Their savings rate may have improved over the past two years, but more than half of American workers are still at risk of being unprepared to completely cover essential living expenses in retirement—which includes such little items as housing, health care, and food.

According to Fidelity Investments’ biennial “Retirement Savings Assessment,” 55 percent of Americans are still in that high-risk group—although the good news is that the number of Americans whose savings have risen enough for them to likely to afford at least their essential expenses during retirement has grown.

Since the last assessment was taken in 2013, when just 38 percent were adjudged capable of paying for the essentials, people are saving more and, according to Fidelity, investing more appropriately for their age.

As a result, that 38 percent has risen to 45 percent.

But that still means more than half of Americans are ill prepared to leave the workplace behind.

The assessment uses a Fidelity-devised retirement preparedness measure (RPM) that evaluates just how well or badly prepared households are for retirement, and divides them into four groups:

On track, and able to cover more than 95 percent of retirement expenses
Good, and on track to cover essentials—though not the niceties of life, such as travel and entertainment
Fair, not on track and likely to have to pare back their lifestyles somewhat during retirement
Needs attention, not on track and likely to have to scale back considerably on living standards during retirement

In 2013, only 23 percent fit into the on-track category, but that’s now risen to 27 percent.

In the good category, only 15 percent made it in 2013, but that’s risen to 18 percent.

The fair group has also risen, from 2013’s 19 percent to 23 percent today, while the needs-attention group has managed to decrease from 2013’s 43 percent to today’s 32 percent.

Of course, that still leaves quite a way to go to boost the country’s workers as a whole, despite improvements.

But progress did occur. Americans’ median savings rate improved from 7.3 to 8.5 percent, with millennials showing the greatest improvement—increasing from 5.8 to 7.5 percent.

Boomers saved the most, stashing away 9.7 percent of their salaries, up from 8.1 percent—but still below Fidelity’s recommended total savings rate of at least 15 percent.

People also made significant improvements in making smart investing strategy decisions and understanding how to allocate assets based on their age.

In 2015, 62 percent of respondents had allocated their assets in a manner Fidelity considers age appropriate, compared to 56 percent in 2013.

Instant Insights /

Over half of workers won't be able to cover retirement expenses

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