Putnam Lifetime Income Scores III

PUTNAM INVESTMENTS | putnam.com
In 2011, Putnam Investments, in partnership with Brightwork Partners,
introduced the Lifetime Income ScoreSM
(LIS), a tool for helping households
estimate the level of income that they are currently on track to replace in
retirement. Scores incorporated numerous variables related to earnings
through employment, as well as financial behavior and confidence in financial
decision making. The result is a tool that Americans can use — even early in
their careers — to begin measuring their progress toward seeking a financially
secure retirement.
Now in its third year, our survey compiles data provided by 4,089 working
adults between the ages of 18 and 65. This survey was conducted online
between December 7, 2012, and January 4, 2013, and results are weighted
according to U.S. Census parameters. Once again, our research supports
several key hypotheses: first, that factors like access to workplace retire-
ment savings plans and higher deferral rates have an enormous impact on
retirement preparedness. Second, our research suggests that having a paid
financial advisor can appreciably influence investor confidence and Lifetime
Income Scores. Third, our data lend support to the idea that achieving retire-
ment preparedness is fundamentally a behavioral issue. Although income and
investable assets tend to correlate with retirement preparedness, even lower-
income households that make a habit of saving can get on track to being
financially prepared for the future.
An overview of retirement preparedness
Results from our survey this year show that working Americans are on track
to replace 61% of their household income in retirement. As in prior years,
our research indicates that the least well prepared tend to be older and less
well educated, while the better prepared tend to be younger and male. LIS
differences along age and gender lines have consistently emerged in our data
over the last three years of our survey. That the better prepared tend to be
younger — i.e., under the age of 50 — may be due to the fact that being in a
workplace savings plan longer enhances one’s ability to prepare for retirement.
April 2013 » Perspectives
Lifetime Income Scores III:
Our latest assessment of retirement
preparedness in the United States
W. Van Harlow, Ph.D., CFA
Director, Investment Retirement Solutions
• Working Americans are
on track to replace 61% of
their household income in
retirement.
• Deferring 10% or more
to a workplace savings
plan and using a financial
advisor continue to have a
major impact on retirement
preparedness.
• Confidence data uncovered
by our research indicate the
possibility for a virtuous
circle of plan eligibility,
participation, savings
behavior, and retirement
preparedness.
• The Lifetime Income Score
accounts for a variety of
critical financial factors,
including home ownership,
business value, and
inheritance — and now, for
the first time, mortality
rates associated with a
variety of common health
conditions.
Keytakeaways

