America’s Savings Rate Improves, but Fidelity® Study Finds More Than Half of Americans at Risk of Not Covering Essential Expenses in Retirement

Three Actions Can Help Significantly Improve Retirement Readiness

Want to Know Where You Stand? Fidelity Introduces New Personal Retirement ScoreSM

America’s Savings Rate Improves, but Fidelity® Study Finds More Than Half of Americans at Risk of Not Covering Essential Expenses in Retirement (Graphic: Business Wire)

BOSTON--()--What a difference two years can make. According to Fidelity Investments®’ biennial Retirement Savings Assessment study, which features a unique Retirement Preparedness Measure (RPM), people are saving more and investing more appropriately for their age, improving the overall state of retirement readiness of households in America. As a result of this positive behavior, the number of people who are likely to afford at least their essential expenses1 in retirement jumped seven percentage points since 2013, from 38 to 45 percent. However, this means more than half (55 percent) are estimated to be at risk of being unprepared to completely cover essential living expenses in retirement, which includes housing, health care and food.

Fidelity’s RPM factors in comprehensive data from 4,650 survey responses that are then run through the extensive retirement planning platform Fidelity uses every day with customers2. The end result: a single score measuring a household’s ability to cover estimated expenses in retirement, which also provides a view of preparedness across generations. Using this score, households fall into four categories on the retirement preparedness spectrum that are linked to a numeric range based on a household’s ability to cover estimated retirement expenses in a down market3 (with green representing good/very good and yellow/red indicating improvement may be needed):

  • Dark Green: On Track (greater than 95). These households are on track to cover more than 95 percent of total estimated expenses. 27 percent fall in this category, up from 23 percent in 20134.
  • Green: Good (81-95). On track for essential expenses, but not discretionary expenses like travel, entertainment, etc. 18 percent are in good shape, up from 15 percent in 2013.
  • Yellow: Fair (65-80). Not on track, with modest adjustments to their planned lifestyle likely. 23 percent are in the yellow, up from 19 percent in 2013.
  • Red: Needs Attention (less than 65). Not on track, with significant adjustments to their planned lifestyles likely. Although 32 percent are in the red, the number is significantly less than 2013, when 43 percent fell into this category.

America’s Retirement Score is in the Yellow, But Getting Greener

If America were assigned a score representing the state of retirement preparedness, what would it be? The data reveals America’s retirement score5 to be 76, which is in the “yellow zone,” meaning many will fall short of completely covering estimated essential retirement expenses and potentially require sacrifices such as spending cuts in retirement that may diminish their quality of life, especially if the market experiences a severe downturn. However, the good news is that collectively, Americans are now only four percentage points away from moving into the “green zone,” a significant improvement from 2013, when the score was 69.

This improvement is driven in large part by across-the-board progress in savings and how investments are being allocated. On the savings front, Americans’ median savings rate improved from 7.3 to 8.5 percent6. Millennials showed the greatest improvement, increasing from 5.8 to 7.5 percent. Boomers saved the most, stashing away 9.7 percent of their salaries, up from 8.1 percent—but still below Fidelity’s recommended total savings rate of at least 15 percent7. People also made significant improvements in making smart investing strategy decisions and understanding how to allocate assets based on their age. In 2015, 62 percent of respondents had allocated their assets in a manner Fidelity considers age appropriate8, compared to 56 percent in 2013.

“Even in the midst of unsteady market conditions and pockets of global instability, it’s extremely encouraging that so many people have taken positive steps to improve their ability to live comfortably in retirement, with many saving more, spending less and making smart investment decisions,” said John Sweeney, executive vice president of Retirement and Investment Strategies at Fidelity. “While many aren’t completely on track, there are steps people can take—regardless of age or income level—to help get on a path to green and plan for their someday.”

Retirement Preparedness by Generation

One thing that makes this score unique is its ability to enable comparative views of preparedness across generations. According to this year’s data, here’s how retirement preparedness stacks up by age:

Generation         RPM Score9         Important to note:
Baby Boomers

(ages 51-69;

born 1946-64)

  • While Baby Boomers are in fairly good shape to cover essentials, they have less time to take actions to help move them to “dark green.”
  • Fewer options than their younger counterparts to make up any shortfall.
  • For this generation, the most powerful step: consider working longer.
Gen X

(ages 35-50;

born 1965-1980)

  • Gen X-ers still have 15 years or more to get to green.
  • For this generation, the most powerful steps are to increase savings and to consider working longer.

