Americans’ ability to replace their current income in retirement has improved

Empower’s 2020 national survey of retirement preparedness found continued improvement in the median American’s ability to replace their current income in retirement. Despite this progress, some groups of people remain better prepared for retirement than others. In this paper, we explore three significant factors that influence individuals’ retirement scores:

• Savers’ personal characteristics
• Retirement plan design features
• Individual actions that support better retirement savings habits

The insights provided by our survey results offer guidance for plan sponsors as they seek to improve employees’ retirement preparedness. For example, plan sponsors might consider:

• Tailoring communications to vulnerable populations
• Including plan features that encourage participants to increase their savings
• Offering financial advice to plan participants

Key findings:

• The median American is on track to replace 69% of their current income in retirement. This number represents an increase from previous years.
• Plan design elements such as automatic enrollment and automatic contribution increases can play a significant role in boosting retirement savings.
• Habits such as saving 10% of income help employees stay on track for retirement. Plan design can help reinforce these habits.
• The use of financial advice — from a digital or human advisor — can improve an employee’s ability to achieve the retirement lifestyle they want.

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