APRIL 2013 | Lifetime Income Scores III: Our latest assessment of retirement preparedness in the United States
2
Our data also show that the better prepared frequently have a
financial advisor — 39% of those in the top LIS segments (scoring 100
or more) report having an advisor — while total household income and
investable assets both tend to rise along with Lifetime Income Scores.
The top two quartiles of LIS, for example, earn a median of $85,000
and $75,000, respectively, per year by household and have median
investable assets of $221,000 and $81,000, respectively.
Importantly, however, our research indicates that being prepared
for retirement is not solely a function of “having more money,”
whether in terms of income or investable assets. When we take a
closer look at the LIS distribution by household income, 15% of all
households earning less than $50,000 per year manage to achieve
a LIS over 100% — an encouraging point to discover (Figure 1).
While the role of Social Security cannot be ignored for virtually any
income level, high scores are achieved by individuals across the
income spectrum, a fact that we believe highlights the significance of
consistent saving behavior.
Figure 1. Lifetime Income Scores were relatively
insensitive to household income levels
Total < $50K
$50K to
$100K
$100K to
< $175K $175K+
Under 45 31% 38% 27% 31% 30%
45 to < 65 23 22 28 18 15
65 to < 100 23 25 21 25 21
100+ 23 15 24 27 35
Net under 75 62 68 63 58 52
Net 75+ 38 32 37 43 48
Median LIS 61 55 60 67 73
Percentages in each column indicate incidence among respondents.
Key drivers of retirement preparedness
Our latest survey data indicate once again that some factors matter
more than others on the path toward retirement preparedness. Impor-
tantly, the factors that arguably matter most are things that plan
sponsors, investment managers, financial advisors, and policymakers
can substantially influence, whether through the crafting of better
policy, the implementation of better plan design, the distribution of
more robust education, or a combination of these elements. Other
factors, such as home ownership, business value, and expectation of
an inheritance, have a modest effect (5 points) on the total, aggregate
Lifetime Income Scores for working Americans. Generally speaking,
though, these factors are dwarfed in significance by factors that bear
on qualified-plan access, deferral rates, and the use of an advisor.
Our newly expanded formula
for Lifetime Income Scores
Since 2011, we have continually sought
to broaden the scope of our research
to better educate individuals about
the realities of retirement planning and
assist plan sponsors in the development
of more effective plan design. This
year, in addition to including factors
such as home equity, business value,
and inheritance in the calculation of
Lifetime Income Scores, we have added
new inputs to reflect a range of health
conditions commonly experienced by
retirees.
To look at retirement without
contemplating the prevalence of
these health conditions, we felt, risks
missing critical financial and personal
aspects of retirement. For this reason,
we revised our model to include
mortality rates associated with various
chronic conditions, including high
blood pressure, high cholesterol, type
2 diabetes, cancer of any type, and
cardiovascular disease of any type
apart from high blood pressure. In
this way, we increased the robustness
of our methodology for calculating
Lifetime Income Scores and, we
believe, enhanced the effectiveness
and educational impact of our Lifetime
IncomeSM
Analysis Tool.

3
Employer plan eligibility
Our survey data continue to demonstrate that employer-
sponsored plan access is a critical component in workers’
pursuit of retirement security. In our latest research, the
median LIS jumps from 41 for non-eligible workers to 73
for workers who enjoy plan access. That number rises
further — to 76 — for households that are eligible to
participate in a defined contribution (DC) savings plan.
The significance of plan eligibility is particularly clear
when we compare the median LIS for workers who are
eligible but not active (54) with the median for those
who are active (79). These data strongly support our
conclusion that eligibility for participation in a retirement
plan — especially a DC plan — is a critical factor in boosting
one’s ability to prepare financially for retirement.
Analyzing the demographic composition of plan-
eligible workers, we sought to identify the ways in which
those who are eligible vary from those who are not.
Interestingly, the key points of difference do not reside
with age or gender but rather with education and level
of investable assets. Nearly 50% of households that are
not eligible to participate in an employer-sponsored
plan have received formal education equivalent to a
high school diploma or lower. Meanwhile, more than
65% of households that are eligible to participate in
employer-sponsored plans have had at least some college
experience. As for investable assets, households that
are eligible to participate in an employer-sponsored plan
find their median investable assets at $90,000, while
non-eligible households struggle with median investable
assets at only $5,000. Clearly, eligibility lines break across
levels of education and accumulated wealth. Also, as we
found in our previous year’s study, eligibility continues to
vary widely by industry of employment and yet it consis-
tently has a major impact on the median LIS (Figure 2).
In this year’s survey, we collected data on individuals’
confidence with respect to their knowledge and comfort
with various aspects of retirement planning. Importantly,
eligibility — which we know opens the door to education,
participation, and higher levels of preparedness overall —
appears to have a clear impact on investors’ confidence
(Figure 3). In short, investors who are plan-eligible feel
more confident about what they know, what they need to
do, and how much retirement will cost in the long run. We
would suggest that elevated levels of confidence can have
a decisive impact on savings behavior, and thus go a long
way toward better preparing Americans for retirement.
Figure 2. Lifetime Income Scores by industry and plan eligibility
n Total n Eligible n Not eligible
76
72
72
65
62
59
58
58
55
52
50
87
81
80
74
70
72
70
66
80
73
61
40
45
38
36
43
40
41
41
42
40
40
Financial industry (6%)
Information (5%)
Educational services (8%)
Public administration (7%)
Manufacturing (10%)
Trade, transportation, and utilities (14%)
Professional business services (16%)
Health care and social assistance (11%)
Leisure and hospitality (7%)
Construction (7%)
Other services (7%)
Median scores shown. Percentages next to industry categories indicate incidence among respondents.

