green and white chart showing upward movement

A new Fidelity study finds that while Americans' retirement readiness scores have improved, there's still work to be done if those who are still behind aren't going to be stuck at a subsistence level, or worse, in retirement.

In its biennial Retirement Savings Assessment, Fidelity says that Americans have actually made a lot of progress over the last 15 years, increasing the retirement readiness score from its 2006 level of 62 to a more respectable 83, considered to be in the green zone.

That doesn't mean they're all where they need to be, however. Just 37 percent of respondents are considered to be "on target," meaning they should be able to cover more than 95 percent of total estimated retirement expenses—including essential and discretionary expenses—during retirement. Just 32 percent of respondents were in this category in 2018.

Another 17 percent are also in the green zone, although at a lower level—considered "good," they're believed to be able to cover between 81–95 percent of essential expenses, but not discretionary ones such as travel, entertainment and other extraneous costs. In 2018, 18 percent of Americans were in this zone.

The yellow zone claims 18 percent of Americans, a percentage that's fallen from 2018's 21 percent. This group is considered to be "fair," able to cover between 65–80 percent of essentials but likely having to do so by making "modest adjustments" to their retirement lifestyle.

And that leaves the group that's still in trouble: the red zone folks, who are expected to struggle to cover less than 65 percent of retirement's essential expenses and who will have to make "significant adjustments" to their lifestyles in retirement. In 2018, 29 percent of Americans fell into this group; that's only fallen to 28 percent.

The study credits better asset allocation—due at least in part to workplace retirement plans "defaulting employees into target-date funds and managed accounts"—and higher savings rates—now at a median rate of 10 percent, compared with 2018's median of 8.8 percent and a substantial rise from 2006's 3.6 percent—for the improvement.

Millennials, by the way, are doing better than GenXers on retirement preparedness, according to the study; their preparedness score has actually fallen from 2018's 83 to 80, making them "the only generation in the yellow" zone. Millennials, on the other hand, are in the green zone with a 2020 score of 82 and an increased savings rate of 9.7 percent, up from 2018's 7.5 percent.

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Retirement scores hit the green zone, but few savers are on target to cover all expenses

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