NEW YORK ( TheStreet) -- Americans like to think they're sunny and optimistic when it comes to retirement. You know the drill. Work until you're 65 or so, then pull up stakes and buy a home somewhere warm and sunny. Work on your golf game, travel a bit and enjoy your golden years as nature intended. But is that a realistic goal these days? A study from Charles Schwab ( SCHW) says "maybe not." That study suggests Americans are "underestimating" their financial needs in retirement, even as most U.S. adults say they are prepared for calling it a career. The Schwab study of 1,800 U.S. investors says 84% of them say they "have a retirement plan in place" and 80% say they are "confident" of their ability to retire comfortably. But Americans aren't aiming high enough on their retirement income, Schwab says. The report notes that study participants say they'll need $66,000 in annual income in retirement, way below their current annual income of $115,000. Most financial advisers want their clients to have at least 75% of their annual income in retirement, which means the Schwab study participants won't have enough cash to retire in reasonable comfort. "Everyone's retirement saving and investing plan is going to be unique, but each plan needs to start with a realistic assessment of personal situation and goals," says Carrie Schwab-Pomerantz, Charles Schwab's senior vice president and a certified financial planner. "In many cases, we tell clients to assume they'll need roughly the same annual income in retirement as they had beforehand unless they anticipate a significant lifestyle change, and to take into account longevity risk when planning how much money they might need."
By and large, U.S. workers estimate they'll retire at age 67 and will live until age 86 -- meaning they'll need 21 years of savings in retirement. But only having roughly 60% of their annual income to live on after age 67 won't cut it, Schwab suggests. How can Americans catch up on their retirement income, especially since 39% of study participants say they won't continue to work in retirement? (Another 46% say they plan on working part-time.) Schwab has a few thoughts on that front too. "We recommend maximizing contributions in a 401(k) at least up to the employer match, considering other tax-advantaged retirement accounts such as an IRA, and finding ways to automate savings," Schwab-Pomerantz says. "We're also having retirement planning discussions with an increasing number of clients who want to be more engaged in investing and how their money is managed." One of those discussions focuses on the high cost of health care for older Americans, which the investment firm says will rise significantly over the next 20 years. That could be a huge "budget buster" for retirees. "Even with Medicare benefits, a 65-year-old couple could need nearly $400,000 to cover out-of-pocket health care costs during retirement, according to research by the Employee Benefit Research Institute, and it's widely accepted that those costs could rise significantly in the future," Schwab-Pomerantz says. "The bottom line for everyone is that health care costs need to be carefully factored into retirement plans." Factoring high health care costs into the mix, it's increasingly apparent Americans are underestimating how much cash they'll need to live on in retirement. It's a miscalculation retirees can't afford to make.