Fidelity Investments' Retirement Readiness Score at All-Time High

January 31, 2018 — 1:25 PM EST

Americans are saving more for their retirement than in years past, with Fidelity Investments reporting that its America's Retirement Score hit an all-time high of 80 in the company's latest Retirement Savings Assessment study.

A score of 80 means that savers are on target to have 80% of the income they will need to cover retirement expenses. That is a big improvement from back in 2005, when the score was just 62. Despite the huge jump in retirement readiness, the Boston-based fund and investment firm found that half of those surveyed are at risk of not being able to completely cover expenses when they retire.

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Among the different generations, Fidelity said that Baby Boomers have a score of 86, which is an increase of one point in two years. Meanwhile, Generation Xers' score was unchanged at 77, while Millennials' score increased two points to 78. This marks the first time ever that Millennials have caught up with their Generation X counterparts, and the younger investors have the stock market gains and a longer investment horizon to thank for that.

"Millennials are clearly putting money aside for retirement and taking more control of their personal situations to ensure a financially-secure future," said Ken Hevert, senior vice president of retirement at Fidelity, in a press release highlighting the results of the biennial survey. "While younger generations typically don't have jobs with access to pensions as a source of guaranteed retirement income, there are many actions that can be taken to improve retirement readiness, including saving more, managing debt and making smart investment decisions. For the average saver – regardless of age or income level – these findings demonstrate the positive impact of knowing where you stand and taking appropriate actions to get on the path to retirement readiness."

According to Fidelity, the survey also shows that the average household is in the U.S. is one point away from moving into the so-called green zone in which most savers are on track to cover all of the essential costs when they retire. In 2006, the median savings rate of Americans was 3.6%, and it is now at 8.8%. In 2017, Baby Boomers socked away the most, saving 9.9% of their salaries, which is up from 9.7% in 2016. Millennials' savings rate stayed steady and 7.5%. Fidelity noted that a savings rate of at least 15%, including employer contributions, is encouraged to meet retirement goals.

On the investment front, Fidelity said that savers need to do more work when it comes to asset allocation to ensure that they have enough money for retirement. Of the survey respondents, 55% are engaging in asset allocation, which is down from 57% in 2016 but much better than the 48% recorded in 2006. A movement on the part of employer-sponsored retirement savings plans to default workers into target-date funds and managed accounts is helping on that front, Fidelity said.