Americans are woefully ill-prepared for retirement and have unrealistic expectations about how much money they should save for their golden years. As a result, many people could face the prospect of working far longer than they expect, but, in reality, may be unable to do so due to declining health or corporate downsizings.

These are among the key findings of the Employee Benefit Research Institute's 16th annual Retirement Confidence Survey, for which the Washington-based trade association interviewed 1,000 working and 252 retired people.

Although 70% of those polled are saving for retirement, 52% have total savings and investments worth less than $50,000, and 39% said they have total assets of less than $10,000.

The amount of money that they think they will need in retirement is also surprisingly low. Nearly a third, 30%, said they would need less than $250,000. Another 19% said between $250,000 and $499,999, 21% said between $500,000 and $999,999 and 8% said between $1 million and $1.49 million. Only 10% expect to need $1.5 million or more, while 9% said they did not know.

And even though retirement for some people is expected to last 30 to 40 years and include expensive long-term healthcare and/or nursing home costs, the amount that people think they will need in retirement decreases with age. Workers age 45 and older are more likely than younger workers to think they'll need less than $100,000. On the other hand, those age 35 or younger or in households with total income of $50,000 or more were more likely to point to higher amounts.

Although a majority, 59%, would like to enjoy a standard of living that is at least the same or better in retirement, 50%, oddly enough, indicated they thought they could comfortably retire on 70% or less of their preretirement income.

The annual survey also found that 24% of workers are very confident about their financial security in retirement, but, here again, EBRI found anomalies, as 22% of this group is currently not saving for retirement, 39% has less than $50,000 saved and 37% has not done a retirement needs calculation. Another 44% said they are somewhat confident, while 17% said they are not too confident, and 11% said they are not confident at all.

A key reason why people have modest retirement savings may be that few have taken the time to figure out how much they will need in retirement. Only 42% of respondents and/or their spouses have tried to calculate their retirement savings. This figure has continued to decline every year since 2000, when 53% had done such a calculation.

The likelihood of doing a retirement needs calculation increases with household income, education, the amount of savings and investments, as well as if one owns a home or is married. Workers age 45 and older, participants in a defined contribution plan - especially one that includes retirement planning information or investment advice - are also likely to try to figure out how much they will need in retirement. Unfortunately, however, only 35% turned to a financial adviser to help them figure this out. More than half, 51%, made their own calculations or used a worksheet or online calculator, the results of which vary widely.

Workers also are overly optimistic about how long they will be healthy enough to continue to work. Fifty-nine percent said they expect to retire at age 65 or older, with 67% planning to work part time in retirement. In reality, only 32% made it to age 65 before they retired, with just 27% of these folks taking on part-time jobs.

"The Retirement Confidence Survey has consistently found that approximately four in 10 retirees leave the workforce earlier than planned," the report said. "Many retirees who retired early cite negative reasons for leaving the workforce before they expected, including health problems or disability, or changes at their company, such as downsizing or closure. The consequences of an unplanned early retirement can be heavy."

As to life expectancies, 50% of both men and women expect to live until age 85. Only 25% of men and women expect to live until age 90, and 10% until age 96. Seventy-five percent of men said they expect to live until age 77, and 75% of women see themselves reaching age 80.

Americans are also largely ill-informed about the age at which they will receive full Social Security benefits. Thirty-one percent incorrectly think they will qualify for full benefits at age 65, and 17% think full Social Security benefits kick in before that time.

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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