Retirement savings: Who's on target?

America's retirement score has improved—it can get even better with these tips.

Key takeaways

  • Americans who have started saving for retirement continue to improve their retirement readiness, according to a recent survey by Fidelity.
  • Each generation—millennials, Generation X, and baby boomers—can all improve their readiness for retirement.
  • Saving more, working longer, and investing appropriately for your time frame, financial situation, and risk tolerance are 3 key ways to improve your outlook.

Saving money consistently throughout your career can help you live the life you want in retirement. But it can be hard to tell how you're doing on the way there.

Fidelity's tools may be able to help. The retirement savings guidelines, particularly the savings milestones, can help you quickly gauge where you stand. And the Retirement ScoreSM can offer a more refined, personalized assessment of your retirement preparedness. On a national scale, Fidelity's biennial survey, the Retirement Savings Assessment (RSA), asks thousands of people who have already started saving for retirement how they're getting prepared. The results are calculated to give the country a score that shows generally how prepared Americans may be in retirement.

And there's good news this year—America's retirement score1 is up to 83 based on the recent RSA survey. That means that the median saver is on target to have 83% of the income Fidelity estimates they will need to cover retirement costs.

There are 4 categories on Fidelity's retirement preparedness scale. They measure your ability to cover estimated retirement expenses2—in any market but particularly in a down market.3

Dark green: Very good (96 or over). On target to cover 96% or more of total estimated expenses.

37% of households are in the dark green zone, up from 32% in 2018.

Green: Good (81–95). On target to cover essential expenses, but not discretionary expenses like travel, entertainment, etc.

17% of households are in the green zone, down from 18% in 2018.

Yellow: Fair (65–80). Not on target to cover all essential retirement expenses without modest adjustments to planned lifestyle.

18% of households are in the yellow zone, down from 21% in 2018.

Red: Needs attention (less than 65). Not on target to cover all essential retirement expenses without significant adjustments to planned lifestyle.

28% of households are in the red zone, down from 29% in 2018.

How to improve your retirement score

No matter how prepared for retirement you are, there are steps you can take that may help you feel more confident and ready for the next phase in life.

Here are 3 key actions people can take to improve their retirement readiness:

  • Save more
  • Invest appropriately for your time frame, financial situation, and risk tolerance4
  • Delay retirement

Taken one at a time or implemented altogether, each of these actions work together—and time is one of the most important influences on the potential impact of these actions. Saving a little bit extra in your 20s can add up to a lot by the time you retire. But to have the same effect, someone close to retirement will need to save more—simply because there's less time for growth and compounding.

That's one reason why delaying retirement can be a powerful move in addition to saving and investing. There's more time to save and more time for those savings to potentially grow. It also allows for a potential increase in monthly Social Security benefits when you delay claiming retirement benefits. And it shortens the period of time you'll need to rely on savings to support retirement expenses.

Investing appropriately for your time frame, risk tolerance, and financial situation is a key component as well. A diversified mix of stocks, bonds, and short-term investments can provide a balance of growth potential and steady returns through different types of markets. Designing an investment mix could mean adding more stocks for some people and dialing down the stock market exposure for others.

Read Viewpoints on Fidelity.com: How to start investing

Here's how much median savers, those in the middle of the savings spectrum, from each generation can improve their retirement readiness by taking advantage of all 3 actions.

How millennials can improve their retirement readiness

Millennials in the RSA survey have a median retirement score of 82.

Saving at least 15%5 of their annual, pre-tax income, including any potential match from an employer, could help significantly. The median savings rate for millennials is 9.7%. Increasing that to 15% could raise the median score for millennials by 20 points.

Investing in an age-appropriate investment mix of stocks, bonds, and short-term investments has the potential to help your money grow. Fidelity's survey found that 60% of millennials are invested in a way that Fidelity would call appropriate. No millennials in Fidelity's survey were invested in an aggressive mix though 40% were labeled as conservative. The remainder were on track or invested in a lifecycle fund. Investing in a mix that is neither too aggressive nor too conservative could lift the score another 8 points.

Delaying retirement until their full retirement age, the age they will receive full Social Security retirement benefits, boosts the score another 22 points. Delaying retirement beyond the full retirement age for Social Security benefits offers further score improvements too but that is not accounted for here.

The final score for a millennial saver with a median score who activates all 3 levers comes out to 132.

How Gen X can improve their retirement readiness

Generation X has a median retirement score of 80.

In Generation X, the median savings rate is 9.7%. Saving at least 15% of their annual, pre-tax income, including any potential match from an employer, raises the score 12 points.

Investing in an age-appropriate mix of stocks, bonds, and short-term investments increases the score 3 points. Fidelity's survey found that 64% of investors in Generation X are already invested in a way that Fidelity would call appropriate. That means the investment mix isn't too aggressive or too conservative for their general time frame. About a third of Generation X investors were considered conservative in Fidelity's survey.

Delaying retirement until their full retirement age, the age they will receive full Social Security retirement benefits, pushes the score up by 16 points. Delaying retirement beyond the full retirement age for Social Security benefits offers further score improvements too.

Activating all 3 levers brings the total score up to 111.

How baby boomers can save more for retirement

Baby boomers have a median retirement score of 87.

Saving at least 15% of their annual, pre-tax income, including any match from an employer, boosts the score 3 points. Baby boomers are already saving more than the other 2 generations, with the median savings rate at 11.7%.

Investing in an age-appropriate mix of stocks, bonds, and short-term investments increases the score 2 points. A little more than half, 55%, of baby boomers are invested appropriately by Fidelity standards—not too conservative but also not too aggressive. A quarter of baby boomers were considered aggressive investors in Fidelity's survey, the highest of the 3 generations. Another 19% were considered conservative. 

Delaying retirement is the most impactful move measured by the RSA survey for baby boomers. Waiting to retire at their full retirement age increases the score 7 points.

Taken together, these 3 actions can boost the median boomer's retirement score to 99.

How prepared are you? Find out with the Fidelity Retirement Score

Today is a great day to save

There's a famous quote attributed to a Chinese proverb, "The best time to plant a tree is 20 years ago. The second best time is right now." And it may be true for retirement savings too. Even if you didn't save as much or as often as you'd like in the past, today is a great time to act.

Even if you can't save 15% of your income right now, saving a little bit more than you're currently saving is a big accomplishment. Save what you can, increase as you're able to, and invest for growth. In a few years, you may be amazed at what you can accomplish.

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