How much money Americans are saving for retirement—and how much you need if you want to retire by 65

Lesia Valentain | Twenty20

If you're hoping to retire by 60, like most young people are, or even a little later in your mid-60s, you might need to up your savings.

"Most American workers aren't saving at levels that will allow them to retire fully at age 65 at their current standard of living," researchers at the Stanford Center on Longevity conclude in a 2018 report, "Seeing Our Way to Financial Security in the Age of Longevity."

After considering factors such as the rate of return on investments, salary growth, life expectancy and Social Security benefits, the researchers project that, if you want to retire at age 65 and maintain your standard of living, you need to put 10 to 17 percent of your current income into a retirement account. And that's if you start saving as early as age 25.

If you wait until 35 to start, you have to save 15 to 20 percent of your income to retire by 65. Keep in mind that this amount does not include your short-term savings, so it would be on top of any money you're putting in an emergency fund, for example.

Most employees aren't saving nearly that much, according to the report: "Based on our estimation, families age 25-64 are currently only saving a median of about 6 to 8 percent of income toward retirement."

Here's the Center's breakdown of median contribution as a percent of income in work-based retirement plans for families at different ages.

Click to enlarge

Understanding that families could be using other retirement savings accounts besides employer-sponsored ones, researchers looked at how many households have IRA/Keogh accounts and the median balances.

Only 18 percent of families age 25-34 use a IRA/Keogh and just 36 percent of families age 55-64 use one, the Center finds, meaning "the shortfalls in employer-sponsored plans won't likely be made up by contributions to IRAs or Keogh accounts."

The report concludes that most Americans aren't on track to retire fully by age 65.

In order "to address retirement savings shortfalls," the researchers say, "American workers will need to adopt some combination of working longer, saving more, spending less, and making every dollar count by adopting efficient investment and retirement income strategies."

The definitive guide to retirement savings plans
The definitive guide to retirement savings plans

Separate research from the Stanford Center on Longevity from March 2018 suggested that the typical American would benefit from a later retirement age, too.

After analyzing 292 different retirement income strategies, the research team identified the best way for most people to withdraw their money in retirement. They called it the "spend safely in retirement" strategy, and a key component of it is delaying Social Security payments until age 70. That could mean working longer.

Currently, you can start receiving retirement benefits at age 62, and the full benefit age is 66 years and two months for people born in 1955. It will rise to age 67 for those born in 1960 or later.

According to the March 2018 report, "The best way for an older worker to implement the Spend Safely in Retirement Strategy is to work just enough to pay for living expenses until age 70 in order to enable delaying Social Security benefits. In essence, 'Age 70 is the new 65.'

"To make this method work, retirees may also need to significantly reduce their living expenses."

American workers will need to adopt some combination of working longer, saving more, spending less, and making every dollar count.
Seeing Our Way to Financial Security in the Age of Longevity
Stanford Center on Longevity

If you want to leave your full-time job before you turn 70, one option is to work part-time for those last few years and make enough to cover living expenses.

If working either part- or full-time until 70 is out of the question for you, though, the next best thing to do is to use a portion of your retirement savings to substitute for the Social Security benefits you're delaying. As Steve Vernon, head of the research team, tells CNBC Make It: "Suppose Social Security at age 65 would have been $20,000 per year and you're delaying it for five years. That's $100,000. So you set aside $100,000 and that's what you withdraw from age 65 to 70."

Ultimately, everyone's scenario is different, and people settle down at different times in their lives. To help you figure out the right amount to fund your retirement, try using a retirement calculator.

Most importantly, though, don't put retirement on the back burner. Doing so may push back your end date even more.

If you need inspiration to kick-start your savings goals, check out:

Don't miss: Suze Orman says 70 is the 'new retirement age'—and research backs her up

Like this story? Subscribe to CNBC Make It on YouTube!

How you can retire in 10 years if you're making $70,000 now
How you can retire in 10 years if you're making $70,000 now