Study finds many Americans unprepared for retirement savings shortfall

WASHINGTON (7News) — More Americans than ever will reach retirement age this year, according to a new study by Fidelity Investments, and they will be getting a wake-up call.

The study found that many retirees, although confident about their finances, have been caught off guard by rising healthcare costs.

"We find that an average individual will need about $165,000 just to cover health care costs in retirement, and that does not even include long-term care," said Rita Assaf, VP of Fidelity Investments.

That is after what Medicare covers.

And it is the biggest expense retirees will have.

The next concern is covering day-to-day living expenses.

"Many Americans are actually worried that their retirement savings will not last them through retirement," said Assaf.

Assaf said the amount you need to save for retirement varies.

"It's personal to you. I know we've seen figures as high as a couple of million, but it really depends on what your plans are," Assaf added.

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This is where having a solid retirement plan can come into play. She recommends not withdrawing more than 5% from your investment accounts each year.

"You'll want to have a plan that addresses essential expenses that will be covered by guaranteed income sources that keep up with inflation. Think Social Security and annuities. Second, you want to make sure that discretionary expenses are covered by savings or investment income," Assaf said.

Assaf said for those younger people with a longer earning horizon, make sure you're regularly contributing to your 401 (k), IRA, and saving accounts.

One great tip is to automate those contributions, so the savings are painless. And for an idea of how much you'll need to live in retirement, take a look at your credit card statements and your current bills, and the sources of where your income will come from in retirement.