But when you factor in large and unexpected out-of-pocket medical expenses, David Rosell, president of Rosell Wealth Management and author of Failure is NOT an Option, says he's more inclined to believe that most Americans are not prepared for retirement.
In the survey conducted for TheStreet by GfK, 52% of respondents -- between the ages of 50 and 64 -- worry about facing major unexpected medical expenses.
Apart from medical expenses, retirees should also consider the cost of long-term care. Rosell says, "Sadly, the escalating costs associated with long-term care during retirement can make the possibility of outliving one's retirement income a reality for many."
Research shows that at least 70% of people over 65 will need long-term care and help with basic daily activities at some point in their lifetime. According to Genworth's recent study, the cost of long-term care services has been steadily increasing.
In 2008, the median annual rate for a private nursing home room was $67,525, compared with the 2013 median annual rate of $83,950. This means Americans can expect to pay approximately $16,425 more per year today for a nursing home than they had to pay in 2008.
"The fact is, retirement could be very expensive," says Schwab-Pomerantz, who wrote The Charles Schwab Guide to Finances After Fifty, out in April. When deciding whether or not to put more money toward retirement or spending on other things today, Schwab-Pomerantz suggests these saving fundamentals:
- If your company offers a 401(k) plan that will match your contributions, save in your 401(k) up to the company match. Depending on your age, you may need to add more funds to your 401(k) or supplement your retirement savings with an IRA account.
- In your bank account, make sure you have enough money to cover at least three to six months of essential expenses.
- Pay off non-deductible, high-interest loans.
When these areas have been covered, Schwab-Pomerantz says, one can then start thinking about spending on other things such as a vacation, new car -- or even paying for a child's education.
College Fund vs. Retirement Account
In the survey conducted for TheStreet by GfK, only 29% of respondents said they worry about having enough money to send their children to college.
When it comes to saving for retirement vs. paying for your child's education, Rosell insists saving for retirement should come first. "Just as you would put an oxygen mask on yourself first before helping a child in a plane emergency, your retirement should be your priority."