“To see what is in front of one’s nose needs a constant struggle.” – George Orwell

The Putnam Investments 2014 Lifetime Income Study, done in collaboration with Brightwork Partners, drew on data from over 4,100 working age adults (18 to 65 years of age) to comprehensively assess their potential to replace pre-retirement incomes. The survey included Social Security, DB and DC assets, personal savings, and home equity. Overall, it found that working Americans are on track to be able to replace roughly 61% of pre-retirement income.

But it also showed that 44.5 million households of the 117 million total are on track to replace 75% or more of their work-life incomes. What’s more, 21% of households earning less than $50,000 per year are saving enough to potentially replace 100%+ of what they had earned while working.

The chart below illustrates key structural and behavioral variables that impact potential lifetime income replacement rates – of which the most powerful are automatic enrollment and escalation features and the choice to defer 10% or more of salary (including employer match, if any).

The key policy challenge this data suggests is to find ways to spread these successful structural and behavioral practices across as many workplace savings plans as possible.

The Putnam Lifetime Income Survey, with research methodology provided by the Putnam Institute, was conducted online by Brightwork Partners and completed in January 2014. The survey of 4,148 working adults age 18 to 65 was weighted to U.S. Census parameters for all working adults. U.S. Census data estimates (2012 Statistical Abstract, Table 690: Money Income of Households).