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Retirement Planning > Retirement Investing

Most are unprepared for retirement

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It has again been reported that Americans aren’t saving nearly enough to fund their post-9-5 years. Even with an improved economy, many are still falling behind on retirement preparedness, according to Fidelity Investment’s Retirement Preparedness Measure (RPM).

According to the RPM, 55 percent of Americans are in fair or poor condition when it comes to being able to completely cover estimated essential living expenses in retirement, such as housing, health care and food. Under the RPM, working Americans fall into four categories on the retirement preparedness spectrum. The categories are linked to a numeric range (the higher the better), based on an individual’s ability to cover estimated retirement expenses, even in a down market. It looks as follows:

The color coding is broken down into:

  • Dark Green: Very Good or Better (95 or over). These households are on track to cover 95 percent or more of total estimated expenses, even in a down market. Thirty-three percent of those surveyed were dark green.
  • Green: Good (80-95). On track to cover at least essential expenses, but not discretionary expenses like travel, entertainment, etc. Twelve percent of those surveyed were green.
  • Yellow: Fair (65-80). Not on track to sufficiently cover all essential retirement expenses, with modest adjustments to their planned lifestyle likely. Fourteen percent of those surveyed were yellow.
  • Red: Poor (less than 65). Not on track to sufficiently cover all essential retirement expenses, with significant adjustments to their planned lifestyle likely. Forty-one percent of those surveyed were red.
The median RPM shows that Americans are on track to meet just 74 percent of their estimated retirement expense goals. 
“This savings shortfall is one of the biggest reasons the median RPM is in the yellow, although there are several others, too,” said John Sweeney, executive vice president of Retirement and Investment Strategies at Fidelity. “When you factor in the expectations many have of an early retirement, along with increasing longevity and sometimes overly conservative asset mixes for investments, you can see why many people are not as prepared as they need to be to cover their expected expenses in retirement.”

As for ways to make it into — and stay in — the green zone, Fidelity recommends increasing savings, reviewing your asset mix and retiring later on in life. Of course, once in retirement, there are options for other sources of income, including part-time work, downsizing a residence or reallocating part of your savings into an annuity. 

Either way you look at it and no matter what generation, something must be done to more fully prepare for retirement. 

The RPM is based on the results of Fidelity’s 2013 Retirement Savings Assessment, a regular survey of more than 2,200 households. The RPM compares retirement preparedness for a wide cross-section of the population, using the survey responses to set retirement income targets for each participant, based on Fidelity’s income replacement methodology .


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