The reason most people are unprepared is because they have no idea how much they should be saving each year to accumulate the necessary financial assets for retirement. Since they don't know, or aren't terribly interested in finding out, they don't do much about it.
But if you're a regular reader of personal finance columns, I bet you have some idea of how much you should be saving and how much you'll need.
Every personal finance writer I know understands that Americans are in a severe savings deficit, and consistently writes about the need to save more money. At a minimum, you've got to be saving 10% to 15% of your pay every year if you want a fair chance of building assets for retirement. So if you've been reading these types of columns, you're probably concerned about making sure you're saving enough and it's likely you've made some changes to increase your savings rate.
Personal finance writers also generally agree on the amount of income you can expect from your savings during your retirement years. You've probably seen a number of articles on these figures. A good estimate is that you can expect somewhere between between a 4% and 5% inflation-adjusted distribution each year, depending on market conditions. That means if you want $75,000 of income from your investments, you'll need somewhere between $1.5 to $1.87 million in savings to generate those distributions.
Personal finance writers also know that most Americans carry too much debt. That message has probably been hammered into your head, and then reinforced by the realities of the housing market. If you've been reading columns about debt, that's probably caused you to question how much debt you have, and then do something about paying it down and lowering your interest rate.
While many Americans are clueless about their retirement preparedness, it's basically because they don't spend any time trying to learn about it. Reading is a powerful financial tool. Over time, you'll pick up all kinds of ideas on how to budget, reduce debt, increase savings, reduce investment costs, reduce interest rate costs, make prudent investment decisions, make good insurance decisions, and the list goes on.
Every writer has a little different take on how to accomplish all of these things, and some approaches will work better than others depending on your circumstances. And no single column or idea will solve all of your personal finance challenges.
But the value of reading about all these things is that the totality of the information helps you build a certain "institutional" knowledge about finance. That knowledge creates certain habits and skills that carry over into the diverse aspects of your personal finances. You start thinking more critically about financial choices and analyzing financial matters becomes easier. So the more you read, the more likely it is that you'll make smart financial decisions.
While it's nice to study the retirement readiness issue and then lament our national lack of preparedness, in the end, it comes down to each individual taking a personal interest in his or her own financial security. Only you can do that.
Bottom line: Keep reading, you're bound to increase your odds of a secure retirement.
Learn More: Want to learn about a simple way to manage your personal finances and prepare for retirement, investigate my new book Your Money Ratios: 8 Simple Tools For Financial Security, available in bookstores and at amazon.com The Wall Street Journal called the book "one of the best finance books to cross our desks this year." WSJ 12/19/09.