1. EO002 273312 2/12 | ‹#› Not FDIC Insured May Lose Value No Bank Guarantee Not FDIC Insured May Lose Value No Bank Guarantee

2. EO002 273312 2/12 | ‹#› Topics for today 5 key challenges to prepare for in retirement Achieving a successful retirement Putting an income plan into practice

3. EO002 273312 2/12 | ‹#› Five challenges we can prepare for Longevity Inflation Health-care costs Public policy changes Investment risks and volatility

4. EO002 273312 2/12 | ‹#› Longevity: Plan on spending 25 to 30 years in retirement Source: National Center for Health Statistics, U.S. Life Tables, 2005. Most recent data available. Age Your lifespan probability after reaching age 65 Living to age 83 Probability: 56% Living to age 83 Probability: 56% Living to age 89 Probability: 31% Living to age 89 Probability: 31% Living to age 94 Probability: 14% Living to age 94 Probability: 14%

5. EO002 273312 2/12 | ‹#› Even low levels of inflation make a difference over time 30 years $50,000 income Amount needed to maintain purchasing power: $90,568 $162,169 $287,174 Inflation rate

6. EO002 273312 2/12 | ‹#› Health-care costs outpacing inflation and earnings A couple age 65 retiring in 2011 needs $230,000 in savings to fund healthcare needs in retirement – Fidelity Consulting Services, 2011 Source: Kaiser Family Foundation, April 2011. Health insurance premiums 160% Workers’ earnings 50% Overall inflation 38%

7. EO002 273312 2/12 | ‹#› What about Social Security? Sources: Social Security Administration 2011 Annual Report. 1950Today 20322036 There were 16 U.S. workers for each Social Security beneficiary 3 workers for each beneficiary Benefits owed currently exceed taxes collected 2 workers contributing for each beneficiary The Social Security trust fund will be exhausted $$ $0

8. EO002 273312 2/12 | ‹#› Where are income tax rates headed? This chart reflects the maximum federal income tax rate at each year-end. Source: Internal Revenue Service, 2012. U.S. federal income tax rates, 1962–2012 (%) Tax rate (%) 19622012 Kennedy tax cuts Tax Reform Act of ’86 Bush/Clinton tax hikes Bush tax cuts Bush tax cuts extended

9. EO002 273312 2/12 | ‹#› Achieving a successful retirement Diversify to manage volatility and achieve growth Make sure you’re not withdrawing too much Consider adding guaranteed income Be smart about taxes Address other potential risks

10. EO002 273312 2/12 | ‹#› Choose the right withdrawal rate This example assumes a 90% 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 2011 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 (as represented by 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. Years Percentage of your portfolio’s original balance withdrawn each year How long would your money have lasted? 10% will last 10 years 9% will last 11 years 4% will last 37 years 5% will last 22 years 6% will last 17 years 7% will last 14 years 8% will last 12 years 3% will last 50 years Stocks 60% Bonds 30% Cash 10%

11. EO002 273312 2/12 | ‹#› Address longevity risk Mix20 years30 years40 years Conservative 20% Stocks 50% Bonds 30% Cash Balanced 60% Stocks 30% Bonds 10% Cash Growth 80% Stocks 20% Bonds 0% Cash Historical success of three asset mixes (assumes 5% withdrawal rate, adjusted for inflation annually) These illustrations are based on a 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 returns from 1926 to 2011 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. 96% 75% 79% 55% 70% 89%3%26% 80%–100% probability60%–79% probability0–59% probability

12. EO002 273312 2/12 | ‹#› When you retire can make a big difference Assumptions – $1 million nest egg – 5% withdrawn annually and increased each year to keep up with inflation – Invested in a portfolio of 60% stocks, 30% bonds, and 10% cash – Results over a 10 year timeframe Sequence of returns risk refers to adverse effect negative investment returns in the early stages of retirement can have on a nest egg $1M $1,731,989 $1,861,592 $472,238

13. EO002 273312 2/12 | ‹#› Consider diversifying more broadly in retirement U.S. large-cap stocks Commodities U.S. small-cap stocks U.S. high-yield bonds Developed country international stocks Emerging-market stocks U.S. Treasury bills Global investment grade bonds Inflation- protected securities Hedge funds Real estate investment trusts U.S. growth and value stocks Floating rate bank loans U.S. investment grade bonds Emerging-market bonds Traditional asset classes are defined as those included in traditional balanced portfolios, such as stocks, bonds, and cash, and that have been widely owned by individual investors since the post-war emergence of modern portfolio theory. See “The History of Absolute Return Investing” Modern asset classes are specialized investments that were created or have become more accessible since the advent of broader market participation by individual investors due to tax-advantaged retirement saving

14. EO002 273312 2/12 | ‹#› Consider adding guaranteed income Example Balanced portfolio – 50% stocks, 40% bonds, 10% cash 5% withdrawn annually Guaranteed income based on current immediate annuity rates 68% 94% Probability of portfolio survival over 30 years No guaranteed income 25% guaranteed income This example is based on rolling historical time period analysis and does not account for the effect of taxes, nor does it represent the performance of any Putnam fund or product, which will fluctuate. Assumes historical rolling periods from 1926 to 2011 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 (as represented by 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. Guaranteed income is based on a single premium, immediate annuity for a 65-year-old male assuming single life expectancy. 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.

