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Are Your Clients Prepared for Retirement?
Use the results of the 2023 Fidelity Retirement Savings Assessment to find ways to help clients accelerate progress toward their retirement goals.
Retirement Preparedness Measure (RPM)
78
America’s Median RPM
The overall median RPM for the typical American household is 78, which falls into the "Fair" zone, meaning the typical retirement saver is on target to have 78% of the income Fidelity estimates they will need to cover retirement costs.
Millennials (born 1982–1992)
- Millennials have the benefit of time on their side, so staying invested and making steady contributions —even through market volatility and recession fears —can help your retirement savings grow long-term and recover from any downturns.
Gen X (born 1966–1981)
- Gen X-ers are in their prime earning years and may still have a long time before retirement to save and invest, so there's plenty of time for your money to potentially grow. Individuals 50 and above can even leverage catchup contributions to boost savings.
Baby Boomers (born 1946–1964)
- As Boomers get closer to retirement, being clear on your goals and having a plan in place can make a big difference in ensuring your savings last.
* Fidelity’s Retirement Preparedness Measure (RPM) is calculated through the proprietary asset/liability modeling engine of Strategic Advisors LLC, which has been providing asset allocation, retirement, and tax-sensitive investment management services to Fidelity’s individual and institutional clients for nearly two decades. Median scores: 34% of households are in the red zone, 18% in the yellow zone, 16% in the green zone, and 32% in the dark green zone.
Consider six ways to accelerate your clients’ retirement preparedness
Pre-Retirement
Many clients may not be planning adequately for retirement because they are unsure where to start or are concerned that their personal retirement income goal may be unattainable. However, the findings clearly demonstrate actions that can be taken to gain better control over their financial future and boost their retirement preparedness. These include:
Raise savings now.
Even small increases in savings can make a big difference, especially when placed in retirement savings vehicles.
Revisit asset mix.
The goal is a portfolio with exposure to various asset classes that can provide the opportunity for growth and outpace inflation, while also providing a certain level of downside protection.
Retire later.
The longer you can wait, the more time to build savings. Waiting until you're at least entitled to full Social Security Retirement benefits (between 65 and 67) may increase your monthly benefit.
Post-Retirement
While the retirement preparedness measure is an estimate of savings adequacy, savers may need to take additional steps to provide additional retirement income or cover essential expenses. Some examples of additional steps savers can take include:
Return to work part time.
This can boost retirement income—and help keep investors active and involved.
Realize home equity.
If investors own a home, they should estimate the impact of downsizing and investing the proceeds. What’s more, property maintenance costs will most likely decrease, freeing up assets for other retirement expense needs.
Reallocate part of savings into an annuity.
Combining a lifetime fixed income annuity with an investment portfolio can reduce the risk that retirees will outlive their assets.
- Important Additional Information
- About the Fidelity Retirement Savings Assessment
- The findings in this study are the culmination of a year-long research project that analyzed the overall retirement readiness 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 typical 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 3,569 working households earning at least $25,000 annually with respondents [and spouses, if married] age 25 to 75, from August 22 through September 26, 2022. All respondents expect to retire at some point and have already started saving for retirement. Data collection was completed by Versta Research using NORC's probability-based nationally representative online panel. The responses were benchmarked and weighted against data from the American Community Survey and Current Population Survey conducted by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. Versta Research and NORC are independent research firms not affiliated with Fidelity Investments. Fidelity Investments was not identified as the survey sponsor.
- Fidelity's Retirement Score is calculated through Fidelity's proprietary financial planning engine. Of note, Fidelity continually enhances and evolves the retirement readiness methodology, guidance tools and product offerings. This year's survey processing includes enhancements including, but not limited to, demographic weighting, retirement income projections and social security estimates.
- 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.
- What the retirement score indicates:
- Dark Green: Very good or better (higher than 95). Even in a down market, these households are on track to cover 95% or more of discretionary expenses, such as travel, and essential expenses, including health care, housing, and food.
- Green: Good (81–95). On track to cover at least estimated essential expenses, but not discretionary expenses like travel. (The survey assumes 80% of estimated retirement expenses are essential.)
- Yellow: Fair (65–80). Not on track to sufficiently cover all essential retirement expenses in a down market. Modest adjustments to planned lifestyle are likely.
- Red: Poor (less than 65). Not on track to sufficiently cover all essential retirement expenses in a down market. Significant adjustments to planned lifestyle are likely.
- Diversification and asset allocation do not ensure a profit or guarantee against loss.
- Investing involves risk including the risk of loss.