Rev up retirement readiness

Use the results of the 2013 Fidelity Retirement Savings Assessment to find ways to help accelerate progress toward your retirement goals.

Retirement Preparedness Measure (RPM)

All age groups

Boomers, Gen X, and Gen Y

Survey
results

Accelerated results

0FAIR
Retirement Preparedness
Measure (RPM)
Estimated spending goal in retirement
0GOOD

Fidelity's 2013 Retirement Savings Assessment gives Americans an overall score of "fair." Without big changes, the median American household is on pace to replace 74% of estimated retirement spending goals. But there are steps they can take to get back on track.

<65 Poor
65-79 Fair
80-94 Good
95+ Very Good
Boomer (1946-1964)
  • Boomer (1946-1964)
  • Gen X (1965-1977)
  • Gen Y (1978-1988)
All income brackets
  • All income brackets
  • $20,000-50,000
  • $50,000-80,000
  • $80,000-120,000
  • $120,000+

Choose a generation

Find out how six key steps can improve the likelihood of retirement readiness.

Boomer

(1946-1964)

0FAIR

Gen X

(1965-1977)

0FAIR

Gen Y

(1978-1988)

0FAIR

Acceleration strategies

See how these steps can help rev up progress toward retirement goals.

  • Raise savings
  • Rethink asset mix
  • Raise savings and rethink asset mix
  • Retire later
  • Return to work part time
  • Realize home equity
  • Reallocate 40% of savings into an annuity*
  • Do all

Important Additional Information

About the Fidelity Retirement Savings Assessment

These findings are the culmination of a yearlong research project with Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company, which analyzed the overall retirement readiness of American households based on data such as workplace and individual savings accounts, projected Social Security benefits, home equity and pension benefits. The analysis for working Americans projects the income replacement rate for the average household, compared with pre-retirement income, and modeled the estimated effect of specific steps to help improve readiness based on the anticipated length of retirement.

Data for the Fidelity Investments Retirement Savings Assessment (RSA) was collected through a national online survey of 2,265 working households earning at least $20,000 annually with respondents aged 25 and older from June through October. Data collection was completed by GfK Public Affairs and Corporate Communications using GfK’s KnowledgePanel,® a nationally-representative online panel. Fidelity Investments was not identified as the survey sponsor. GfK Public Affairs and Corporate Communication is an independent research firm not affiliated with Fidelity Investments.

About the Retirement Preparedness Measure

The retirement preparedness measure (RPM) attempts to reflect all reported retirement investment assets, retirement guaranteed income sources, and earned income in retirement. The score illustrates the percentage of the retirement income goal we estimate a given population is on track to replace. That target is an estimate based upon income brackets using Fidelity research and data from the Bureau of Labor Statistics Consumer Expenditure Survey, and is adjusted for stated health expectations using Medical Expenditure Panel Survey Data, U.S. Department of Health and Human Services and Fidelity research, and lifestyle expectations based on data from the International Council on Active Aging, Bureau of Labor Statistics Consumer Expenditure Survey, and Fidelity research. The survey assumes a planning horizon of 92 for a male and 94 for a female based on the Society of Actuaries Annuity 2000 table. Actual individual circumstances and results will vary.

The assessment calculations rely on 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. The same modeling engine is used in Fidelity’s retirement planning tools. Using its modeling engine, Strategic Advisers generates the percentage of potential pre-retirement net income that each individual American household surveyed is likely to replace upon retirement. Strategic Advisers uses Monte Carlo simulations for this projection and uses a down market assumptions—meaning that in the simulations actual results would have been better 90% of the time and worse 10% of the time. The RPM represents the median (or midpoint) for accumulator households and income and age cohorts.

The hypothetical illustrations are for educational purposes and do not reflect actual investment results and are not guarantees of future results. Actual investment fees or expenses are not reflected in these hypothetical illustrations. 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 (95 or higher). 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 (80-95). 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.

Assumptions and impact of hypothetical changes

Investment mix: The study looks at the reported asset mix from the survey results and estimates the potential effect of adjusting the asset allocation for investors who are more conservatively or aggressively invested than our age‐based investing guidelines would suggest. The results are then adjusted to account for the long-term investment performance potential of an age-appropriate asset allocation.

Enroll in an automatic increase program: The base results reflect the reported level of annual savings contribution in the survey results—the national median savings rate was 7%. The automatic increase program assumes a 1 percentage point annual increase up to a combined employer/employee cap of 15%. The results are then adjusted to reflect the potential impact of the increased savings and investment potential.

Retirement age/delay retirement: The base score reflects the reported planned retirement age—the median reported planned retirement age was 65. The option to delay retirement adds two years to the projected working life reported by each individual and the score is adjusted based on the assumption that current earnings trajectory, savings, and investment behavior is extended for those two additional years.

Work part time in retirement: The base score assumes that all work and income from work ceases in the year of retirement. The work part-time in retirement option adds a percentage of the reported earned income and a duration of part-time work based on each individually stated retirement age from the survey. The maximum duration is five years of part-time work and the minimum duration is one year.

*Annuitize: The annuitize option assumes 40% of the individual’s investable assets are invested in a single-life fixed income annuity with an annual 2% cost-of-living adjustment and a 10-year guarantee period. Age at annuitization is assumed to be 67 for generations X and Y and 66 for boomers. Results are based on best available male rates as of August 2013 from lifetime fixed income annuities available through Fidelity Insurance Agency, Inc., and issued by third-party insurance companies. A guarantee period provides annuity income through a specified date even if no annuitant lives to the end of the guarantee period. Guarantees are subject to the claims-paying ability of the issuing insurance company.

Downsize: The base score assumes that the retiree maintains his or her current housing situation. The downsize option assumes the sale of the home and repurchase of a home that frees up 25% of the projected equity for each individual survey participant at the time of sale based on reported value in the survey. The equity is then reinvested as part of the retirement portfolio.

All of the above: Combines the effects of each accelerator described above.

Diversification/asset allocation does not ensure a profit or guarantee against loss.

Investing involves risk including the risk of loss.

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

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