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Putnam Investments: Pathway to Independence

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Retirement strategies for women

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Putnam Investments: Pathway to Independence

  1. 1. Not FDIC May Lose No Bank Insured Value Guarantee EO013 270090 10/11 |1
  2. 2. A strong foundationNearly half of the U.S. 47%labor forceMore than half ofmanagement and professional 51%jobsMore 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. 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. 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 lifeSource: National Committee on Pay Equity, September 2010. EO013 270090 10/11 |4
  5. 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 retirementSource: Social Security Administration, 2011. EO013 270090 10/11 |5
  6. 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 careSource: 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. 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. 8. Strategies to move yourretirement planin the right direction EO013 270090 10/11 |8
  9. 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. 10. Do you know how muchyou’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% $1,000,000Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey. EO013 270090 10/11 | 10
  11. 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 $3,600,000Assumes 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. 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 $1,000Source: IRS, 2011. EO013 270090 10/11 | 12
  13. 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. 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. 15. Diversification can helplower volatilityStocks felt the boomand bust of the 1990sand early 2000s.$500,000 $1,703,459Jan. 1991 Dec. 2010 Annual withdrawal: $25,000Illustration 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 stockperformance. You cannot invest directly in an index. EO013 270090 10/11 | 15
  16. 16. Diversification can helplower volatilityBonds were steady,but lagged behindstocks.$500,000Jan. 1991 $716,709 Annual withdrawal: $25,000 Dec. 2010Illustration 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 BarclaysCapital 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. 17. Diversification can helplower volatilityA diversified portfoliooutpaced bonds withfar less volatility.$500,000Jan. 1991 $1,029,714 Annual withdrawal: $25,000 Dec. 2010Illustration 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 diversifiedportfolio 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 toslides 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. 18. Diversify across opportunitiesChanges 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 IndexPast 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. 19. Small-Cap Growth Stocks are represented by the Russell 2000 Growth Index, whichis an unmanaged index of those companies in the Russell 2000 Index chosen for theirgrowth orientation.Large-Cap Growth Stocks are represented by the Russell 1000 Growth Index, whichis an unmanaged index of capitalization-weighted stocks chosen for their growthorientation.Small-Cap Value Stocks are represented by the Russell 2000 Value Index, which is anunmanaged index of those companies in the Russell 2000 Index chosen for their valueorientation.Large-Cap Value Stocks are represented by the Russell 1000 Value Index, which is anunmanaged index of capitalization-weighted stocks chosen for their value orientation.International Stocks are represented by the MSCI EAFE Index, which is anunmanaged 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 isan 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 BillIndex, which is an unmanaged index used as a general measure for money market or cashinstruments. EO013 270090 10/11 | 19
  20. 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 2010Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital U.S. Aggregate Bond Index. Indexes are unmanaged and represent broadmarket performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversificationand 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. 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 2010Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital U.S. Aggregate Bond Index. Indexes are unmanaged and represent broadmarket performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversificationand 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. 22. Putnam Asset Allocation Funds• Asset class diversification• Global investment perspective• Active rebalancing• Individual security selection EO013 270090 10/11 | 22
  23. 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 midsizecompanies. Such investments increase the risk of greater pricefluctuations. The use of derivatives involves special risks and may resultin 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 includinginterest-rate risk, credit risk, and inflation risk. As interest rates rise,the prices of bonds fall. Long-term bonds have more exposure tointerest-rate risk than short-term bonds. Lower-rated bonds may offerhigher yields in return for more risk. Unlike bonds, bond funds haveongoing fees and expenses. EO013 270090 10/11 | 23
  24. 24. Putnam’s three diversified fundsChoices 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. 25. How long will your savings last?It depends on how much you withdraw each year. 50 40 30Years 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 yearThis example assumed a 95% probability rate. These hypothetical illustrations are based on rolling historical time period analysis and do not account for theeffect of taxes, nor do they represent the performance of any Putnam fund or product, which will fluctuate. These illustrations use the historical rollingperiods 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. Aone-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 Indexis an unmanaged index of common stock performance. You cannot invest directly in an index. EO013 270090 10/11 | 25
  26. 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. 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. 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. 29. A BALANCED APPROACHA WORLD OF INVESTINGA COMMITMENT TO EXCELLENCE EO013 270090 10/11 | 29
  30. 30. Investors should carefully consider the investmentobjectives, risks, charges, and expenses of a fundbefore investing. For a prospectus, or a summaryprospectus if available, containing this and otherinformation for any Putnam fund or product, callyour financial representative or call Putnam at1-800-225-1581. Please read the prospectuscarefully before investing.Putnam Retail Managementputnam.com EO013 270090 10/11 | 30
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