4
Figure 3. Plan eligibility (by household(HH)) can enhance retirement confidence
Confidence levels with different aspects of retirement — points above or below “very or somewhat confident”
HH not eligible for employer planHH eligible for employer plan
Knowing how much
money you will need for
health-care expenses
in retirement
Being able to count
on receiving your
full Social Security
beneﬁts in retirement
Knowing how you will
cover health-care
expenses in retirement
Knowing how much
money you will
need for retirement
Being ready for
retirement ﬁnancially
-8 -8
-5 -3
-13
5
3 3
2 2
The importance of a financial advisor
Investors’ decision to use or not use a financial
advisor continued to have a sizable impact on
Lifetime Income Scores. Those who worked with
a paid advisor had a median LIS of 80 while those
who did not had a median LIS of 56 (Figure 4).
Not surprisingly, those who have an advisor tend
to have higher household income levels as well
as higher investable assets. However when we
neutralize all other key factors, from household
income and investable assets to savings rates and
demographics, having an advisor raises the LIS
by 9.6 points.
Figure 4. Using an advisor boosted
Lifetime Income Scores
Median Lifetime Income Scores
by advised/non-advised
Do not have a
paid advisor
Have a paid
advisor
Total
61
56
80
Using an advisor provides an even more significant
boost to investor confidence than did plan eligibility
(Figure 5). Those who have an advisor exhibit a 21-point
advantage relative to the average respondent when
asked whether they feel confident about being ready for
retirement. By contrast, those who do not use an advisor
betray a 6-point disadvantage relative to the average
respondent.

5
In response to the question of knowing how they will
cover health-care costs in retirement, the advised show
a 17-point advantage relative to the average, while the
unadvised exhibit a 5-point disadvantage. Clearly, having
an advisor contributes to investor confidence and may
confer a potential advantage in terms of engendering
positive financial behaviors.
The beneficial effects of a paid advisor carry over to
the confidence of DC plan participants in terms of how
they allocate their retirement assets. Indeed, those who
have an advisor enjoy a 9-point advantage relative to the
average respondent when asked how confident they are
with the way they have allocated assets among stocks,
bonds, and cash (Figure 6).
Figure 6. Advised DC participants had greater
asset allocation confidence than non-advised
participants
Confidence levels with different aspects of
retirement — points above or below “very confident”
Do not have a paid advisor
Have a paid advisor
The amount of
money that you
are contributing
The investments
you have selected
The way you have
your assets allocated
among stocks,
bonds, and cash
9
-4
-3 -3
8
7
Figure 5. Advisors can enhance retirement confidence
Do not have a paid advisorHave a paid advisor
Knowing how much
money you will need
for health-care
Being able to count
on receiving your full
Social Security beneﬁts
in retirement
Knowing how you
will cover health-care
Knowing how much
money you will need
for retirement
Being ready for
-5 -5 -5
-3
-6
21
17
15 15
11

