth Long-term inflation preservation averages 3.24% per year** * U.S. Dept. of Labor, 2010 Consumer Expenditure Survey Report (based on 2009 data). ** Consumer Price Index, 2011, for the period 1913-2010. EO013 270090 10/11 |9
- 10. Do you know how much you’ll need to save? Survey responses Less than 31% $250,000 Less than 50% $500,000 Less than 72% $1,000,000 At least 17% $1,000,000 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey. EO013 270090 10/11 | 10
- 11. Because reality can be startling If your current annual income is You’ll need to save $50,000 $890,000 $100,000 $1,800,000 $250,000 $3,600,000 Assumes 25 years of retirement, and a retirement nest egg growing at 6% annually, compounded monthly and adjusted for 3% inflation. EO013 270090 10/11 | 11
- 12. Save as much as you can 2011 limit Your employer’s retirement plan $16,500 Before-tax contributions, tax-deferred earnings Traditional IRA $5,000 Before-tax contributions (if you qualify), tax-deferred earnings Roth IRA $5,000 After-tax contributions, tax-free withdrawals Additional contributions for those age 50 and over Employer’s retirement plan $5,500 Traditional or Roth IRA $1,000 Source: IRS, 2011. EO013 270090 10/11 | 12
- 13. Social Security won’t cover it all $50,908 $38,272 Annual income of full-time worker (age 60) $17,520 $14,460 What you can expect from Social Security* Single Men Single Women * In today’s dollars. Assumes retirement at age 66. The maximum Social Security benefit in 2011 for an individual at full retirement age (66) is $28,392. Sources: Bureau of Labor Statistics, Highlights of Women’s Earnings in 2010, Social Security Administration, 2011. EO013 270090 10/11 | 13
- 14. Actively manage your nest egg • Diversify to reduce risk, while seeking to optimize returns • Rebalance regularly • Take sustainable withdrawals Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses. EO013 270090 10/11 | 14
- 15. Diversification can help lower volatility Stocks felt the boom and bust of the 1990s and early 2000s. $500,000 $1,703,459 Jan. 1991 Dec. 2010 Annual withdrawal: $25,000 Illustration is based on a hypothetical investment of $500,000 in the S&P 500 Index. The S&P 500 Index is an unmanaged index of common stock performance. You cannot invest directly in an index. EO013 270090 10/11 | 15
- 16. Diversification can help lower volatility Bonds were steady, but lagged behind stocks. $500,000 Jan. 1991 $716,709 Annual withdrawal: $25,000 Dec. 2010 Illustration is based on a hypothetical investment of $500,000 in the S&P 500 Index and the Barclays Capital U.S. Aggregate Bond Index. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities. You cannot invest directly in an index EO013 270090 10/11 | 16
- 17. Diversification can help lower volatility A diversified portfolio outpaced bonds with far less volatility. $500,000 Jan. 1991 $1,029,714 Annual withdrawal: $25,000 Dec. 2010 Illustration is based on a hypothetical investment of $500,000 in the S&P 500 Index, the Barclays Capital U.S. Aggregate Bond Index, and a diversified portfolio composed of a 25% investment in the S&P 500 Index and a 75% investment in the Barclays Capital U.S. Aggregate Bond Index. Refer to slides 15 and 16 for index definitions. You cannot invest directly in an index. Annual withdrawals are $25,000 increased by 3% annually for inflation. Diversified portfolio is rebalanced annually. EO013 270090 10/11 | 17
- 18. Diversify across opportunities Changes in market performance, 1991–2010 1991 1995 2000 2005 2010 Highest return Lowest return U.S. Small-Cap Growth Stocks | Russell 2000 Growth Index International stocks | MSCI EAFE Index U.S. Large-Cap Growth Stocks | Russell 1000 Growth Index U.S. Bonds | Barclays Capital U.S. Aggregate Bond Index U.S. Small-Cap Value Stocks | Russell 2000 Value Index Cash | BofA Merrill Lynch U.S. 3-Month Treasury Bill Index U.S. Large-Cap Value Stocks | Russell 1000 Value Index Past performance does not indicate future results. Indexes are unmanaged and show broad market performance. It is not possible to invest directly in an index. EO013 270090 10/11 | 18
- 19. Small-Cap Growth Stocks are represented by the Russell 2000 Growth Index, which is an unmanaged index of those companies in the Russell 2000 Index chosen for their growth orientation. Large-Cap Growth Stocks are represented by the Russell 1000 Growth Index, which is an unmanaged index of capitalization-weighted stocks chosen for their growth orientation. Small-Cap Value Stocks are represented by the Russell 2000 Value Index, which is an unmanaged index of those companies in the Russell 2000 Index chosen for their value orientation. Large-Cap Value Stocks are represented by the Russell 1000 Value Index, which is an unmanaged index of capitalization-weighted stocks chosen for their value orientation. International Stocks are represented by the MSCI EAFE Index, which is an unmanaged index of international stocks from Europe, Australasia, and the Far East. U.S. Bonds are represented by the Barclays Capital U.S. Aggregate Bond Index, which is an unmanaged index used as a general measure of fixed-income securities. Cash is represented by the Bank of America Merrill Lynch U.S. 3-Month Treasury Bill Index, which is an unmanaged index used as a general measure for money market or cash instruments. EO013 270090 10/11 | 19
