Individuals’ savings behaviour is the dominant variable in achieving a successful retirement, according to a survey.
The Putnam Lifetime Income Score survey finds that U.S. householders are on track to replace 61% of their current income in retirement.
Those best positioned for success share three characteristics: having access to workplace savings plans, deferring 10% or more of their income, and working with a financial advisor.
“As awareness grows among working Americans that a financially successful retirement may require greater savings discipline, we think a solid understanding of the various factors at play could positively raise their chances of replacing current income in retirement,” says Edmund F. Murphy III, Putnam’s head of defined contribution.
The research indicates that being prepared for retirement isn’t just about having more money, whether it be in terms of income or assets. Overall, households that defer 10% or more of their income to retirement savings are on track to replace more than 106% of their pre-retirement income.
Workers that are eligible for a workplace retirement plan are on track to replace 73% of their income, compared with 41% who don’t have a plan.