Study: Do Americans Think They're Saving Enough For Retirement?

How much of your paycheck should you devote to your retirement? How much money will you need in your investment accounts to live out your later years?

If these questions strike you as important enough to always know the answer for yourself and your family, congratulations. If not, and you know who you are, you’re one of the more than four out of every 10 people who are setting yourself up for danger.

According to CNBC, a recent study found that Americans are more upbeat about their retirement situation. The survey found that 18 percent of workers are “very confident” that they’ll have enough money to live on during retirement. This represents a five percent increase from 2013.

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But here’s the problem: The average American worker isn’t doing anything different than one year ago; the improving economy has pushed the value of their investment accounts and property values much higher very rapidly.

Further, 36 percent of workers and retirees have less than $1,000 in savings and investments earmarked for retirement and 44 percent don’t know how much they should be saving.

How Much Should I Save?

If you don’t want to get too scientific, follow the general rule and save 10 to 15 percent of every paycheck. Throw it in a 401(k) up to the amount your company will match and for any leftovers, consider an IRA where you have more control over the fees and investment options.

You can also find a number of retirement calculators online that help you estimate your “magic number.”

If you want to be more exact with your financial planning, the rule of thumb is to replace 70 percent of your income but that is misleading according to some experts.

Let’s say that you’re living that American life complete with your spouse, 1.7 kids, a home, a car, and enough expenses to wipe out most of your paycheck before it reaches your bank account.

Once you reach retirement, those 1.7 kids will be out of your home (hopefully), you probably won’t drive as much, your home might be paid off—you get the picture. Your expenses are often lower later in life so if you come in a little short, you’re likely to be ok because you aren’t spending as much as you once were.

But what if you get sick or some other unforeseen drain on your money becomes your reality?

The bottom line might be to go back to not trying to predict the future and use that 10 to 15 percent figure. A financial planner can help you better estimate those numbers but what is definitely true is that saving nothing or very little is dangerous. Don’t be one of 44 percent with virtually no savings. You’ve worked too hard to live in poverty later when you should enjoy life.