(ages 25-34;

born 1981-1990)

  • Furthest away from retirement, but in fairly good shape.
  • In 2013, Millennials were in the red at 61, but improved significantly.
  • Millennials have the benefit of time on their side to save and invest.
  • For this generation, the single most powerful step is to increase savings.

Getting to Green: Three Accelerators to Improve Retirement Readiness

Many people may not be planning adequately for retirement because they are unsure where to start or are concerned their personal retirement income goal may be unattainable. However, the findings clearly demonstrate actions that can be taken to gain better control over your financial future and boost your retirement preparedness. These include:

  • Raise savings. Even small increases in savings can make a big difference. Some relatively painless ways include investing salary increases into savings or increasing contributions to a workplace savings plan by just one percent every year. Make the most of tax‐advantaged savings vehicles such as 401(k)s, 403(b)s, IRAs, Health Savings Accounts and tax‐deferred annuities. Also consider a Roth IRA10 or 401(k), where contributions are after‐tax but withdrawals are income tax free. As a general guideline, set an annual goal of saving 15 percent or more of your income (including any employer match you may have). Saving at this level pays off: by adjusting the savings rate to at least 15 percent, the median RPM score of 76 increases to 84.
  • Review your asset mix. Although you can’t anticipate market behavior, you can build the potential for long-term growth into your portfolio through investment choices and exposure to various asset classes that can provide growth and outpace inflation, while also limiting downside risk. By replacing portfolios that appear to be either too conservative or too aggressive with an age appropriate allocation, the median RPM score of 76 increases to 78.
  • Retire later. The longer you can wait, the more time there is to build savings. In addition, waiting until at least the time you’re entitled to full Social Security Retirement benefits11 (between 65-67) may help increase your monthly benefit. If you can afford to wait until your full retirement age, your monthly Social Security income will increase by 30 percent12. By adjusting the expected retirement age slightly, from the median reported retirement age of 65 to between 66-67, the median RPM score of 76 increases to 86.

“Our analysis shows that using these three ‘accelerators’—either individually or in combination—can have a substantial impact on retirement readiness,” said Sweeney. “In fact, when all three are applied, America’s retirement score jumps all the way to 100, putting many more individuals in a better financial position to truly enjoy their retirement years.”

Want to Know Where You Stand? Check out Your RPM Using Fidelity’s Retirement ScoreSM

Every individual’s retirement vision is unique, and every “someday” starts with a plan. One of the first steps to creating a plan is to know where you stand on the retirement preparedness spectrum and whether you are on track to meet your goals. With this in mind, Fidelity has introduced the ability for everyone to quickly and easily estimate what their personal retirement score is—and how they stack up against others—by answering a few key questions.

Fidelity customers can also use Fidelity’s new online Planning & Guidance Center, either online or with the help of a Fidelity investment professional, to dive deeper into their retirement score. Within the Center, customers can create or view their retirement plan, identify specific steps to improve their readiness, model outcomes, and make adjustments to their plan, when needed, to help ensure they stay on track to achieve their goals. In addition, Fidelity offers a variety of resources, including:

  • Educational Fidelity Viewpoints® articles, including “Give your savings a check-up” and a Retirement Roadmap Special edition devoted exclusively to retirement planning.
  • Designed for a younger generation, offers videos, infographics and articles on topics related to budgeting, saving, investing and more, including a video weighing the financial ramifications of paying off student loan debt or saving for retirement and an infographic showing the impact of saving 1% more for retirement.
  • Seminars and online learning modules to help learn about key retirement issues and how to prepare for them.
  • Fidelity offers its workplace retirement plan employees Plan for Life, which delivers personalized experiences to engage, educate, and drive employees to take simple steps toward improving their financial future, today and into retirement.

About the Fidelity Investments® Retirement Savings Assessment

The findings in this study are the culmination of a year-long research project with Strategic Advisers, Inc.—a registered investment advisor and a Fidelity Investments company—that analyzed the overall retirement preparedness of American households based on data such as workplace and individual savings accounts, Social Security benefits, pension benefits, inheritances, home equity and business ownership. The analysis for working Americans projects the retirement income for the average household, compared to projected income need, and models the estimated effect of specific steps to help improve preparedness based on the anticipated length of retirement.