- 20. Active rebalancing Without rebalancing: The market controls asset allocation Stocks Bonds 67% 57% 33% 43% Out-of- Balanced balance portfolio portfolio 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital U.S. Aggregate Bond Index. Indexes are unmanaged and represent broad market performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses. EO013 270090 10/11 | 20
- 21. Active rebalancing With rebalancing: Asset allocation remains consistent Stocks Bonds 67% 57% 67% 67% 33% 43% 33% 33% Balanced Balanced portfolio portfolio 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital U.S. Aggregate Bond Index. Indexes are unmanaged and represent broad market performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses. EO013 270090 10/11 | 21
- 22. Putnam Asset Allocation Funds • Asset class diversification • Global investment perspective • Active rebalancing • Individual security selection EO013 270090 10/11 | 22
- 23. Consider these risks before investing: Putnam Asset Allocation Funds can invest in international investments, which involve risks such as currency fluctuations, economic instability, and political developments. The funds invest some or all of their assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. The use of derivatives involves special risks and may result in losses. The funds can also have a significant portion of their holdings in bonds. Mutual 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 have more exposure to interest-rate risk than short-term bonds. Lower-rated bonds may offer higher yields in return for more risk. Unlike bonds, bond funds have ongoing fees and expenses. EO013 270090 10/11 | 23
- 24. Putnam’s three diversified funds Choices for investors with different objectives Growth Balanced Conservative Portfolio Portfolio Portfolio 20% 30% 40% 60% 70% 80% Amount allocated to stocks Amount allocated to bonds EO013 270090 10/11 | 24
- 25. How long will your savings last? It depends on how much you withdraw each year. 50 40 30 Years 20 10 3% 4% 5% 6% 7% 8% 9% 10% will last will last will last will last will last will last will last will last 50+ years 37 years 22 years 17 years 14 years 12 years 11 years 10 years 0 Percentage of your portfolio’s original balance withdrawn each year This example assumed a 95% probability rate. These hypothetical illustrations are based on rolling historical time period analysis and do not account for the effect of taxes, nor do they represent the performance of any Putnam fund or product, which will fluctuate. These illustrations use the historical rolling periods from 1926 to 2010 of stocks (as represented by an S&P 500 composite), bonds (as represented by a 20-year long-term government bond (50%) and a 20-year corporate bond (50%)), and cash (U.S. 30-day T-bills) to determine how long a portfolio would have lasted given various withdrawal rates. A one-year rolling average is used to calculate performance of the 20-year bonds. Past performance is not a guarantee of future results. The S&P 500 Index is an unmanaged index of common stock performance. You cannot invest directly in an index. EO013 270090 10/11 | 25
- 26. Put your plan into action • Understand your investment challenges and consider how they may impact your retirement • Develop an effective retirement plan to determine what you can do today to ensure you’ll have the income you’ll need later on EO013 270090 10/11 | 26
- 27. Prepare for the unexpected • Life events – Family and home emergencies – Change in health – Change in career or income – Divorce or death of a spouse • Estate planning EO013 270090 10/11 | 27
- 28. Work with a financial advisor • Be actively engaged in the management of your money and review your financial plan regularly EO013 270090 10/11 | 28
- 29. A BALANCED APPROACH A WORLD OF INVESTING A COMMITMENT TO EXCELLENCE EO013 270090 10/11 | 29
- 30. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial representative or call Putnam at 1-800-225-1581. Please read the prospectus carefully before investing. Putnam Retail Management putnam.com EO013 270090 10/11 | 30
- 31. EO013 270090 10/11 | 31
Notas do Editor
- Welcome. Today, we’re going to talk about saving for retirement and preparing for a financially sound and satisfying future. We’ll learn about the challenges and discuss time-tested investment principles for growing and monitoring your savings so you can feel confident and secure about your retirement journey.
