Putnam Investments is launching a new online tool for the 401(k) industry called "How do I compare," which will allow plan participants to compare their progress in saving for retirement with their peer group and top-tier savers.
The tool will be integrated with Putnam’s Lifetime Income Analysis Tool, which projects participants' current savings into future monthly retirement income and offers actionable steps to increase savings. The Putnam tool draws on social comparison behavioral theory which holds that individuals are motivated by comparisons with peers who are top performers.
It will use data from across all of Putnam’s 401(k) plans to allow employees to measure their savings rate and potential income replacement in retirement with peers, based on age, salary and gender. They can also see how they compare to the top savers in each peer group.
“We are constantly searching for new and better ways to shed additional light on the retirement savings challenge at the plan sponsor and participant levels,” said Edmund Murphy III, head of defined contribution for Putnam Investments. “Research shows that social comparisons can have a powerful effect on changing behavior. We believe this concept has tremendous application in the retirement savings space to potentially help raise contribution rates.”
The tool will work in conjunction with Putnam’s Health Cost Estimator and Financial Wellness components as well.
Putnam Investments is a global money management firm with $150 billion of assets under management at the end of December 2013.