Workers within 10 years of retiring are improving their efforts to reach an 80% income replacement goal at retirement, but there's still a gap between their current savings and their goals, said research published by BlackRock on Wednesday.
Those with the best chance of achieving the 80% goal are the 55-year-olds, whose estimated median income replacement rate was 69% as of June 30 compared with 65% at the end of June 2013. Income replacement calculations are based on personal savings and Social Security, according to the research.
“People still have 10 years to close that gap” to reach the desired 80% income replacement level, Chip Castille, managing director and head of BlackRock's U.S. retirement group, said during a telephone news conference. Sixty-nine percent “is not a bad number, but it's not where they need to be.”
As people grow older, the gap between what they have and what they need for retirement grows wider. Among 60-year-olds, the latest median income replacement rate was 64% vs. 60% for the year-earlier period, according to the research.
Among workers who are 64, the rate was 59% as of June 30 compared with 56% a year ago. Mr. Castille said the rates in this group might be distorted by the fact that some workers with adequate savings might already have retired.
BlackRock's analysis was based on information from the company's proprietary CoRI Retirement Indexes, a group of 11 fixed-income indexes that tracks the estimated cost of future, cost-of-living-adjusted lifetime income. The analysis also incorporated data from the Employee Benefit Research Institute covering workers' median income as well as median savings for workers with both 401(k) accounts and individual retirement accounts.