Americans are less prepared for retirement than they were during the start of the COVID-19 pandemic, according to Fidelity Investment’s 2023 retirement saving assessment study.

According to the study, which was released Tuesday and examined the responses of 3,569 retirement savers that are run through Fidelity’s retirement planning platform, the typical American saver is on target to have only 78% of the income needed to cover expenses during retirement. That is down from 83% at the beginning of 2020, when the last survey was released.

“People are investing more conservatively,” said Rita Assaf, vice president of retirement at Fidelity Investments in an interview. “So our study found that 60% of Americans are concerned about being too aggressive with their investments, which can have a negative impact on their savings.”

She added that another factor that played into this was that since the pandemic, Americans tended to contribute less of their money to their retirement, despite having more money since then.

The survey also found that 52% of American households are at risk of not being able to cover essential expenses in retirement with the remaining 48% likely being able to at least afford necessary expenses.

Ms. Assaf said that Fidelity has three recommendations that would help Americans improve their retirement readiness.

“First, save as much as you can,” she said. “So Fidelity recommends saving 15% of your income, which includes the company match if you have access to a 401(k).”

Second, savers should have the correct mix of stocks, bonds and cash based on how far they are from retirement and their level of comfort with risk, she said. Third she said was waiting longer to retire in order to take advantage of maximum social security benefits.

When grouping by generation, millennials and baby boomers had the lowest savings rate at 9.5%, with Generation X saving 11.1%.

Millennials’ savings rate declined from 9.7%, or being able to cover 82% of their retirement expenses, in the previous survey to 72% in the most recent one, according to Ms. Assaf.

“Even though millennials enjoyed the biggest increase in median income since 2020, they did decrease their savings rate,” she said. “They also saw the largest drop in age-appropriate asset allocation, which means they may not have (an) appropriate amount to equities when they’re considering their long-term goal … they also have a longer time horizon so they’re not as aggressive as they could be for their age group.”

Inflation is also top of mind for savers, though more so for those closer to retirement, such as Generation X and Baby Boomers, with 85% reportedly feeling concerned about it eating into their savings, than Generation Z and Y, with 78% expressing similar concern. However, despite what data from the survey shows, those surveyed still reported a high level of confidence in their retirement lifestyle expectations. Over 80% of respondents said they feel confident they will meet their retirement goals with little variation by generation, though Generation Z expressed the most optimism, with 22% expecting a very comfortable lifestyle.

“What people are probably definitely doing is thinking,’Hey, I’m saving.’ And they just think that they’re OK. Really what it comes down to is they need to take a look at what their expenses are going to be and whether their savings will cover those expenses,” Ms. Assaf said.

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