No one wants to face being penniless in retirement, yet saving enough money to retire comfortably can be quite a challenge. In fact, the (U.S.) National Retirement Risk Index, which assesses data collected by the Federal Reserve's Survey of Consumer Finances, indicates that 52% of households are at risk of not being able to maintain their current standard of living in retirement. What's potentially even more worrying is that 20% of those at-risk households believe they are on track to retire with enough money. The study identified two factors likely to cause households to believe incorrectly that they have enough money for retirement: owning a defined-contribution plan such as a 401(k), and having a high income.

The reality of 401(k)s

If you have a retirement account and are making contributions to it, you have indeed taken an important step toward funding your retirement. However, you may not be funding it enough to guarantee income throughout your retirement. This is especially true if you waited to start making contributions until late in your career -- with far less time for those funds to grow, you won't have a chance to get high returns on your investments.

If you haven't already done so, pull up one of the many retirement calculators available online and punch in your current numbers. You may be surprised and disturbed by how much your savings will fall short by the time you reach retirement age -- or you may be pleasantly surprised!

Social Security cards and money

Image source: Getty Images.

The reality of Social Security

One common misconception is that retirees will be able to depend on Social Security benefits for the bulk of their retirement income, and 401(k) funds will just provide a little extra cash. In reality, Social Security benefits are likely to be considerably less than the income you've enjoyed during your working life. The size of your Social Security benefit depends on how long you've worked and how much you made while working. Take a look at your annual Social Security statement (or go to the Social Security website and check your statement online) to see exactly how much your benefits will be, and then ask yourself if you can really live comfortably on that much money.

As of December 2016, the average Social Security benefit was $1,360 a month. That's definitely better than nothing, but if it's your sole source of income, you'd better plan on living very, very simply. If you wait until age 70 to start claiming your benefits, the maximum Social Security benefit you could receive is $3538 per month. Again, that's not chicken feed, but if you've been making enough money during your career to earn the maximum Social Security benefit, then $3538 per month will represent a steep drop in income.

The reality of high income

Earning a high income now does not guarantee you a high income in retirement, because guess what? When you retire, that income will disappear. High income only helps your retirement if you're diverting a significant percentage of that income into retirement savings. Unfortunately, many households that earn a high income end up spending it all. They often reason that they will start saving "next year" or at some nebulous point in the future. The problem is, that point may never come, until one day these folks suddenly realize that they are nearing their planned retirement age and have saved little or no money.

Making reality match your expectations

Does all of this mean that your situation is hopeless? Absolutely not. The biggest problem is that many people simply don't realize they have a problem. Once you do realize you're behind on retirement savings, you can take steps to get caught up. Decide how much income you'll need in retirement in order to pay for whatever it is you plan to do (buy a second home, travel around the world, take up golf, do volunteer work for your favorite charity, etc.), then fire up a retirement calculator and find out how much money you need to have in order to create that much income. Once you know that, you can start working toward guaranteeing the retirement of your dreams.