6
Active participation in workplace savings plans
Arguably the most important factor in the determination
of retirement preparedness is financial behavior — specifi-
cally, the propensity to save. Looking across deferral rates
in workplace savings plans, households that defer 10% or
more of their income to retirement savings are on track to
replace 106% of pre-retirement income, and scores jump
to 121% when deferral rates reach 15% or more (Figure 7).
Notably, plans that set up auto-deferral rates in the range
of 4% to 6% can expect their participants’ median LIS to
fall above the overall median of 61, but possibly only by a
modest amount.
Figure 7. Deferral rates can have a radical
impact on Lifetime Income Scores
15%+
(7%)
10%+
(17%)
8% to
< 10%
(6%)
6% to
< 8%
(8%)
4% to
< 6%
(10%)
0.01%
< 4%
(14%)
0%
(5%)
Total
61
48
59
68
78
88
106
121
Our data reveal that eligible non-participants are
generally older than those who actively contribute to their
retirement plans. In addition, we found that participants
who tend to defer more of their income (10%+) also have
a paid advisor, while deferral rates themselves are not
particularly sensitive to level of household income.
Total savings rates
In addition to tracking data on workplace savings, our
survey captures a more comprehensive view of household
savings that includes non-plan-related savings activity.
Looking back over the past three years of collected data,
we observe that average savings rates have eroded
slightly over the past year (Figure 8), quite possibly
because economic uncertainty at home and abroad has
continued to weigh on working Americans.
Figure 8. Total savings rates have fluctuated,
but lately have eroded
201320122011
12.1%
LIS study year of publication
14.2%
13.1%
Health care
Our research continues to suggest that the majority
of households are feeling more concerned about the
economy and their investment prospects. More than 50%
of respondents expect inflation will rise in the year ahead,
and about a third of workers expect unemployment will
rise nationally. Once again, the largest area of uncertainty
pertains to health care. More than 60% of all respondents
expect out-of-pocket health-care costs will rise in the next
year, and 21% (versus 18% in the previous year’s survey)
expect these costs will rise substantially (Figure 9).
For the second year in a row, we sought to determine
the level of interest in planning tools that could bring
clarity to workers over the question of health-care costs.
Specifically, we gauged the level of workers’ interest in a
planning tool that could help estimate these expenses and
accommodate them in retirement planning. We found that
a majority of workers — 60%, which matches the previous
year’s result — would be interested in such a tool, with 13%
of all respondents expressing strong interest.

7
Significantly, the most prepared for retirement (with
scores greater than 100) expressed the strongest level of
interest in a health-care planning tool (Figure 10). In effect,
those who know the most about planning and saving for
retirement similarly want to know more about how they
can plan to cover health-care costs in their later years.
The health-care question is of particular importance
for those who plan to retire prior to becoming eligible
for Medicare, as the prevalence of employer-sponsored
health-care coverage for retirees has declined
dramatically in recent years. Among large, private-sector
employers (200 or more employees), only 26% offered
retiree health benefits in 2011, which was down from 28%
in 2009 and 66% in 1988.1
1 “2011 Employer Health Benefits Survey,” Kaiser Family
Foundation and Health Research & Educational Trust (HRET),
http://ehbs.kff.org/pdf/2011/8225.pdf.
Figure 9. Economic expectations
Twelve-month forward expectations for economic indicators relative to present levels
The stock market
Home values in your area
Long-term interest rates
The unemployment rate in your area
The unemployment rate nationally
Inﬂation
Health-care costs that you pay
Much lower Somewhat lower Same Somewhat higher Much higher
1%
6% 37% 41% 14%2%
3% 24% 44% 20% 10%
4% 14% 47% 31% 4%
6% 19% 44% 28% 3%
3% 11% 53% 28% 6%
3% 25% 38% 23% 12%
6% 31% 41% 21%
Due to rounding, results may not equal 100%.
Figure 10. Interest in health-care planning tools
Interest in tools to help estimate out-of-pocket health-care expenses and plan accordingly, by LIS range
Total 0 to < 45 45 to < 65 65 to < 100 100 or more Net < 75
Net 75 or
more
Net: Interested 61% 51% 61% 65% 69% 57% 67%
Very interested 13 10 10 14 21 10 19
Somewhat interested 47 41 51 51 49 46 49
Not very interested 23 24 25 23 19 24 21
Not interested at all 17 25 14 12 12 19 12
Net: Not interested 40 49 39 35 31 43 33
Percentages indicate incidence among respondents.

