PROVIDENCE – Americans are increasingly improving their retirement savings, particularly those in the New England region, according to a new report from Fidelity Investments Inc.
The 2020 Retirement Savings Assessment shows that Americans, on average, have saved 83% of the income they will need over their retirement years. In New England, residents have saved 88% of the income they will need for retirement, according to the company.
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Millennials are also increasing their retirement readiness, with 82% of retirement income saved, surpassing Gen-Xers due to an increasing savings rate in the last two years. Baby boomers remain at the top, with 87% of retirement income saved.
This “retirement readiness score” is based on 3,200 survey responses in 2019, which Fidelity groups into four categories based on how well survey takers will be able to cover estimated retirement expenses in a down market. Nationally, 37% of survey takers were on target to cover more than 95% of estimated retirement expenses (the highest of the four categories), while 28% were in the lowest category, indicating they will need to make significant adjustments to their planned retirement lifestyles if they don’t take action.
The national average score increased significantly since 2006, when survey takers had saved 62% of what they needed for retirement, the company stated. While the median savings rate of 10% has also increased, it is still below Fidelity’s recommended 15%. The rate was 8.8% in 2018 and 3.6% in 2006.
The survey showed a correlation between respondents’ financial literacy and their retirement scores. Those able to correctly answer three financial literacy questions had retirement savings scores that were 11 points higher than those who got at least one question wrong.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
