A new survey from leading financial services firm Wells Fargo & Co. has suggested that the current state of savings among pre-retirees in the US are unlikely to fund the retirement lifestyles they expect to maintain.

Pre-retirees are defined as those aged between 50 and 59, and the survey – entitled the Retirement Fitness Survey – is based on 2108 online surveys with pre- and young-retirees (those aged 55 to 70) nationwide. It found that only 23 percent of pre-retirees are saving more for retirement than they were a year ago; meanwhile 57 percent are saving the same amount, and 20 percent are now saving less.

Perhaps most interestingly, however, the report revealed that 67 percent say their expectations for retirement have changed in the past year, and 56 percent now expect to work longer by an average of three years.

Insufficient

The recession has already greatly impacted the outlook for many pre-retirees. Baby boomers in particular, once anticipating a fruitful retirement, are already looking at their options to remain in the workplace longer, hoping to help support the lifestyles their battered retirement savings can no longer uphold.

Whats more, according to the Wells Fargo report, the overall financial positions and savings habits of pre-retirees are “insufficient” to last the expected 20-plus years of retirement. In fact, the financial services firm suggests that while those studied expect to need $800,000 for retirement, they have only saved $300,000.

Inadequate assessment

According to the findings of the report, the concern is that pre-retires have “inadequately assessed” how long their savings will last in retirement. On average, pre-retirees are expected to live nearly 21 years in retirement, planning to spend nearly 10 percent of their savings for every year they are in retirement. However, HR professionals recommend thatpre-retirees should look to withdraw no more than four percent each year.

The American Dream could be to blame for the inadequacies, it seems; and researchers wonder whether Americans have simply been too optimistic about their investment returns. According to findings in the report, whenpre -retirees and retirees typically started saving in their 30s, they expected the value of their investments to grow by 8.7 percent each year. In reality the compound annual growth rate of the S&P 500 stock market index from 1958 through 2008 was only 6.6 percent.

Strategies

Further to this, the report also uncovered that despite such inadequate savings, nearly two-thirds of Americans lack a formal plan for retirement savings or spending strategies. Lynne Ford, head of Wells Fargo Retail Retirement, said: “In the wake of the severe economic crisis, we had expected to find people had become more conservative in their savings and spending behavior.”

So, what’s the advice?

Put simply: plan for retirement and get a strategy in place; don’t just rely on a “just make ends meet” notion; and, heed the advice of HR professionals – don’t anticipate a 10 percent annual spend on your savings. A more reserved lifestyle will help savings go a long, long way.