8
Auto plan features
Our survey now includes data on automatic plan features
such as auto enrollment and auto escalation of deferral
rates. Overall, these features of plan design, which
have increasingly been adopted since the passage of
the Pension Protection Act in 2006, had a substantially
positive effect on Lifetime Income Scores.
Auto enrollment
Among respondents who are eligible to participate in a
401(k) plan, the majority (67%) reported having to opt in
to their plan. Whether one is auto enrolled or opts in does
have an impact on the LIS. Indeed, our data confirm a
stark difference: The median LIS for auto-enrolled 401(k)
participants was 91 versus 73 for workers who opted in.
Our survey data also suggest that this difference is
not income sensitive, nor is it sensitive to the amount of
workers’ investable assets. We did find, however, that
expected DC plan deferral rates for auto-enrolled workers
were modestly higher (mean deferral rate of 9%) than
deferral rates for workers who opted in (mean deferral
rate of 8%). And perhaps most importantly, we found that
auto enrollment appears to have a substantial impact on
workers’ attitudes toward their future, as auto-enrolled
participants claim to be more secure with their progress
toward retirement and future ability to meet expenses
(Figure 11). Clearly, auto enrollment can have a palpable
impact on retirement security for many Americans, and
the large difference in LIS, which is generally insensitive to
income tiers (Figure 12), may indeed come down to behav-
ioral factors aided by plan design.
Figure 11. Auto-enrolled participants were more confident
Opted inAuto enrolled
0
4
3
0
-1
14 14
13
10
9
Knowing how much
money you will need
for health-care
Being able to count
in retirement
Knowing how you
Knowing how much
money you will need
for retirement
Being ready for
Figure 12. LIS generally insensitive to household
income levels for both auto-enrolled and opt-in participants
Opted-inAuto enrolled
$100K+
< $100K
$175K+
$100K to < $175K
$50K to < $100K
< $50K
Total by auto enrollment 91% 73%
95% 72%
88% 72%
83% 76%
96% 85%
95% 72%
87% 78%
Median LIS: all workers = 61; active DC plan participants = 79.

9
Auto escalation
Our survey data have a similarly positive story to tell
with regard to the impact of auto escalation features on
workers’ retirement preparedness. For those whose plans
include this feature, the positive impact on median LIS
scores is as powerful — if not more so — as that of auto
enrollment.
Workers whose plans offer auto escalation had a
median LIS of 95, versus 74 for workers who do not enjoy
this feature. Also as with auto enrollment, the positive
impact of auto escalation was detected across all income
tiers. What’s more, mean expected deferral rates for
workers with auto escalation (10%) were appreciably
higher than rates for workers who do not have this feature
in their plan (8%), which further underscores the power of
modern plan design to bolster retirement preparedness.
The attitudinal impact of auto escalation is a factor
worth exploring further, particularly for fiduciaries that
are considering the pros and cons of incorporating this
type of feature into their plan. According to our survey
data, the aggregate psychological and behavioral impact
of auto escalation is quite positive. Indeed, participants
whose plans include this feature report on it, almost
uniformly, as having beneficial effects. At once reassuring
and additive to their knowledge of how to go about saving
successfully for retirement, auto escalation features can
give a substantial boost to workers’ confidence and sense
of financial well-being (Figure 13).
Figure 13. Plan participants with auto-escalation were more confident about retirement
No auto escalationHave auto escalation
Knowing how much
money you will need
for health-care
Being able to count
in retirement
Knowing how you
Knowing how much
money you will need
for retirement
Being ready for
0
-2
4
3
-2
19
17
16
15
11

