People are saving more for retirement and investing more appropriately for their age, improving the overall state of retirement readiness in the U.S., according to a new study by Fidelity Investments.
Its biennial Retirement Savings Assessment study, which factors in data from 4,650 respondents, found that the number of people who are likely to be able to afford at least their essential expenses in retirement jumped seven percentage points since the organization’s last study in 2013, from 38% to 45%.
However, the study noted, this means that more than half (55%) of people are still estimated to be at risk of being unprepared to completely cover essential living expenses in retirement.
This improvement is driven in large part by across-the-board progress in savings and how investments are being allocated. On the savings front, Americans’ median savings rate improved from 7.3% to 8.5%.
Millennials showed the greatest improvement, increasing from 5.8% to 7.5%. Baby boomers saved the most, putting away 9.7% of their salaries, up from 8.1% in 2013.
According to the study, people also made significant improvements in making smart investing strategy decisions and understanding how to allocate assets based on their age. In 2015, 62% of respondents had allocated their assets in a manner that Fidelity considers age appropriate, compared to 56% in 2013.
“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,” said John Sweeney, executive vice president of Retirement and Investment Strategies at Fidelity.
“While many aren’t completely on track, there are steps people can take, regardless of age or income level, to help get on a path to green and plan for their someday.”