Putnam Investments released a survey Thursday measuring the success of its Lifetime Income Analysis Tool and found that over one-third of 401(k) participants who use the tool changed their deferral rate. Of those, 80% increased their savings rate. The average increase in savings rate was 23%.
The Lifetime Income Analysis Tool shows workers how much monthly income their savings will provide in retirement, and helps them determine if they're on track to maintain their current standard of living once they retire. It was launched in January 2010.
Workers are facing two big challenges in retirement, according to Ed Murphy (left), head of defined contribution for Putnam Investments. "One is inadequate savings, but workers don't clearly understand how savings translate into income in retirement," Murphy told AdvisorOne on Friday.
"We need to change the mindset; we call it the retirement income challenge. We need to change workers' mindset and perspective to help them get the most value from retirement. They need to shift from thinking about savings to thinking about monthly income," Murphy said.