How Seriously Should You Take Retirement Savings Calculators?

You punch some numbers into a retirement calculator, and the results are so frightening you want to run away: It says you should have $500,000 saved by now. Or $1 million. Or is that $2 million for a couple? Or maybe it's eight times your salary.

How seriously should you take all those stories about how much you need to save for retirement? Very seriously, no matter what your age is, experts say.

How far you're falling short is scarier than any horror movie. While the amount you need to save for retirement varies, the truth is that few people are saving enough.

"At the risk of sounding like Chicken Little and sounding like the sky is falling, I'm going to suggest that people take it a lot more seriously than they have been," says Lynnette Khalfani-Cox, personal finance author and co-founder of AskTheMoneyCoach.com. "Overall, Americans are horrible savers, and our retirement accounts are woefully underfunded."

According to the National Institute on Retirement Security, 45 percent of working-age households have no retirement savings at all. Among people 55 to 64, average household retirement savings total only $12,000. For those near retirement who have savings, the average balance is $100,000 -- still not much money to finance the next 20 to 30 years.

"If you look at the way people actually behave, we're in serious trouble," says Liz Weston, personal finance columnist and author.

Exactly how much you need for a comfortable retirement depends on a variety of factors, including where you live, what sources of income you have beyond Social Security and what you consider "comfortable."

The average Social Security payment for retired workers in 2014 is about $1,300. For 22 percent of married couples and 47 percent of single people, Social Security accounts for 90 percent or more of their income in retirement, the Social Security Administration reports.

The rule of thumb for retirement accounts is that you should withdraw no more than 4 percent a year. If you have $100,000 in savings, that means $4,000 a year, or about $333 per month.

If you receive the average Social Security payment for this year and have no other sources of income, that would give you only $1,633 a month to live on. A couple with $100,000 in savings would have $2,933 a month. (You can get a personal estimate of your Social Security benefits on the SSA website.)

Those lucky enough to have a monthly pension from a former employer -- down from about two-thirds of workers in the 1970s to less than a quarter of them in 2007 -- can add that source of income. "There is a huge advantage to that pension because the money comes no matter what," Weston says. "That life is gone for most of us. It's going to be entirely up to us if we want to have a comfortable retirement."

When calculating how much you will need for retirement, factor in whether you'll need to pay a mortgage or rent, as well as other living expenses. Don't forget that even with Medicare, you'll still have health care expenses, from prescription drug plans and co-payments to home health care and nursing home expenses. A serious illness or the death of a spouse can quickly unravel your well-laid plans.

"People need to save a lot more than they think, mainly because there are so many retirement risks and so many retirement unknowns that can do you in," Khalfani-Cox says. "You don't want to be a bag lady at 86 because you ran out of money."

Living to 86 or beyond is likely. According to the Centers for Disease Control and Prevention's National Center for Health Statistics, a person who was 65 in 2012 can expect to live to almost 85, slightly older for women and slightly less for men.

While 50-somethings are worried now about falling short of their needed retirement savings, 20-somethings should also be thinking about the future.

"Ideally, I'd love to see everyone start saving for retirement from their very first paycheck," Weston says. She advises young people to think not so much about retirement, but about saving for the life they want at all stages. Being ahead on savings may provide you the flexibility to take time off to stay home with kids, pay for a trip around the world or survive being laid off in your 50s.

Compound interest rewards early savers. Each $1,000 you save when you're 25 will grow to more than $20,000 by the time you're 65, at an 8 percent annual return. Each $1,000 you save at 35 will grow to only $10,000.

Waiting until you've paid off student loans and other debt to start saving, particularly if your employer matches your 401(k) contribution, is not wise, she says. "Nothing beats that early start," Weston says.

Whether you're 24 or 64, there are things you can do to boost retirement savings and ensure you can pay the bills, even if you live to be 100.

Here are nine things you can do to improve your retirement prospects:

Get your maximum 401(k) match. If you have a job and your employer offers a 401(k) match, contribute at least as much as you need to get all the matching funds. Not only do you save on taxes, you get a 100 percent return on your initial investment.

Cut your budget now to boost your savings. Look at where you spend your money and calculate where you can cut back on expenses. If you're fully funding your retirement accounts, save for a house, vacation, your children's college education or unexpected problems that might crop up down the line.

Downsize before you retire. Many empty nesters expect to sell the family home and perhaps move to a city with a cheaper cost of living when they retire. But there's nothing to keep you from downsizing while you're still working. You could move to a cheaper neighborhood in your current city, a new town nearby or closer to where you would like to retire.

Put retirement savings ahead of your children's college educations. Don't raid your retirement funds to put your children through college, and don't borrow to pay their tuition. They will have plenty of time to save and pay back any loans.

Plan to work longer -- but know it may not be up to you. Many people who hope to keep their jobs until full retirement age find themselves pushed out way before. Getting another job, even if it pays much less, is a better financial move than drawing early Social Security or living off the retirement funds you worked so hard to stash away.

Delay drawing Social Security. Each year you delay drawing Social Security after age 62 adds about 8 percent to your benefits. You can maximize monthly benefits by waiting until you're 70. For some, it pays to live off savings to delay Social Security. "You can't get guaranteed returns like that anywhere else," Weston says.

Continue working after you retire. That could mean consulting in your field, having a booth at the flea market, helping with occasional projects such as the U.S. Census or being a greeter at Wal-Mart. Any money you earn is money you won't have to withdraw from savings.

Consult a financial planner. For those who have retirement savings, it's important to invest them well. A fee-only financial planner -- who provides advice only and does not sell investments -- can help you evaluate and refine your financial plans.

Have a backup plan. No matter what plans you make, illness, death, health problems or job loss can derail your agenda. "People make up these plans based on the perfect scenario," Khalfani-Cox says. "What if the perfect storm happens instead of the perfect scenario?"