Older workers feel on track for retirement. Are they?

Buoyed by record-high stocks and nearly eight years removed from the Great Recession, most middle-aged and older Americans say they’re at least somewhat prepared for retirement.

But a closer look at their plans, concerns and nest eggs reveals that many may not be as well-equipped as they believe.

Fifty-nine percent say they’re very or somewhat prepared for retirement, according to an Ipsos/USA TODAY survey of 1,250 adults ages 45-65 conducted in mid-January. And 65% are very or somewhat confident they’ll have enough money to hold them through their golden years.

What’s more, more Americans seem to be backing up their words with action. Sixty-five percent of those surveyed say they’re very or somewhat likely to put at least $100 toward retirement over the next six months, the second most likely expenditure behind paying off debt.

“It’s encouraging to see people are starting to think about retirement,” says Aaron Rheaume, a certified financial planner at the Financial Enhancement Group. “Some people stayed out of the market and didn’t feel they wanted to invest because of the recession. Now people are starting to play catch-up.”

The downturn of 2007-09 left nearly 9 million Americans out of work and U.S. stocks down by more than 50%. But all of those jobs have been recovered and 7 million more have been added. The 4.7% unemployment rate is less than half the 10% peak in 2009. And the Dow Jones industrial average hit a record 20,000 last week, triple its recession-era nadir.

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Yet the economic recovery has been tepid, leaving out or squeezing many workers. Many of those laid off are in part-time or lower-level positions, or drifting in and out of the labor force. Many depleted their nest eggs to pay living expenses while they were sidelined. Wage growth for most U.S. workers has been meager until recently.

All of that has taken a toll. Twenty-seven percent of the 45- to 65-year-olds surveyed have no retirement savings or investments and another 22% have less than $100,000. About 14% have at least $500,000 and 5% have $1 million or more. By contrast, nearly 50% believe they’ll need at least $500,000 to be comfortable and about a quarter say they’ll need at least $1 million.

Rheaume says there’s no one-size-fits-all benchmark for a retirement fund — despite the oft-cited $1 million standard — adding it depends on the retiree’s lifestyle and spending patterns. Still, he says, the number of aging Americans with less than $100,000 “is very concerning.”

Not surprisingly, there’s a stark contrast between lower- and higher-income workers. Of those earning $50,000 or more, 84% have retirement savings, compared to 45% of those with lower salaries, the survey shows.

Asked if he’s prepared to retire, Christopher Zell, 65, of Horseheads, N.Y., a  39-year technician at a network TV affiliate with $40,000 in household income, says simply, “Hell, no!” He has socked away about $150,000 in 401K and individual retirement accounts. That should add $7,000 or so in annual income to his $20,000 in anticipated Social Security. He notes he’s frugal – he buys cars on the scrapheap and repairs them -- and never takes weeklong vacations. And his small ranch house is paid off.

“I think I can get by,” he says, noting he would have amassed at least $250,000  but his wife’s stay in a nursing home for more than a year chipped away at their nest egg.  He adds, “At any moment, my wife’s health could fail, my health could fail … the stock market could crash.” Any of that would throw the couple off course.

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Many people are aware they’re falling short, with 77% strongly or somewhat agreeing they’ll need to save more to afford the retirement they want. So how can their seemingly inadequate savings and worries be squared with their overall confidence in their belief they’re on track?

While the economic recovery and market rally have left many people better off, “I think (many others) are kidding themselves,” Rheaume says. “We’ve had seven years of a pretty good economy and market, and people are feeling good.” But he adds, “Are they doing the math?”

Donald St. Clair, a certified financial planner at St. Clair Financial, says, “There’s a certain amount of dissonance … People are suffering. People are behind. They know they don’t have enough. But they don’t know how to deal with it.”

One way may be to tighten their belts. Seventy-eight percent of those surveyed plan to cut back on spending after they retire. Yet both St. Clair and Rheaume are dubious.

“Most people don’t do that,” Rheaume says. “They don’t want to change the lifestyle they’re accustomed to.” While some expenses, such as dry cleaning, decline, travel and others are likely to increase.

Susan Farrow, 60, a part-time medical writer in Chattanooga, Tenn., says she’s “somewhat prepared” for retirement. Farrow and her husband, Doug, a life insurance salesman, are paid about $90,000 from their jobs and her disability income. (People on disability can earn a limited amount of income.) And they’ve put about $275,000 to $300,000 in annuities and 401(k) plans for retirement. That should generate $15,000 to $20,000 a year to supplement an estimated $30,000 or so in Social Security when they hang it up within five years.

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Their retirement income “will be less but when you think of expenses you have when you’re working (such as clothing and gasoline), that’ll be different,” Susan says.  

After Doug was out of work for several months last year, “It was pretty scary,” Susan says. Now, “It’s all about retirement,” she adds. “It’s not like we’re looking at life like — let’s get a new car or go on an expensive vacation.”

Here’s proof many Americans know they need to do more to catch up: While 43% plan to retire by age 65, a roughly equal share say they’ll wait until 66 or older. “If you looked at that in 2000, a lot more people were thinking of retiring earlier than 60,” St. Clair says.

Then there are those who seem to be set but are still jittery. Marian and Jim Wall, both 56 and bankers, have about $750,000 to $999,999 in retirement savings. The couple, who live in Thousand Oaks, Calif., live frugally, forgoing vacations and clipping coupons.

But Jim lost his six-figure job last year when his employer shifted to more contract workers, a trend that has intensified since the recession.

Despite Marian’s six-figure salary, “We felt a lot more secure about six months ago” when Jim was employed, she says. “I don’t think we do feel very secure.”