A Fidelity news release said that its new Fidelity Retirement Index showed that the typical working household has saved $18,750 for retirement and is expecting to cover the majority of retirement expenses through Social Security and pension benefits. Additionally, a scant 15% of typical American households will have enough in retirement savings to replace 85% or more of preretirement income, Fidelity said.
Looking at investors by age group, Fidelity said that younger working American households, whose primary decisionmakers are age 25 to 40, are typically on track to replace an estimated 55% of projected preretirement income when they retire. This compares to 63% for working American households whose primary decisionmakers average age 41 to 54 and 62% for households whose primary decisionmakers are preretirees age 55 and older.
Some 16% of working Americans have not yet started saving for retirement, Fidelity said.
“While this data may seem encouraging, Americans are relying heavily on Social Security and employer pensions and are only saving a small percentage of their personal income to fund their retirements,” said Jeffrey Carney, president of Fidelity Personal Investments, in the news release. “What this means, in effect, is that many Americans will take a significant pay cut in their retirement years, making it difficult for them to adequately prepare financially for rising retiree medical costs and longer anticipated life spans.”
According to Fidelity:
- working American households of younger adults (age 25 to 40) have typically saved $9,000 toward retirement and contribute $92 each month to that goal. Twenty-one percent of working younger adults haven’t saved anything for retirement.
- working households of mid-life adults (age 41 to 54) have typically saved $30,000 toward retirement and contribute $187 each month to that goal. Fourteen percent of working mid-life adults have not yet started saving for retirement.
- working households of preretirees (ages 55 and older) have typically saved $60,000 toward retirement and contribute $229 each month to that goal. Eleven percent of working preretiree adults have not yet started saving for retirement.
The Fidelity Retirement Index is based on a survey of more than 1,900 American households. The Index uses Americans’ broad financial picture, including workplace and individual savings, asset growth, future savings, projected social security benefits, pension payments, and retirement horizon. Representing the median – an equal number saving more and an equal number saving less – the Index is based on Fidelity’s retirement income planning methodology. Fidelity expects to report its Index findings twice a year, according to the announcement.