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Funding college educationSurvey the scene to understand your options

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Figures include tuition, fees, room, and board. Estimated growth rate of 5.0%.Sources: The College Board, Trends in College Pricing, 2012.

College costs are risingFour years of tuition, room, and board

2012

Public college (in state) $71,440

Private college$158,07

2

$171,928

2030

$380,419

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College debt is also rising57% of full-time undergraduates use

loans to help finance their college costs.

Among graduates from private universities who borrow money, the average debt is $29,900.

The median starting salary for a graduate with a bachelor’s degree is $55,700.

Sources: Trends in Student Aid, 2012; Education Pays, 2010 (The College Board),

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A 529 college savings planhas many benefits

• Tax advantages: Account grows taxfree, and there are no taxes on funds withdrawn for qualified higher education expenses

• Control: Investor controls account assets after the beneficiary reacheslegal age

• Flexibility: Anyone can contribute — parents, grandparents, other family members, friends

Do you have existing custodial (UGMA/UTMA) accounts?

Converting a custodial account to a 529 can help you benefit

from tax advantages while increasing a child’s eligibility for financial aid.

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Estate planningGrandparent uses Putnam 529 for AmericaSM to lower estate tax

* Married couples filing jointly may contribute up to $140,000 per beneficiary. Individuals may contribute up to $70,000. Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount ($14,000 for 2013). Contributor may elect to treat contribution in excess of that amount (up to $70,000 for 2013) as pro-rated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years after death are includible in contributor’s gross estate. Consult your tax advisor for more information.

Contribution to 529 plans*

Ω

$140,000

Ω

$140,000

Ω

$140,000

Ω

$140,000

Ω

Grandparents$700,000

Ω

$140,000

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Minimizing taxesConsider how to best allocate your resources

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Taxes increased in 2013Tax item 2012 2013

Ordinary income 35% 43.4%

Dividends 15% 23.8%

Capital gains 15% 23.8%

Payroll tax 4.2% 6.2%

Income phaseouts of itemized deductions and personal exemptions?

No Yes

Tax rates reflect highest marginal rate and incorporate additional taxes related to the health-care reform law. Health-care-related taxes include a surtax of 3.8% on net investment income and an additional 0.9% payroll tax affecting single filers with income in excess of $200,000, and joint filers with income in excess of $250,000. Highest marginal tax rate on income, capital gains, and dividends apply to tax payers with taxable income above $400,000 ($450,000 for couples).

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Annual U.S. Federal budget surplus/deficit, 2000–2012 ($B)

Will taxes increase even more?

-$1,500

-$1,000

-$500

$0

$500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: Congressional Budget Office, Monthly Budget Review, September 2012.

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The aging of America will further strain the systemTotal U.S. population age 65+

Source: U.S. Census Bureau, Facts for Features, May 2012.

Today

40.3 million

2050

88.5 million

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New health-care taxes take effect in 2013

• Increase in the individual portion of the Medicare payroll tax on wages from 1.45% to 2.35%

• New Medicare investment income tax of 3.8%– Will affect interest, dividends, capital gains,

rental income– Distributions from retirement accounts are excluded– Interest from municipal bonds are not affected

• Targeted at individuals with more than $200K income (couples with $250K income)

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Be aware of the AMTYou may owe the AMT if you

• Claim children asexemptions

• Live in an area with highincome or property taxes

• Claim miscellaneousitemized deductions

Your incomeChance you will owe AMT

$100K – $200K

2%

$200K – $500K

48%

$500K – $1M 78%

Source: Urban-Brookings Tax Policy Center, September 2012 estimates.

Will you owe the AMT?

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Tips for avoiding orminimizing the AMT

• Select municipal bonds wisely

• Proceed with caution before exercising stock options

• Assess the impact of large capital gains

• Defer certain tax deductions like local property taxes if you are going to owe AMT

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Taxes on traditionalretirement plans

A dollar inside a traditional (pretax)retirement savings account may onlyprovide 60¢ of income in retirement

Incomefor expenses

Federal income taxes

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Consider the benefitsof a Roth IRA

• Tax-free incomein retirement

• No required distributionsin retirement

• Heirs receive assets free from income taxes

• Remember, beginning in 2010 everyone can convert to a Roth

Few benefits Some benefits ConsiderStronglyconsider

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Planning for income in retirement and transferring wealth

The decisions you make today impact the shape your retirement takes tomorrow

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2% 4% 6%

Longevity comes at a cost

• 30 years

• $50,000 income

Amount needed to maintain purchasing power:

$90,568

$162,169

$287,174

Inflation rate

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The end of Social Security?

• If nothing changes– Beginning in 2010, benefits

owed exceeded taxes collected– The trust fund will be exhausted

in 2033

• Potential solutions– Raise wage base– Decrease or delay benefits– Pre-fund benefits through

personal, voluntary savings accounts

Sources: SSA 2011 Annual Report.

Work

ers

per

ben

efi

ciary

Worker-to-beneficiary ratio has fallen dramatically

5.1

2.8

2.1

0

1

2

3

4

5

6

1960 Current 2030

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Create an income plan

SocialSecurity IRA

withdrawals

Real estate

Later in retirement

401(k)withdrawals

Part/full-timeworkPension

income

Immediateannuity

Early in your retirement

Life insurance

Long-term-care insurance

Investments are subject to market risk, including possible loss of principle.