10
Types of funds owned
In our latest survey, we collected data on the propor-
tion of DC plan participants who have allocated assets to
target- risk and target-date funds in their retirement port-
folios. As with auto escalation features, which received
policy backing by the PPA, target-risk and target-date
funds have received increasingly wide acceptance as
QDIAs (qualified default investment alternatives) as retire-
ment policy has evolved. Among survey respondents,
those who are DC plan-eligible and have a DC plan balance
(44% of our base), decisive majorities have made some
allocation of assets to these specialty products (Figure 14).
Figure 14. Prevalence of asset allocation funds
When asked what percentage of plan balance was
held in:
Target-date fundsTarget-risk funds
None
11%
Any 83%
Don’t
know
7%
None
21%
Any 67%
Don’t
know
12%
Base: Participants who are eligible to contribute and have a balance in a
DC plan (44% of respondents).
Target-risk and target-date funds
Importantly for plan participants and sponsors alike, LIS
generally were higher among participants who employ
these investment vehicles. The median LIS for indi-
viduals who have any allocation to target-risk funds is
84, substantially higher than our survey’s median LIS of
61. Individuals who take advantage of these funds typi-
cally have higher levels of household income (median of
$85,000) and higher levels of investable assets (median
of $136,000). Similarly, the median LIS for DC plan partici-
pants who have allocated a portion of their portfolio to
target-date funds is 87. The same pattern with respect to
income and investable assets holds for target-date funds
as for target-risk funds.
Asset allocation
Generally speaking, households have heavily allocated
their retirement assets to conservative investments,
with an emphasis on cash. Unfortunately, but not too
surprisingly given the prevailing economic uncertainty
and perception of market volatility, investors have steadily
put more of their assets into cash investments and a
smaller proportion of their assets into stocks and stock
mutual funds (Figure 15).
Within qualified plans, a revealing detail appears in a
comparison of self-directed and professionally advised
portfolios. Advised portfolios were more heavily weighted
to equities and fixed income, while non-advised portfolios
had a pronounced bias toward cash (Figure 16).
Figure 15. Asset allocation within employer-sponsored plans
Stock or stock mutual fundsBonds or bond mutual funds
Cash, money market mutual funds, or other cash equivalents
2011
2012
2013 55% 15% 30%
52% 15% 32%
43% 18% 39%
Mean asset proportions by household. Due to rounding, results may not equal 100%.

11
Figure 16. Advised-plans’ asset allocation had
lower cash and higher equity exposure
Mean percentages of household assets in employer-
sponsored retirement plans
Not advisedAdvised
Cash,
money market
mutual funds,
or other cash
equivalents
60%
Stock
or stock
mutual funds
27%
Stock
or stock
mutual funds
40%
Bonds or
bond mutual
funds 21%
Bonds or
bond mutual
funds 13%
Cash,
money market
mutual funds,
or other cash
equivalents
39%
This has important implications for retirement savings,
as investors who opt for the sidelines of cash — which has
generated very low income for investors over the past
three years due to prevailing low interest rates — may
significantly limit their ability to capture the upside poten-
tial of equity market rallies.
Conclusion
In our latest study, we enriched the LIS by folding in retire-
ment income associated with home equity, business
ownership, and inheritance. In addition, we recalibrated
our methodology to accommodate mortality expecta-
tions associated with five chronic health conditions plus
tobacco use. With this new methodological foundation,
we believe we have created a useful and highly accurate
tool for assessing retirement preparedness today.
Our latest study reveals much about the psychological
and behavioral dynamics of retirement saving. Notably,
our study took place against a backdrop of improving
economic expectations, but these did not appear to have
translated into retirement confidence. While workers
largely expect economic growth rather than recession
in the year ahead and feel more secure in their jobs, for
example, majorities lack confidence in the major aspects
of retirement planning.
Importantly, our study found that the
best-prepared — and most confident — workers
tend to enjoy better workplace savings plan access
and participate more actively in their plans. We also
found that using an advisor has a material impact
on the median LIS. For plan sponsors considering
different aspects of plan design, we believe our
study provides strong evidence to support the
“automation” of workplace savings programs —
from auto-enrollment to auto-escalation — as these
features clearly correlate highly with improved
retirement preparedness.
Survey methodology
•4,089 working adults, age 18 to 65
•Conducted online, 12/7/12–1/4/13
•Weighted to Census parameters for all working adults
For Lifetime Income Score, the following applies:
IMPORTANT: The projections, or other information
generated by the Lifetime Income Score regarding
the likelihood of various investment outcomes, are
hypothetical in nature. They do not reflect actual invest-
ment results and are not guarantees of future results.
The results may vary with each use and over time.
The Putnam Lifetime Income ScoreSM
represents an
estimate of the percentage of current income that an
individual might need to replace from savings in order
to fund retirement expenses. For example, consider an
individual, 45 years old, with an income of $100,000 per
year. A Lifetime Income Score of 65% indicates that the
individual is on track to be able to generate $65,000 in
retirement income (in today’s dollars), i.e., 65% of current
income. This income estimate is based on the individual’s
amount of current savings as well as future contributions
to savings (as provided by participants in the survey)
and includes investments in 401(k) plans, IRAs, taxable
accounts, variable annuities, cash value of life insurance,
and income from defined benefit pension plans. It also
includes future wage growth from present age (e.g., 45)
to the retirement age of 65 (1% greater than the Consumer
Price Index for Urban Wage Earners and Clerical Workers
(CPI-W)) as well an estimate for future Social Security
benefits.

