Just How Prepared are Americans for Retirement?
Americans may still not be saving as much as advisors suggest but they’re far better prepared for retirement than they were 12 years ago, according to a recent Fidelity Investments survey cited by the Associated Press.
The typical saver is now on track to put away 80% of the income they’ll need in retirement, according to the survey of more than 3,000 working households conducted by Fidelity and cited by the AP. And that’s a new record since the company started the survey back in 2005, when the typical saver was only on track to have 62% of what they’ll need, the Associated Press writes.
The healthy growth in the stock market following the financial crisis has helped boost value in 401(k) plans and individual retirement accounts, according to the AP. But Americans have also been saving more of their earnings. While in 2006 the savings rate was just 3.6%, it has since more than doubled to 8.8%, Fidelity found, according to the Associated Press. That’s still only a little over half of the 15% rate recommended by Fidelity and other advisors, however, according to the AP.
The survey also found that millennials are serious about saving for retirement, which Ken Hevert, senior vice president of retirement at Fidelity, attributes to that generation’s growing up during the Great Recession, the Associated Press writes. Millennials, who on average save 7.5% of their earnings, are on track to have 78% of the savings they’ll need for retirement, surpassing Generation X for the first time since Fidelity started the survey, according to the AP. Gen X savers are on track to save 77% of what they’ll need, the Associated Press writes.
But Baby Boomers remain the best prepared for retirement. With a typical saving rate of 9.9%, Baby Boomers are on track to have 86% of what they’ll need for retirement, according to the survey cited by the AP. In addition to the high savings rate helping them along, Baby Boomers are also the last generation to benefit widely from traditional pensions, the Associated Press writes.