- Women have made great strides with finances. More women are working full time Women compose 47% of the total U.S. workforce In 2009, 66 million women are employed in the United States — down slightly from the all-time high of 68 million in 2008. The largest percentage of employed women (51%) work in management, professional, and related occupations. Greater potential for higher education Among those who graduated high school in 2009, a greater percentage of women (72%) than men (66%) enrolled in college that fall. Sources: Bureau of Labor Statistics, Women in the Labor Force: A Databook , 2010.
- Despite the gains made in the areas of earnings and investing, challenges remain. Of course, all investors confront hurdles on their way to reaching their goals. But let’s review challenges that are more unique to women: Earnings (still) tend to be lower overall Likely to live longer (yes, it’s a challenge!) Women often assume the role of caregiver More cautious investment style
- Let’s take a closer look at these challenges. At work: Equal pay has been the law since 1963. But today, more than 45 years later, women are still paid less than men — even with similar education, skills, and experience. In 2009, women were paid only 77 cents for every dollar a man was paid, according to the U.S. Census Bureau. Economist Evelyn Murphy, president and founder of The WAGE Project, estimates the wage gap costs the average full-time U.S. woman worker between $700,000 and $2 million over the course of her work life. Statistics provided by the Older Women’s League at www.owl-national.org and the National Committee on Pay Equity, 2010.
- In life: In planning for retirement, it is important to consider how long you might live. And women today are living longer than men. If you are celebrating your 65th birthday today, you can expect to live an average of 21 more years. What’s more, the majority of people age 85 and older are women. One challenge with longevity is that, statistically, as people age they find themselves paying more and more on health-care and related expenses. Fifty-six percent of women are worried about paying for long-term health-care costs in retirement versus 45% of men. It is important to recognize that inflation is different for seniors because of health care. Health-care costs are projected to rise 8% annually over the next 20 years. Make sure your retirement income plan takes a longer life span and an increase in health-care costs into account.
- At home: Of all the unpaid caregivers who provide care to the elderly and disabled, 61% are women. This commitment to the care of others takes its toll on the careers of these women, who are forced to be home — and therefore away from the workplace — more than they otherwise would be. In fact, according to the U.S. Department of Health and Human Services, more than half of employed women caregivers make adjustments to their work schedules in order to provide care.
- Studies have shown that experienced women investors actually earn better returns overall than men because they are more patient investors and don't jump in and out of the market as often. But studies also have found that women tend to invest more conservatively than men, often sticking with “safe” but low-returning vehicles such as savings accounts. This has an obvious impact on all aspects of one’s financial life, but particularly retirement. By focusing on preserving your portfolio’s principal rather than achieving returns, you may give up the growth necessary to reach your long-term savings goals 65% of women are likely to make riskier investments, compared to 71% of men. 26% of women are likely to make changes to their investments, compared to 30% of men. 62% of women worry about their investments keeping pace with inflation in retirement, compared to 51% of men. 52% are worried about depleting their savings, versus 37% of men. Sources: Hewitt Associates, “Total Retirement Income at Large Companies: The Real Deal,” July 2008; Society of Actuaries, “Risks and Process Retirement Survey Report,” May 2008.
