Average Americans don’t have a clue how much money they will need for health care expenses in retirement. Putnam Investments wants to help them find out. This fall it will introduce a new feature to its 401(k) offering that will bring greater focus on health care costs, the company announced at its recent Health, Wealth, and the Future of Retirement Forum in New York City.
The new feature will allow Putnam 401(k) plan sponsors to provide their participants with a customized estimate of how large a slice of their expected future monthly income will be needed to cover their health care costs in retirement. The personalized monthly health care cost projections will be generated from individual participant data and cost models using proprietary actuarial-based guidelines, Putnam said in a press release.
“For all the talk and worry about health care, we have seen very little by way of solutions or even baseline guidance beyond macro-estimates of lifetime costs, which leave many people just frozen with fear,” Putnam Investments President and CEO Robert L. Reynolds, said in the release. “It makes no sense at all to talk about retirement savings or lifetime income provision without expressing the numbers in a monthly context and factoring in health care expenses.”
The monthly health care cost projections will be incorporated into Putnam’s Lifetime Income Analysis Tool, which helps workers model how much monthly income their savings might generate in retirement. The projections will include “itemized insight on medical, dental and pharmaceutical expenses, at different age points,” the company said.