CST:24/05/2016 10:41:55   

Retirement Readiness Improves as Americans Save More

89 Days ago

(NewsUSA)Fidelity.com) came up with a unique way of measuring not only how close working Americans are to meeting their post-retirement expenses, but also how different generations -- baby boomers, Gen Xers, and Gen Yers -- stack up against each other. The one standout back then was boomers. But now that same gauge, the Retirement Preparedness Measure (RPM), is signaling more widespread improvement -- thanks in large part to what John Sweeney, Fidelity's executive vice president of retirement and investment strategies, ascribes to "across-the-board progress in savings, and investments being allocated in a more age-appropriate way." Specifically, the number of people likely to afford at least their essential expenses in retirement jumped 7 percentage points since 2013, from 38 to 45 percent, according to the firm's biennial "Retirement Savings Assessment" study. On the flip side, of course, that means 55 percent are estimated to be "at risk of being unprepared to completely cover" essentials like housing, food and health care. That said, what's especially illuminating about the RPM is the color-coded breakdown -- with dark green being the best -- showing how retiree households are currently prepared to withstand a down market compared to 2013: * Dark Green. Twenty-seven percent are on track to cover more than 95 percent of their total estimated expenses (up 4 percent). * Green. Eighteen percent are headed toward only covering essentials, with no money for travel and entertainment (up 3 percent). * Yellow. Twenty-three percent are off track and would likely require "modest" lifestyle adjustments (up 4 percent). * Red. Thirty-two percent definitely "need attention," to put it mildly, though that's down significantly from 43 percent. So which generation is faring best? Well, boomers saved the most -- stashing away 9.7 percent of their salaries (up from 8.1 percent, which is still below Fidelity's recommended rate of at least 15 percent). However, millennials showed the most improvement by boosting their savings from 5.8 percent to 7.5 percent. For those curious how they're doing, Fidelity now allows anyone to access their personal retirement score online. And if you are flashing "code red" -- or just eager for a more comfortable retirement -- certain "accelerators" can help. Saving that aforementioned 15 percent of your income, for example, brings the study's median RPM score of 76 -- smack in the yellow zone -- up to the green zone's 84. Replacing portfolios that are either too conservative or too aggressive with more age-appropriate asset mixes can help improve the score, too. "The score reaches 100 if you combine delaying retirement with the other two accelerators," says Sweeney.

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