Reply #94: Social Security, pension still mainstay: Fidelity index [View All]

[UpInArms]

http://www.marketwatch.com/news/story.asp?guid=%7BEE1A4C6B%2D03C5%2D43AB%2DA83A%2D40BE8F716889%7D&siteid=mktw

BOSTON (MarketWatch) -- The typical working American household has saved just $18,750 for retirement, and expects to cover the majority of retirement expenses with Social Security and pension benefits, according to an index Fidelity Investments introduced Tuesday.

Fidelity, the biggest U.S. mutual-fund company, said its Fidelity Retirement Index also showed that the typical working American household -- whose primary decision makers are age 43, on average -- is on track to replace an estimated 59% of his or her projected income when they retire.

Boston-based Fidelity recommends replacing 85% or more of so-called preretirement income. But the index revealed that just 15% of typical American households are on track to achieve that goal.

"What this means, in effect, is that many Americans will take a significant pay cut in their retirement years, making it difficult for them to adequately prepare financially for rising medical costs and longer anticipated life spans," Jeffrey Carney, president of Fidelity Personal Investments, said in a statement.

The index showed that younger working American households -- those whose primary decision makers are ages 25 to 40 -- are typically on pace to replace an estimated 55% of projected preretirement income when they retire. That compares with 63% for households with midlife decision makers ages 41 to 54, and 62% for preretiree households with decision makers age 55 and older.

Overall, the index found that 16% of working Americans haven't started saving for retirement.

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The GOP mantra of tax-cuts is not going to alleviate this problem.