15. EO002 273312 2/12 | ‹#› Pay attention to taxes Type of incomeTaxability Social SecurityMay be partially taxable as ordinary income Pension incomeTaxed as ordinary income IRA and 401(k) distributionsOrdinary income rates Dividend income15% rate Long-term capital gains15% rate Roth IRAsNot subject to taxation Liquidation of investment principalNot subject to taxation

16. EO002 273312 2/12 | ‹#› Use a Roth strategy to control your tax bill Source of tax-free income in retirement – Access to tax-free source of income provides more options on where to draw income from No mandatory withdrawals at age 70½ Having a portion of retirement savings in a Roth IRA can provide a hedge against the threat of rising taxes in retirement

17. EO002 273312 2/12 | ‹#› Preserve your wealth in retirement through tax efficient withdrawals Retirement situationProposed course of action Lower marginal tax rateDraw from traditional retirement accounts to maximize use of lower relative tax bracket, which may help to reduce RMDs at age 70½ Higher marginal tax rateUse tax-free or taxable assets to avoid higher income tax rates and potentially take advantage of lower capital gains rates Significant appreciation in a taxable account If leaving an inheritance, preserve taxable assets to take advantage of “stepped-up” cost basis at death Working in retirementAvoid traditional retirement accounts, which will increase overall income (higher income could trigger taxes on Social Security benefits)

18. EO002 273312 2/12 | ‹#› Address other specific risks Post-retirement riskRisk management tool Unexpected health-care costs Medigap supplemental coverage or health-care “emergency fund” Loss of ability to live independently Long-term-care insurance or health-care “emergency fund” Catastrophic medical or long-term-care costs Life or long-term-care insurance Lawsuits or creditorsTrusts Spending the children’s inheritance Life insurance/irrevocable life insurance trust Inability to fulfill charitable intent Charitable remainder trust or charitable annuity

19. EO002 273312 2/12 | ‹#› Putting an income plan into practice Expense approach: Matching income sources with expenses Time-frame approach: Considering a bucket strategy

20. EO002 273312 2/12 | ‹#› Match potential sources of income to expenses in retirement Essential expensesAnnuities Social Security Dividends Pension income Interest Required minimum distributions Discretionary expenses Employment income Portfolio withdrawals Personal savings Unforeseen expenses Real estate Life insurance Long-term-care insurance

21. EO002 273312 2/12 | ‹#› Consider a bucket approach Growth stocks/funds Real estate Commodities Longevity insurance Bonds Deferred annuities Absolute return funds Asset allocation funds, balanced funds Cash CDs/money market Short-term bonds Immediate annuities Social Security/pension income Wages Inflation hedge, address longevity risk Mix of growth and income, replenish short-term bucket, guard against market volatility Meet immediate cash-flow needs, emergency fund, etc. Long-term income (10+ years) Mid-term income (2–10 years) Short-term income (0–2 years)

22. EO002 273312 2/12 | ‹#› Closing thoughts The retirement landscape will continue to evolve It’s critical for investors to prepare for certain (and uncertain!) risks A thoughtful income strategy can help you address these challenges and attain the lifestyle in retirement you desire Meet with your financial advisor to assess your personal situation

23. EO002 273312 2/12 | ‹#› Additional resources Books Longevity Revolution: As Boomers Become Elders, Theodore Roszak AgeQuake, Paul Wallace Age Power: How the 21st Century Will Be Ruled by the New Old, Ken Dychtwald, Ph.D. We're Not in Kansas Anymore: Strategies for Retiring Rich in a Totally Changed World, Walter Updegrave How Not to Die Broke at 102, Adriane Berg On the web AARP, www.aarp.org Social Security Administration, www.ssa.gov American Savings Education Council, www.asec.org ElderWeb, www.elderweb.com Medicare, www.medicare.gov National Association of Home Care Providers, www.nahc.org

24. EO002 273312 2/12 | ‹#› A BALANCED APPROACH A WORLD OF INVESTING A COMMITMENT TO EXCELLENCE EO002 268076 7/11 | 24

25. EO002 273312 2/12 | ‹#› 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

26. EO002 273312 2/12 | ‹#› Not FDIC Insured May Lose Value No Bank Guarantee