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Buy Now or Save for Retirement? New App Helps With That Choice


You’re standing in a big-box store with an HD TV calling your name, trying to decide whether you should whip out the credit card – or put the money into your nest egg.

Guess what? As of this morning, for some 401(k) account-holders, there’s an app for that.  Putnam Investments, a Boston fund firm that administers 500 defined-contribution plans with about 250,000 plan participants, made the “Putnam PriceCheck&Save” iPhone application available today. You can download it here.

The app allows account-holders to comparison shop for a product, see the potential cost savings in terms of future monthly retirement income, and immediately contribute to the 401(k) plan. Putnam plans to expand the tool to other forms of mobile technology as well.

Here’s how it works in real life: You’re standing in front of that TV (say, a Samsung 46-inch high-definition number). You scan its bar code with your iPhone’s camera. It tells you that the price in that store is $1,738.64.

But if you put the same amount into your 401(k) account, you could have $44.38 more a month in retirement – more than $11,000 in all. (That calculation could vary, because it’s based on an individual’s investment mix, age and retirement date. Putnam also says it runs more than 100 billion market simulations to come up with its projections, and takes inflation into account, showing the potential outcomes in today’s dollars.)

What if you want the TV anyway? You can click on the “Find a Better Deal” button to see if there’s another place selling it at a lower price. In this case, the TV would cost $1,299.99 on eBay.

Then, you can elect to take the $439 difference in price and click on a button to deduct it from an upcoming paycheck and contribute it to your 401(k). The app tells you those savings could provide you with $11.16 more a month in retirement.

“It allows the participant to act immediately to take that money out of their paycheck. If you say, ‘When you get back to the office, remember to call your plan representative,’ most of us aren’t going to do that,” notes Fred Barstein, founder and director of the Retirement Advisor University, a program at UCLA Anderson School of Management Executive Education.

Of course, this app doesn’t do you any good unless your employer happens to use Putnam as its plan custodian. But other 401(k) administrators have similar tools in the works, Mr. Barstein says. “Almost everyone, if they’re not already creating something like this is thinking about it.”

So, before too long, it should get easier for more 401(k) savers to get a tangible idea of the impact their savings today can have on retirement down the road.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.