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Retirement planning strategies for women
PLEASE CHANGE TO PLAIN PUTNAM BLUE/WHITE TEMPLATE—remove statue of liberty
Not FDIC
Insured
May Lose
Value
No Bank
Guarantee
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Women are poised to lead in
financial investing
• Control nearly 60% of wealth in the United States
• Make up more than 40% of all Americans with gross
investable assets above $600,000
• Represent 45% of American millionaires
• Will control two thirds of the nation’s wealth by 2030
Source: Women in Leadership and Philanthropy at Virginia Tech.
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Women face specific challenges
•
•
•
•
•
•
Living longer than men
Earning less than men
Paying for college
Caring for elderly parents
Supporting adult children
Navigating changes in family structure
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Living longer than men
• Women age 65 today can expect to live on average
until age 86.6*
• Health-care spending is projected to rise 5.8% per
year over the next 10 years**
• 61% of women are worried about health-care costs in
retirement (only 51% of men)†
*
**
†
Social Security Administration.
CMS.
AARP.
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Earning less than men
• Women age 55–64 earned 77 cents for every dollar
earned by men*
• Over time, lower earnings diminish women’s ability
to save and the Social Security benefits they receive
• Earnings are affected by caregiving responsibilities —
for example, more than one third leave the workforce
or reduce hours to care for older adults
* Bureau of Labor Statistics, 2013.
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Paying for college
• Average yearly tuition and fees:*
$9,139 — public four-year college (in-state students)
$22,958 — public four-year college (out-of-state students)
$31,231 — private four-year college
• 2014: Student debt reached $1 trillion (record high)
• 2015: Families saved less for college than in three
previous years, but those with a financial plan saved
46% more than those without a plan**
* The College Board, 2014–2015 School Year.
** Sallie Mae, 2015.
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Caring for elderly parents
• 66% of caregivers are women*
• Spend up to 50% more time providing care than men*
• MetLife study:**
–
–
–
–
33% decreased work hours
– 20% switched to part-time
29% passed up a promotion
– 16% quit
22% took leave of absence
– 13% retired early
Women suffer a greater loss on their retirement fund than men:
about $40,000 more
• Lost wages and Social Security benefits: $324,044†
* American Sociological Association.
** MetLife Study on the Impact of Caregiving on Worklife.
† 2011 Study.
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Supporting adult children
• 29% of parents had a grown child move home in recent
years (mostly for economic reasons)*
• 36% of young adults age 18–31 live in parents’ home
(highest percentage in at least 40 years)*
• 59% of parents provide financial support to adult children
no longer in school**
• Among adults age 40–59 with at least one grown child:*
– 73% helped support an adult children in the prior year
– 54% were the grown child’s primary means of support
* Pew Research Center poll.
** Forbes Woman, NEFE.
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Navigating changes in
family structure
• 17% of women age 25 and over have never been
married*
• Percentage has risen dramatically since the 1960s
and is now at a record high
• Presents both challenges and opportunities for single
women who are planning for the future
* Pew Research Center, 2012.
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What every investor wants
• Financial plan to replace current income
in retirement
• Tax-smart saving strategies
• Ways to optimize Social Security
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How to move your
retirement plan
in the right direction
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Will you need more income
in retirement?
Expenses
The average consumer over
age 65 spends $51,933
annually. Over 20 years with
inflation, that’s $1,300,266*
Wealth
preservation
Long-term inflation averages
2.3% per year**
* Putnam research, using U.S. Dept. of Labor, Consumer Expenditure (July 2013–June 2014).
** U.S. Bureau of Labor Statistics, Consumer Price Index annual average for the period 6/30/95–6/30/15.
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Do you know how much
you’ll need to save?
Survey responses
Under
$250,000
25%
$250,000 to
$499,999
19%
$500,000 to
$999,999
$1M to
$1,499,999
$1.5M
or more
25%
10%
11%
Source: EBRI 2015 retirement confidence survey.
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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.
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Save as much as you can
2015 limit
Your employer’s retirement plan
Before-tax contributions, tax-deferred earnings
Traditional IRA
Before-tax contributions (if you qualify), tax-deferred earnings
Roth IRA
After-tax contributions, tax-free withdrawals
$18,000
$5,500
$5,500
Additional contributions for those age 50 and over
Employer’s retirement plan
Traditional or Roth IRA
$6,000
$1,000
Source: IRS, 2015.
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Social Security won’t cover it all
$52,572
$40,508
Median annual
income of full-time
worker (age 55–64)
What you can
expect from
Social Security*
$17,600
Single men
$13,500
Single women
* In today’s dollars. Average benefit retiring at age 65.
The maximum Social Security benefit in 2014 for an individual at full retirement age (66) is $31,956.
Sources: NWLC calculations based on U.S. Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2014,
Bureau of Labor Statistics, Highlights of Women’s Earnings in 2013.