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Beginning with this year’s survey, our calculation also takes
into account mortality rates for a variety of commonly
diagnosed health conditions, including high blood pressure,
high cholesterol, type 2 diabetes, cancer of any type, and
cardiovascular disease of any type apart from high blood
pressure. In addition, the model also takes into account the
consistent use of tobacco on a household basis.
The Lifetime Income Score estimate is derived from the
present value discounting of the future cash flows associ-
ated with an individual’s retirement savings and expenses.
It incorporates the uncertainty around investment returns
(consistent with historical return volatility) as well as the
mortality uncertainty that creates a retirement horizon
of indeterminate length. Specifically, the Lifetime Income
Score procedure begins with the selection of a present
value discount rate based on the individual’s current
retirement asset allocation (stocks, bonds, and cash). A
rate is determined from historical returns such that 90%
of the empirical observations of the returns associated
with the asset allocation are greater than the selected
discount rate. This rate is then used for all discounting of
the survival probability-weighted cash flows to derive a
present value of a retirement plan.
Alternative spending levels in retirement are examined in
conjunction with our discounting process until the present
value of cash flows is exactly zero. The spending level
that generates a zero retirement plan present value is the
income estimate selected as the basis for the Lifetime
Income Score. In other words, it is an income level that is
consistent with a 90% confidence in funding retirement. It
is viewed as a “sustainable” spending level and one that is
an appropriate benchmark for retirement planning.
The survey is not a prediction, and results may be higher
or lower based on actual market returns.
For Lifetime Income Analysis Tool, the following applies:
IMPORTANT: The projections, or other information gener-
ated by the Lifetime Income Analysis Tool regarding the
likelihood of various investment outcomes, are hypothet-
ical 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 invest-
ment 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 partici-
pant’s plan balances and projected savings on income in
retirement. The tool takes into account both before-tax
and after-tax accumulated balances and future regularly
scheduled contributions for estimated projections. It
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. You are advised
to consider your other assets, income, investment options,
investment time horizon, income tax bracket, and risk
tolerance when planning for specific investment goals. It
is recommended that you consult a financial advisor for
more information. It is important to note that the results
from this tool are estimates based on what you input
today. The results are not a guarantee of actual outcomes
and will change as your inputs change.
Health-care costs and projections are provided by
HealthView Services, Inc., a third-party vendor. They
provide broad, general estimates and information that
may help you consider your retirement income needs by
better understanding potential health-care costs. This
estimate is provided for educational purposes only, and
you should not rely on it as the primary basis for your
medical, insurance, investment, financial, retirement, or
tax planning decisions. Costs are estimated, hypothetical
in nature, and not guaranteed. Your actual medical costs
will likely vary (sometimes significantly) from the esti-
mates. Putnam does not believe that HIPAA applies to the
data obtained from plan participants using this new tool.

Putnam Lifetime Income Scores III

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Putnam Lifetime Income Scores III