Well apparently many middle class people are not planning on being able to retire. In this article at MSN, people are talking about not saving for retirement. The first couple in their 70s were lucky to inherit $400k from their parents. This helped them get into a retirement community.
However, experts are predicting people can no longer count on substantial inheritances to bail them out. They also cannot count on SS or a pension to replace their income.
People in general have no idea how much they have to save. They expect a miracle. This is the reason why I don't believe we can switch SS over to an individual account. People are depending on it too much. Are we really going to allow our parents/grandparents to eat dog food?
If you need $40k/year to retire you need about $1M saved to generate that income. This $40k is assuming you have a $12k SS and no pension. This will come to about $52k/year (close to the median salary of $48).
But will that really be enough? Can you live on $52k gross? That's the other question being raised, how will retirees manage the rising medical costs? Before it used to be picked up by employer provided insurance. With cuts to pensions and medical plans how will these retirees manage with medical bills? Will these bills replace the costs of raising their kids? I think so.
It's sad that so many people have nothing saved nor any idea how much to save. But it's better to start later than never. It's better to try to fix your situation than sitting there saving nothing.