Millennials See Biggest Decline in Retirement Preparedness

Americans are less financially prepared for retirement than they were in 2020, with millennials experiencing the biggest setback as savings decreased, according to a study by Fidelity Investments. 

Fidelity’s latest Retirement Savings Assessment estimated that Americans have only 78% of the income they need to cover expenses for retirement, down from an all-time high of 83% in the firm’s last report in 2020. Broken down by generation, that figure was 87% for baby boomers and did not change from 2020, but for millennials, it plunged to 72% from 82% in 2020.

The assessment found 52% of those surveyed may need to make modest to significant adjustments to their retirement lifestyle if they don’t take steps to catch up, and 34% of households may likely have to make significant adjustments.

Natural Reaction

Fidelity said that the two main drivers behind the drop in readiness, saving less and making safer investment decisions, are a natural reaction during a challenging financial environment. It noted Americans have had to deal with the effects of the COVID-19 pandemic, market swings, and the recent banking turmoil. 

Rita Assaf, vice president of retirement at Fidelity Investments, explained that savers “continue to navigate through uncertainty,” and that may lead them to consider pulling back on saving for the future. She pointed out that when it comes to investing for the long-term, having a solid plan in place is “one solid way to help weather any storm.”