Americans are on track to save 61% of their current income in retirement, according to Putnam’s latest Lifetime Income ScoreSM survey of retirement preparedness. The study also found that savings behavior, especially having a commitment to saving, remains one of the dominant drivers of success in meeting retirement goals.
Putnam’s Lifetime Income Score, conducted with Brightwork Partners and introduced in 2011, calculates the income level that retirement savings plan households are on course to replace in retirement. The 2013 survey included more than 4,000 working Americans.
The score represents the percentage of current income the household was likely to replace, and includes projections for Social Security. For some households, scores exceeded 100.
Those best positioned for success shared these other characteristics:
- Have access to workplace savings plans
- Defer 10% or more of their income
- Work with a financial advisor
To determine the score, the study incorporated a range of factors including Social Security, defined benefit and defined contribution assets, and personal savings. In 2013, the calculation of scores began to incorporate factors of home equity, business value, inheritance, and the impact of mortality rates associated with as range of chronic health conditions.
Most households surveyed were also confident about the economy, but uncertain about retirement. A full 65% expect some economic growth in the year ahead and no recession. But 48% noted they are “not very confident” or “not confident at all” in being able to achieve their retirement income goal.
The Putnam Lifetime Income Survey, with research methodology provided by the Putnam Institute, was conducted online by Brightwork Partners and completed in January 2013. The survey of 4,089 working adults age 18 to 65 was weighted to U.S. Census parameters for all working adults.