- A long and happy retirement is on most everyone’s wish list. Understanding the challenges you’ll face on your path to retirement is an important step in taking control of your financial future. Let’s discuss how you work toward reaching your retirement goals with strategies that keep your retirement income plan headed in the right direction.
- While financial planners suggest you may need to carry at least 80% of your working income into retirement, just how hard your income must work is often underestimated. Your earnings may be less than expected You are living longer You are spending more for rising expenses like health care You are taking care of others – that you may or may not have expected to take care of Retirement requires a lot of savings. And with the challenges at hand – plus the signs of rising inflation – how you save requires careful planning.
- Let’s look at how much money people think they need to save for their retirement. The vast majority estimate they need to save less than $1 million, and more than 30% put the figure under $250,000. As you’ll see, these estimates fall far short of reality.
- First, we all need to recognize that the actual numbers associated with retirement savings goals can be daunting. How big of a nest egg do you think you’ll need to replace an annual income of $50,000 over a 25-year retirement? (Solicit responses from the audience.) You’ll need nearly $900,000, assuming a 6% rate of return on the savings and a 3% rate of inflation. To replace $100,000, that’s fairly straightforward — you can quickly do the math: you’ll need approximately $1.8 million. What about $250,000 in income? (Solicit responses from the audience.) It’s a whopping $3.6 million.
- Actively saving is key, and to help you work toward achieving your financial retirement goal, it’s important to take advantage of the tax-sheltered plans available to you. These include your employer’s retirement plan such as a 401(k), a Traditional IRA, and a Roth IRA. As you can see, each type of plan has specific limits on the contributions you can make per year, but the overall savings opportunities are significant.
- While Social Security is a form of an income stream, it’s important to understand that it will provide only a fraction of the income you will need in retirement. Many overestimate the amount of income they will receive from their savings and wind up relying more heavily on Social Security to pay the bills. To maintain your standard of living in retirement, you will have to make up the difference through your own savings and investments. [The maximum Social Security benefit in 2011 for an individual at full retirement age (66) is $28,392.] And if you are married, it’s important to note that the age at which your spouse starts taking Social Security benefits can affect your long-term benefits. Most married men start claiming Social Security benefits at age 62 or 63, far short of the age that maximizes the value of the average household’s benefits. What results is a much lower long-term survivor benefit amount. If your husband postpones when he claims his benefit, you can significantly increase your long-term benefit. Sources: EBRI, 2007; Center for Retirement Research at Boston College, 2008.
- Now that you know how much you’ll need to save and are considering how to take advantage of the tax-sheltered plans available to you, you should also be actively managing your retirement portfolio to help ensure it lasts over your lifetime. You can achieve this by: Diversifying to reduce risk, while optimizing your return. Rebalancing regularly so that you do not lose your target asset mix. Taking sustainable withdrawals – the rate at which you withdraw assets makes a huge difference in how much you end up with down the road.
- Diversification is important. How you spread your money across different types of investments may help smooth the market’s ups and downs. Let’s take a look at how it works. Here, we see the performance of a $500,000 investment in ONLY stocks. This takes into account an annual withdrawal — $25,000 in the first year, which is adjusted for inflation in later years. As you can see, the investment grew over time, but it was a bumpy road.
- In this illustration, the yellow line shows the performance of an investment in ONLY bonds, which are more conservative than stocks. A much smoother ride — but not a lot of growth.
- Now let’s take a look at how a diversified portfolio would have performed (75% bonds/25% stocks). It has less volatility than an all-stock portfolio, and a much higher ending value than an all-bond portfolio. Markets are unpredictable, and over time, different types of investments outperform others. A portfolio that has too many eggs in one basket not only misses investment opportunities in certain areas, but also runs the risk of being overly concentrated in the wrong areas.
- While stocks, bonds, and cash have performed consistently over decades, there is another important lesson to be learned from history: Markets are unpredictable in the short run. In any given year, it is impossible to predict which investments will lead markets, and which will lag. This chart ranks the winners and losers in each year, including value stocks, growth stocks, international stocks, and bonds. Each type of investment has its own color. The winners are on the top row, and the losers are on the bottom. Do we see a pattern? No, not really. That’s because there is no pattern. Over 20 years, there have been 16 changes in market leadership. Often, the top-performing investment one year falls into the lower half in the next year. Even though it’s impossible to predict which type of investment will be at the top or bottom from one year to the next, a diversified portfolio can provide more consistent returns.
