Putnam Investments is expanding availability of its "Lifetime Income Score," a proprietary tool that helps employers to estimate their plan participants' financial "retirement readiness," company officials announced Wednesday.
Putnam's Lifetime Income Score plan-level results will be available to 401(k) plan sponsor clients of Putnam and their advisers. All qualified plan sponsors-and their consultants-regardless of their client status, are eligible to receive a complimentary overview assessment, if requested.
Developed by Putnam Investments, the Lifetime Income Score is a metric to estimate the level of income that U.S. households are currently on track to replace at retirement. The metric uses several variables to calculate estimated earnings through employment, including financial behavior and confidence in financial decision making. Putnam worked with Brightwork Partners, a research-based consultancy firm, to do background research that led to the Lifetime Income Score.
Putnam in June used its income score metric on a survey of nearly 3,300 working Americans to determine their current retirement preparedness. The study identified three key variables that drive successful retirement preparation: disciplined, long-term savings and investing (regardless of income level), access to a workplace savings plan and seeking the assistance of a financial advisor.
The research found that American households are on track to replace an average of 64 percent of their current income in retirement. Many financial professionals recommend that workers seek to replace 75 percent of their current income once they retire.
Edmund F. Murphy III, head of defined contribution, Putnam Investments says Putnam's lifetime income score focuses on monthly income in retirement, rather than on undefined retirement savings balances that can leave individuals in need of broader context and application.
"Our Lifetime Income Score re-focuses attention where it belongs: Expected income in retirement," Murphy said.