Americans retirement preparedness is up, according to Fidelity Investments’ biennial Retirement Savings Assessment study, with the nation’s retirement savings score hitting 80 – an all-time high. This means that savers are on point to have 80% of their income taken care of when they retire, up from 2005 when savers scored a 62.
That is the good news, but the study also found that half of the people in the study might not be able to actually cover their expenses when they actually retire. Fidelity’s Retirement Savings Assessment is comprised of data gleaned from 3,100 people, who used a retirement planning platform that lets them know whether or not savers will be able to cover their expenses when they stop working.
Millennials catching up with their elders
The study also looked at how prepared all the generations are, finding that Millennials are taking retirement seriously. “Millennials are clearly putting money aside for retirement and taking more control of their personal situations to ensure a financially-secure future,” said Ken Hevert, senior vice president of Retirement at Fidelity.
“While younger generations typically don’t have jobs with access to pensions as a source of guaranteed retirement income, there are many actions that can be taken to improve retirement readiness, including saving more, managing debt and making smart investment decisions. For the average saver—regardless of age or income level—these findings demonstrate the positive impact of knowing where you stand and taking appropriate actions to get on the path to retirement readiness,” he said.
One point away from being on target
In the study, they also found that that the scores suggest that the typical household is just one point shy of being in the study’s “green zone,” which basically means they are very close to being able to cover their retirement expenses.
If you’re wondering how they are staying on track, the answer can be traced back to the fact that people are saving more, with the median savings rate hitting 8.8%, jumping up dramatically from 3.6% back in 2006.
Who is saving the most? The answer would be Baby Boomers, who are saving 9.9% of their paychecks, up from 9.7% in 2006. While Millennials are holding at 7.5%, yet all in all neither generation is close to the Fidelity’s suggested total savings threshold of 15%.