- This shows the indexes used to represent the asset classes on the preceding slides. U.S. Small Cap Growth stocks are represented by the Russell 2000 Growth Index. U.S. Large Cap Growth stocks are represented by the Russell 1000 Growth Index. U.S. Small Cap Value stocks are represented by the Russell 2000 Value Index. U.S. Large Cap Value stocks are represented by the Russell 1000 Value Index. International stocks are represented by the MSCI EAFE Index. U.S. bonds are represented by the Barclays Capital U.S. Aggregate Bond Index. Cash is represented by the Bank of America Merrill Lynch U.S. 3-Month Treasury Bill Index.
- If you invested in a diversified portfolio of stocks and bonds more than one year ago, don’t assume that it is still diversified in the way you intended. Over time, changes in markets can have a pronounced impact on your portfolio, making it either more risky or more conservative than you intended. A portfolio that is not regularly rebalanced, as in this illustration, will drift with market performance and can become unbalanced over time, giving investors a very different allocation and possibly more risk.
- If you invested in a diversified portfolio of stocks and bonds more than one year ago, don’t assume that it is still diversified in the way you intended. Over time, changes in markets can have a pronounced impact on your portfolio, making it either more risky or more conservative than you intended. A portfolio that is not regularly rebalanced, as in this illustration, will drift with market performance and can become unbalanced over time, giving investors a very different allocation and possibly more risk.
- Now that we have an understanding of the benefits of investing with a diversified strategy, I would like to tell you about Putnam Asset Allocation Funds, which have pursued such a strategy since 1994. For over 15 years, Putnam has managed these funds with a consistent approach. Putnam’s Global Asset Allocation philosophy has four key components. Broad portfolio diversification across multiple asset classes In all market conditions, each fund invests in a variety of securities across global stock and bond markets, as well as cash investments. This allows each fund to participate in a greater number of investment opportunities and manage risk. Global investment perspective Today, every investment decision needs to be made in a global context. In managing these funds, the portfolio managers analyze global markets, sectors, and securities to understand the risks and opportunities. Active management and rebalancing are part of the disciplined process for managing the funds. The portfolio managers seek to keep the return potential and risk profile consistent over time by actively pursuing opportunities and regularly rebalancing each fund to keep allocations near their target weightings. The benefit of this process is that there is professional oversight that each fund has the appropriate long-term allocations to achieve its goals. Selection of individual securities The funds invest in individual stocks and bonds, not other funds, to make the most of Putnam’s security selection, while helping to reduce the potential for overlapping holdings.
- These are the risks associated with the funds. Putnam Asset Allocation Funds can invest in international investments, which involve risks such as currency fluctuations, economic instability, and political developments. The funds invest some or all of their assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. The use of derivatives involves special risks and may result in losses. The funds can also have a significant portion of their holdings in bonds. Mutual 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 have more exposure to interest-rate risk than short-term bonds. Lower-rated bonds may offer higher yields in return for more risk. Unlike bonds, bond funds have ongoing fees and expenses. Putnam Asset Allocation: Growth Portfolio, Balanced Portfolio, and Conservative Portfolio are series of Putnam Asset Allocation Funds, a registered investment company.
