This $14 Trillion Problem Could Hurt Millions of Americans (Hint: It’s Not the National Debt)

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It shouldn't come as too much of a shock that many Americans aren't saving as much as they should be for their retirement; but the magnitude of the situation may be surprising. According to a recent report, the shortfall -- that is, the gap between what Americans have saved and what they should have in savings -- could be as high as $14 trillion. Here's how to play catch-up if you've fallen behind.

The data is alarming
In a study conducted by the National Institute on Retirement Security (NIRS), Americans' retirement shortfall is $14 trillion, based on the current balances of retirement accounts. Even when taking into account other assets such as pensions and non-retirement savings, the shortfall is still a staggering $11.1 trillion.

When you include all net worth -- homes and other assets included -- there is still a $6.8 trillion shortfall. And even with the most generous estimate, there's a shortfall of about $28,000 for every American adult. In other words, the average American would need this much more in their retirement accounts just to be on track to have enough income to maintain a comfortable lifestyle throughout their retirement.

Open an IRA and take advantage of the benefits
If you have a shortfall in your own retirement savings, my personal favorite way to remedy this is with an individual retirement arrangement, or IRA. And the reason I prefer this is that it lets you take an active role in your retirement planning.

IRAs come in two main varieties: Traditional and Roth, and both can be excellent choices. Both account types allow for up to $5,500 in annual contributions, with an extra $1,000 if you're over 50. (Note: this is a total contribution limit. You can't open both a traditional and Roth account and put $5,500 into each one). In both account types, your money is allowed to grow and compound without having to worry about dividend or capital gains taxes each year.

Speaking of taxes, that's the big difference between the two types of IRAs. With a Traditional IRA, you might be able to deduct your contributions on your tax return each year depending on your income, and you'll pay taxes once you withdraw the money in retirement. This is known as a tax-deferred account.

The Roth IRA works in the opposite way. You can't deduct your contributions, but any qualified withdrawals will be tax free. The main difference is when you prefer to receive the tax benefit.

Once you open an IRA, you can invest in just about any stock, bond, or mutual funds. If you want to use your retirement savings to buy shares of Apple, Facebook, or any other companies you like, you can do it in an IRA. This is the number one reason to invest in an IRA -- it can deliver strong returns over time. You can read more about how to choose great stocks for your IRA here, or by browsing Fool.com for some ideas from our experts.

Increasing your 401(k) contributions could make all the difference
Even though I thoroughly enjoy investing and the challenge of choosing my own stocks, I realize that not everyone does. Lots of people can think of no worse way to spend their time than by looking over their retirement investments – and that's OK.

If you're in this group and are facing a retirement shortfall, you may want to consider increasing your contributions to your 401(k), or other employer-sponsored retirement plan. This way, you can simply have more money withheld, and let the funds in your plan do the work for you. If your employer is willing to match a certain amount of contributions, that amount should be the bare minimum you contribute. You are allowed to contribute more than your employer is willing to match, and in some cases, a lot more.

For the 2015 tax year, the IRS allows for elective deferrals -- not including your employer's contributions or any mandatory contributions -- of up to $18,000. And if you're over 50, you can contribute an additional $6,000, for a total of $24,000.

This may sound like a lot, and it is; so you don't need to "max out" in order to make a difference. Even an extra 1% of your salary can make a big difference over the long run. Consider an example of a 30-year old who earns $50,000 per year, and whose employer is willing to match contributions of up to 3% of salary. Assuming returns averaging 7% per year, just look at the difference a percent or two can make.

Note: calculations assume 2% average annual salary increases and 7% annual investment returns. (The S&P's 20-year historical average is 9.5%, for reference.)

It's important to note that investment performance is not guaranteed, and that this is a simplified example. However, the fact remains that a small increase can make a big difference over time; so ask yourself the question, "Will I really miss 1% of my salary?" If the answer is no, a 401(k) increase may be in order.

Every little bit helps
Even if you can only spare a small amount of money to invest, that's no excuse for doing nothing. Most brokerages allow you to open an IRA with no minimum balance, so you can literally get started for a few dollars. Deposit a few dollars here and there into a retirement account, and you might be pleasantly surprised at how your money adds up over time.