Here’s how it works. Participants can scan the bar code of most sales items on their iPhone, comparison shop across other retailers to seek a lower cost and see the cost savings. The application then shows participants how much that cost savings could mean in potential monthly income in retirement, and gives them the ability to direct that money to their 401(k) account.
It’s a revolutionary way for investors to contribute to their 401(k) in that it breaks out from traditional paycheck debits.
“Putnam’s PriceCheck&Save app is a powerful new way to demonstrate the eye-opening tradeoff between spending today and its future financial impact on an individual’s retirement—translated through the critically important language of income,” said Edmund F. Murphy III, head of defined contribution. “By using leading mobile technology, we are trying to change behavior from impulse spending to impulse saving—all with a few taps on their iPhone.”
Murphy continued: “Putnam is hoping to create greater understanding in the marketplace about the critically important relationship between individuals’ spending of current income and saving of current income on their future retirement income. Spending and saving do not need to be mutually exclusive activities.”
The application complements the Lifetime Income Analysis Tool that Putnam created for its 401(k) plans, designed to show investors how much monthly income their savings could generate in retirement. Putnam is also in the process of creating income-oriented mutual funds for varying levels of risk tolerance.