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Choose the rightwithdrawal rate

This example assumes a 95% 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 2012 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.

0

10

20

30

40

50

Years

Percentage of your portfolio’s original balance withdrawn each year

10%will last10

years

9%will last11

years

4%will last

33 years

5%will last20

years

6%will last16

years

7%will last13

years

8%will last12

years

3%will last

50 years

How long would your money have lasted?

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Watch your asset allocation

PORTFOLIO TYPE ALLOCATION 20 YEARS 30 YEARS 40 YEARS

CONSERVATIVE20% stocks50% bonds30% cash

BALANCED60% stocks30% bonds10% cash

GROWTH80% stocks20% bonds 0% cash

80%–100% probability 60%–79% probability 0–59% probability

96%

96%

76%

79%

54%

69%

89% 3%27%

How long would your money have lasted?The information below shows how various asset allocations affect a portfolio’s expected longevity. It assumes that 5% of the original account balance is withdrawn each year and that withdrawals were increased each year to account for inflation.

This example assumed a 95% 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 2012 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.

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Pay attention to orderType of income Taxability

Social Security May be partially taxable as ordinary income

Pension income Taxed as ordinary income

IRA and 401(k) distributions Ordinary income rates

Dividend income 23.8% rate

Long-term capital gains 23.8% rate

Liquidation of investment principal Not subject to taxation

This is not intended as tax advice. Please consult your independent tax advisor regarding tax ramifications. Dividend and capital gains rates reflect highest marginal tax rate (20%) plus the 3.8% net investment income surtax.

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Stretching an IRA to create generations of wealth

Income is based upon an initial investment of $200,000 and cumulative annual distributions for 39 years. This hypothetical illustration assumes an 8% annualized return (8.30% effective return) and that distributions are kept to the required minimum. It does not represent the performance of any Putnam fund or investment or take into account the effect of any fees or taxes. Investors should consider various factors that can affect their decision, such as possible changes to tax laws and the impact of inflation and other risks, including periods of market volatility when investment return and principal value may fluctuate with market conditions. The Stretch IRA feature is designed for investors who will not need the money in the account for their own retirement needs.

IRA owner’s wife dies at age 70, ten years after the IRA was created and before taking RMDs. Their 46-year old son begins receiving annual payments based on his life expectancy. He names his wife as his beneficiary. Value of IRA: $200,000.

Annual Required Minimum Distributions in selected years

29 years later, the son dies. His wife continues the established distribution schedule. She may not treat the IRA as her own and no rollover is available.

First year Year 10 Year 20 Year 30 Year 39

$12,019 $24,506 $54,566 $124,329 $270,526

The IRA is depleted, having generated over $3 million in income.

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Consider a bucket approach

Short-term income bucket

Meet immediate cash flow needs, emergency fund, etc.

• Cash

• CDs/money market

• Short-term bonds

• Immediate annuities

• Social Security/pension income

• Wages

Mid-term income bucket

Mix of growth and income, replenish short-term, guard against market volatility

• Bonds

• Deferred annuities

• Absolute return funds

• Asset allocation funds,balanced funds

Long-term income bucket

Inflation hedge, longevity

• Growth stocks/funds

• Real estate

• Commodities

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Do you need an estate plan?

• Do you have children who are minors?• Are all of your assets owned jointly with your

spouse?• Are most of your assets in real estate,

a business, or a retirement plan?• Do you have a durable power of attorney?• Do you have a living will/health-care proxy?• Do you own property in another state?• Do you have children from a prior marriage?

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Stick to your plan: Important documents for staying in control

• Durable power of attorney

• Health-care proxy

• Will

• Revocable and irrevocable trusts

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What are the next steps?• Consider transferring existing custodial accounts to a

529• Fund a 529 to remove assets from your estate• Talk to your tax professional on how to minimize AMT• Use a Roth IRA to create tax-free income in

retirementand avoid required distributions

• Consolidate retirement assets and develop an income plan

• Review legal documents like wills and trusts

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Putnam 529 for America is sponsored by the State of Nevada, acting through the Trustees of theCollege Savings Plans of Nevada and the Nevada College Savings Trust Fund. Anyone may invest inthe plan and use the proceeds to attend school in any state. Before investing, consider whetheryour state’s plan or that of your beneficiary offers state tax and other benefits notavailable through Putnam 529 for America. If you withdraw money for something other than qualified higher education expenses, you will owe federal income tax and may face a 10% federal taxpenalty on earnings. Consult your tax advisor.

You should carefully consider the investment objectives, risks, charges, and expensesof the plan before investing. Ask your financial representative or call Putnam at1-877-PUTNAM529 for an offering statement containing this and other informationfor Putnam 529 for America, and read it carefully before investing.

Putnam Retail Management, principal underwriter and distributor Putnam Investment Management, investment manager.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus 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.

This information is not meant as tax or legal advice. Please consult your legal or tax advisor beforemaking any decisions. Shares of mutual funds are not deposits or obligations of, or guaranteed orendorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible lossof the principal amount invested.

Putnam Retail Management putnam.com

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