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Actively manage your savings
• Diversify to reduce risk, while seeking
to optimize returns
• Rebalance regularly
• Take sustainable withdrawals
• Continue to discuss and update your goals
Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses.
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Diversify to reduce volatility
Stocks felt the boom
and bust of the 1990s
and early 2000s.
$1,688,587
Dec. 2014
$504,181
Jan. 1993
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. Annual withdrawals are $25,000 increased by 3% annually for inflation.
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Diversify to reduce volatility
Bonds were steady,
but lagged behind
stocks.
$375,442
Dec. 2014
$509,588
Jan. 1993
Annual withdrawal: $25,000
Illustration is based on a hypothetical investment of $500,000 in the S&P 500 Index and the Barclays U.S. Aggregate Bond
Index. The Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities. You
cannot invest directly in an index Annual withdrawals are $25,000 increased by 3% annually for inflation.
Diversification does not guarantee a profit or ensure against loss. It is possible to lose money in a diversified portfolio.
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Diversify to reduce volatility
A diversified portfolio
outpaced bonds with
far less volatility.
$714,100
Dec. 2014
$508,236
Jan. 1993
Annual withdrawal: $25,000
Illustration is based on a hypothetical investment of $500,000 in the S&P 500 Index, the Barclays 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 U.S.
Aggregate Bond Index. Refer to slide 22 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.
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Diversify across opportunities
Changes in market performance, 2000–2014
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2011
2012 2013 2014
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 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.
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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 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.
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Active rebalancing
Without rebalancing: The market controls asset allocation
Stocks
Bonds
73%
Balanced
portfolio
27%
2004 2005 2006 2007 2008 2009 2010 2011
78%
Out-of22% balance
portfolio
2012 2013 2014
Stocks are represented by the S&P 500 Index and bonds by the Barclays 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.
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Active rebalancing
With rebalancing: Asset allocation remains consistent
Stocks
Bonds
67%
Balanced
portfolio
33%
2004 2005 2006 2007 2008 2009 2010 2011
67%
33% Balanced
portfolio
2012 2013 2014
Stocks are represented by the S&P 500 Index and bonds by the Barclays 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.
Diversification and rebalancing will not necessarily prevent you from losing money, however they may reduce volatility and potentially limit downside losses.
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Putnam Dynamic Asset
Allocation Funds
•
•
•
•
Asset class diversification
Global investment perspective
Active rebalancing
Individual security selection
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Consider these risks before investing: Allocation of assets among asset classes may hurt
performance. Stock and bond prices may fall or fail to rise over time for several reasons, including
general financial market conditions, factors related to a specific issuer or industry and, with respect to
bond prices, changing market perceptions of the risk of default and changes in government intervention.
These factors may also lead to increased volatility and reduced liquidity in the bond markets.
International investing involves currency, economic, and political risks. Emerging-market securities
carry illiquidity and volatility risks. Investments in small and/or midsize companies increase the risk of
greater price fluctuations. Stock prices may fall or fail to rise over time for several reasons, including
general financial market conditions and factors related to a specific issuer or industry. Growth stocks
may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Funds that
invest in government securities are not guaranteed. Mortgage-backed securities are subject to
prepayment risk and the risk that they may increase in value less when interest rates decline and decline
in value more when interest rates rise. Bond investments are subject to interest-rate risk (the risk of bond
prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal
payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for belowinvestment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. Risks
associated with derivatives include increased investment exposure (which may be considered leverage)
and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives
positions and the potential failure of the other party to the instrument to meet its obligations. The use of
derivatives may increase these risks by increasing investment exposure (which may be considered
leverage) or, in the case of over-the-counter instruments, because of the potential inability to terminate or
sell derivatives positions and the potential failure of the other party to the instrument to meet its
obligations. International investing involves currency, economic, and political risks. Emerging-market
securities carry illiquidity and volatility risks. Investments in small and/or midsize companies increase
the risk of greater price fluctuations. You can lose money by investing in the fund.
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Putnam’s three diversified
funds
Choices for investors with different objectives
Growth
Fund
20%
Balanced
Fund
Conservative
Fund
30%
40%
80%
60%
70%
Amount allocated to stocks
Amount allocated to bonds
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How long will your savings last?
It depends on how much you withdraw each year.
50
Years
40
30
20
10
0
3%
will last
50+ years
4%
5%
will last
will last
37 years
years
22
6%
will last
years
17
7%
will last
years
14
8%
will last
years
12
9%
will last
years
11
10%
will last
years
10
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.
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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
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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
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Work with a financial advisor
• Be actively engaged in the management of your
money and review your financial plan regularly
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A BALANCED APPROACH
A WORLD OF INVESTING
A COMMITMENT TO EXCELLENCE
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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
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