Data for the Fidelity Investments Retirement Savings Assessment were collected through a national online survey of 4,650 working households earning at least $20,000 annually with respondents age 25 to 75 throughout August 2015. All respondents expect to retire at some point and have already started saving for retirement. Data collection was completed by GfK Public Affairs and Corporate Communication using GfK’s KnowledgePanel®, a nationally-representative online panel. The responses were benchmarked and weighted against the 2014 Current Population Survey by the Bureau of Labor Statistics. GfK Public Affairs and Corporate Communication is an independent research firm not affiliated with Fidelity Investments. Fidelity Investments was not identified as the survey sponsor.

Fidelity’s Retirement Preparedness Measure (RPM) is calculated through the proprietary asset-liability modeling engine of Strategic Advisers, Inc., which has been providing asset allocation, retirement and tax-sensitive investment management services to Fidelity’s individual and institutional clients for nearly two decades. Of note, Fidelity continually enhances and evolves the retirement readiness methodology, guidance tools and product offerings. This year’s survey processing include a number of enhancements including, but not limited to, demographic weighting, retirement income projections and social security estimates. To enable a direct comparison, the previously-reported 2013 RPM results have been recalculated using the enhanced methodology.

This analysis is for educational purposes and does not reflect actual investment results. An investor’s actual account balance and ability to withdraw assets during retirement at any point in the future will be determined by the contributions that have been made, any plan or account activity, and any investment gains or losses that may occur. For more information on Fidelity Investments® Retirement Savings Assessment, an executive summary and infographic can be found on

About Fidelity Investments

Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.2 trillion, including managed assets of $2.1 trillion as of November 30, 2015, we focus on meeting the unique needs of a diverse set of customers: helping more than 24 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 42,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit

IMPORTANT: The projections or other information generated by the Fidelity Retirement Score and Fidelity’s Planning & Guidance Center Retirement Analysis regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Your results may vary with each use and over time.

Guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary basis for your investment or tax-planning decisions.

Fidelity Investments and Fidelity are registered service marks of FMR LLC.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.
500 Salem Street, Smithfield, RI 02917

National Financial Services LLC, Member NYSE, SIPC
200 Seaport Boulevard, Boston, MA 02110


© 2016 FMR LLC. All rights reserved.


1 The survey assumes that 80 percent of estimated retirement expenses are essential.

2 Fidelity’s planning tools are powered by its Asset-Liability Modeling (ALM) engine.

3 Fidelity uses a down market for planning projections based on Monte Carlo simulations and its asset liability model. Down market indicates that in 10 percent of market simulations the market would be worse, and in 90 percent of simulations the market would perform better. Using down markets as a planning measure leads to conservative results. Using a lower confidence level would improve results, but increase the risk that investors would fall short of projections.

4 Previously-reported 2013 numbers have been recalculated for a fair comparison.

5 This number represents the median RPM score derived from the Retirement Savings Assessment.

6 This number represents the median savings rate reported by respondents. The savings rate is defined as total household savings divided by total household annual, pre-tax income.

7 The rule of thumb of saving at least 15 percent assumes no pension income.

8 “Appropriate” refers to what Fidelity considers to be an appropriate mix, based on data reported in the Retirement Savings Assessment about an individual’s equity allocation distribution that is placed into four categories, based on that person’s age. Those categories are “On track”: within 25 percent on target date equity allocation; “Aggressive”: an equity percentage more than 25 percent above the age-appropriate target equity; “Conservative”: an equity percentage less than 25 percent below the age-appropriate equity target; as well as a category for assets held in a Target Date Fund.

9 These numbers represent the median RPM scores by generation, based on the average age of household.

10 A distribution from a Roth IRA is tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, qualified first-time home purchase or death.

11 Fidelity has not been involved in the preparation of the content supplied at this unaffiliated site and does not guarantee or assume any responsibility for its content.

12 The basis for this increase: comparing one’s Social Security income at full retirement age of 67 against one’s projected Social Security income at the “early eligibility age” of 62. If you can wait even longer to collect your Social Security benefit, you will be eligible for delayed retirement credits which will increase your benefit an additional eight percent each year up until age 70 (for those born after 1942).


Fidelity Investments
Joe Madden, 617-901-0469
Ted Mitchell, 401-292-3084
Fidelity Corporate Communications
Follow us on Twitter @FidelityNews

Release Summary

Fidelity announces the results of its biennial Retirement Savings Assessment study.


Fidelity Investments
Joe Madden, 617-901-0469
Ted Mitchell, 401-292-3084
Fidelity Corporate Communications
Follow us on Twitter @FidelityNews