- The pie charts of the three asset allocation funds show their investments across diverse asset classes. The strategic allocations of each fund address the distinct investment objectives of each fund — which one you choose depends on your life stage and tolerance for risk. Three of these funds — the Growth Portfolio, the Balanced Portfolio, and the Conservative Portfolio — have track records of over 15 years. The Growth Portfolio is structured with the goal of outperforming the U.S. stock market over time, but has a strategic allocation to bonds to reduce volatility. The Balanced Portfolio pursues total return with a classic 60/40 blend of stocks and bonds. The Conservative Portfolio places an emphasis on preserving investors’ capital and invests a majority of its assets in bonds
- One of the important expectations to manage is how much you can withdraw from your portfolio if you want it to last. This idea is called “sustainable withdrawals.” This chart takes a balanced portfolio mix of 60% equities, 30% fixed income, and 10% cash, then shows how long it would have lasted at different withdrawal rates based on historical performance. What’s interesting is that, because we’re dealing in percentages, the dollar amount of your nest egg doesn’t matter. Whether you have $100 or $100,000, 50% is still half. The chart shows that if you take 10% out of your savings each year, you can expect your savings to last about 10 years. Based on this mix, savings at a 6% annual withdrawal rate, increased each year to keep up with inflation, will last around 16 years. If you want to plan for a retirement income stream that lasts more than 20 years, you’d need to consider withdrawing 5% per year or less. The moral of this story is that you should try to limit your annual withdrawals to allow your savings to last throughout your retirement.
- Let’s talk about how to put the ideas we’ve reviewed today into actionable next steps. By taking the time today to learn more about saving for retirement and investment strategies that can help you prepare for a financially sound and satisfying future, you have already put yourself on the road to financial independence. To gain confidence and security about your retirement journey, be sure to understand and acknowledge the challenges you face and how they may impact your retirement. Think critically about your expenses today to help you develop an effective retirement plan that will help you achieve the income you’ll need later on. Key components you need to think about to help put your plan into action: How much will you need? Make an estimate of how much monthly or annual income you will need in retirement. What are your sources of retirement income? Think about what sources of retirement funds will be available and how much you will receive from each, including Social Security, employer retirement plans, and your own personal savings. How long will you live? In planning for retirement, it is important to consider how long you might live. What if your spouse dies first? If you are married, find out which benefits will continue if you or your spouse should die first. How will the cost of living change in the future? When you estimate your retirement income needs, remember to include the impact of inflation. How will you pay for health care? Consider how you will pay your medical bills. How will you manage your retirement money? Consider how you will manage your funds and what the right mix of investments is for your retirement needs. Investments include stocks, bonds, annuities, money market funds, your home, other real estate, and other savings.
- Expect the unexpected. Unplanned illnesses, unanticipated expenses, or accidents can devastate your finances. Review and confirm that your insurance coverage is sufficient – life, health, homeowner’s, and auto. Have a plan to weather the storm of a change in career or income so you don’t have to dip into your retirement plan savings. Unfortunately, half of all marriages end in divorce and over 75% of women are eventually widowed. Thus, many who counted on dual incomes at retirement may have to scramble to make ends meet. Be prepared to manage your own finances. Have an estate plan – it is basically an exit strategy. It organizes your assets in such a way as to leave as much to your loved ones as possible. Estate taxes can be as high as 50% if your estate is valued at more than $1 million. If your estate is valued less than that, you can pass your assets to your loved ones without an estate tax. An estate planning attorney can help guide you through the complex laws regarding estate taxes. Other aspects of estate plans deal with the creation of legal documents such as a will, power of attorney, testamentary, letter, and more. Locate and review your financial papers (individual and joint accounts and policies) Confirm that beneficiary designations are accurate and make changes where necessary. Don’t limit your review to accounts, and check all deeds and titles to real property. This can help your heirs avoid the often costly and time-consuming probate process. Make time to re-review to ensure the paperwork stays current. Guarding yourself from hardship associated with life’s unexpected events is a key component of any well-built financial plan.
- Stay invested and be engaged in the management of your money. Don’t defer financial decision-making to others, but rather seek out a financial advisor you can trust. He/she can help you develop a strategy that best suits your situation and can help you set up a plan to ensure your money is there for you in retirement – and most importantly – that it will last throughout your retirement journey. Thank you for joining me today.
- Since 1937, when George Putnam created a diverse mix of stocks and bonds in a single, professionally managed portfolio, Putnam has championed the balanced approach. Today we offer investors a world of equity, fixed-income, multi-asset, and absolute-return portfolios to suit a range of financial goals. Our portfolio managers seek superior results over time, backed by original, fundamental research on a global scale. We believe in the value of experienced financial advice, in providing exemplary service, and in putting clients first in all we do.