More Americans are ready financially for an adequate retirement versus two years ago, but the majority still lag behind, according to a new study.
Forty-five percent of Americans are prepared to afford at least 80 percent of expenses in retirement, up from 38 percent in 2013, a Fidelity Investments study found. The percentage of people who would need to make significant lifestyle changes in retirement fell noticeably to 32 percent from 43 percent just two years ago.
“Even in the midst of unsteady market conditions and pockets of global instability, it’s extremely encouraging that so many people have taken positive steps to improve their ability to live comfortably in retirement, with many saving more, spending less and making smart investment decisions,” says John Sweeney, executive vice president of retirement and investment strategies at Fidelity.
An economy on the rise and a healthier job market have helped boost people’s savings. Retirement plans and 401(k)s that automatically enroll employees and increase their contributions each year have also helped.
Millennials showed the biggest improvement in their savings rate. The average millennial now puts 7.5 percent of their income into savings, versus a mere 5.8 percent in 2013. Boomers socked away the most, saving 9.7 percent of their salaries, versus 8.1 percent two years ago.
Unsure if you’re saving enough? Fidelity recommends stashing away at least 15 percent of your income towards retirement savings, while the financial consultant TIAA-CREF suggests 10 percent to 15 percent.
Take full advantage of any 401(k) contribution matches that your employer offers. If you don’t, you’re leaving money on the table. Consider adding an IRA or Roth IRA to your retirement planning, Fidelity recommends.
Reconsider your investment choices to maximize long-term growth and guarantee returns that outpace inflation. Last, choose to retire later to increase your benefits through Social Security.