Retirement Readiness Still Poor

The Fidelity Research Institute reported March 12 that Americans are slightly better prepared for retirement, but noted that their expectations for income in retirement remain highly unrealistic. The Institute's third annual Retirement Index showed that the typical American working household is on track to replace 58% of its income in retirement–a slight increase from the 57% level reported in 2006. However, the Institute's executive director, Guy Patton, told reporters in a conference call that while "Americans are still making some progress" in preparing financially for retirement, there remains "plenty of work" to improve their retirement readiness, noting that the "principal driver" behind even the slight increase was the financial markets' performance over the past year.

Among other interesting developments from the online survey of 2,000 working financial decision-makers and nearly 800 retirees, both conducted in January 2007, Patton noted that 60% of pre-retirees plan on working in retirement to make up their income shortfall. However, 22% of the retirees surveyed reported that were forced to retire early because of poor health. Also among retirees, 39% reported they are actually spending more in retirement than they did just prior to retirement. Finally, the survey found that Gen Xers are beginning to feel the "sandwich" effects of caring for aging parents