Feel relieved that retirement savings are up?

(MoneyWatch) You might have heard some sound bites lately that report good news about retirement savings:

-- Fidelity recently revealed that average contributions to IRAs have increased by 15 percent since 2007, from $3,420 to $3,930.

-- A recent bulletin from the Social Security administration shows that retirement savings have been understated in previous analyses on retirement resources, due to underreporting of savings in IRAs and employer-sponsored plans such as 401(k)s.

-- Another recent report from Fidelity on combined 401(k) and IRA retirement savings shows that for investors on the verge of retirement -- those between ages 65 and 69 -- the average combined retirement savings is $359,999.

While this is indeed good news, don't breathe a sigh of relief just yet and think that we've solved the significant retirement savings challenge facing most Americans. Perhaps the image to keep in mind is that of a person running down the deck of the Titanic who finds an inflatable inner tube and says "Look what I found! Heck, this situation isn't as bad as I thought."

Let's dig deeper into these numbers so you can see why I believe we're not out of the woods yet. Let's start with the IRA numbers: If you contribute $4,000 per year for 20 years and earn 6 percent interest each year, you'll accumulate a little over $150,000. While that's not bad, you'll only generate a lifetime retirement income of about $6,000 per year with that amount of savings if you use the popular four percent withdrawal rule. Of course this is better than nothing, but your retirement years won't exactly be golden with this amount of retirement income, even when you add in your Social Security benefits.

Now let's address the Social Security bulletin, which documents inadequacies in income amounts of the aged as reported by the Census Bureau's Current Population Survey (CPS). The CPS includes pension income, but it under-reports distributions to retirees from IRAs and employer-sponsored savings plans such as 401(k)s. As we shift from relying on traditional defined benefit pension plans to 401(k) plans as our primary retirement delivery system, this under-reporting presents a problem to analysts who want to determine if our retirement system generates sufficient retirement income.

Make no mistake -- I'm all for improving the accuracy of data analyses on retirement resources. But the improvements cited by the Social Security bulletin will barely make a dent in the problem. It reports that ownership of IRA and 401(k) accounts among people aged 65 and older has increased from 24.3 percent in 1998 to 37.4 percent in 2009. While that's a nice improvement, it still means that barely more than one-third of Americans own such an account.

The Social Security bulletin also reports dramatic increases in the median account value of all tax-advantaged accounts, including IRAs and 401(k)-type savings. The median value for people ages 55 to 64 increased from $43,400 in 1992 to $100,000 in 2007. Again, this is a significant increase, but the annual retirement income generated by $100,000 will be about $4,000 per year if you again use the four percent rule for annual withdrawals.

It's a little more encouraging to consider the numbers reported at the beginning of this post by Fidelity on the average combined 401(k) and IRA accounts held at their firm. Retirement savings of $360,000 could generate a retirement income of almost $15,000 per year, using the four percent rule. Such an investor could generate an even higher retirement income if they bought an annuity. Combine this amount with a Social Security retirement income of $44,400 per year for a couple aged 70, and they might be able to retire with enough money to live on.

But remember, according to the Social Security bulletin, only about one-third of the population aged 65 and older has any type of IRA or 401(k) account, so the Fidelity numbers definitely represent a minority of Americans. And you'd need to start Social Security benefits at age 70 to realize the most retirement income, meaning anyone retiring sooner than that will have to find a way to cover their expenses without depending on their Social Security benefits.

A retirement plan for the working 99 percent
Retirement income scorecard: Systematic withdrawals
Retirement income scorecard: Immediate annuities
What are the best retirement calculators?

The reported increase in retirement savings is indeed good news, and I don't want to be the wet blanket who spoils the good news. But to celebrate the good news about average retirement savings and ignore the facts means you're truly an optimist -- one who sees the glass as one-eighth full instead of seven-eighths empty. Just don't listen to the sound bites on average savings amounts and conclude that you'll be OK. There's still plenty of room for improvement when it comes to Americans' retirement savings.

The best step is to do your own calculations to see how much you need to save, given your own circumstances and existing retirement savings. The series of posts I'm writing this week and next are a good place to learn more about using online retirement calculators for this purpose. Be prepared to adjust your expectations regarding when you'll retire or how much money you'll have to spend. Only then can you really gain some confidence about your own retirement.