How to not outlive your money: Don't wing it on your 401(k)

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Without a plan for retirement, many people say they just plan to "wing it." Surveys show many workers feel overwhelmed by day-to-day financial pressures, worried about paying monthly expenses and job security.

While they may participate in their company's 401(k) plan or another workplace retirement plan, many workers don't know what to invest in or how much to save. As a result, they're not saving enough.

A new analysis released Tuesday by Fidelity, the nation's largest retirement plan provider, found the average 401(k) balance was $80,600 at the end of June, up nearly 11 percent from the same quarter a year ago. For steady savers who were continuously employed in a workplace plan for the past decade, the average balance rose to $211,800, nearly 19 percent higher than a year ago.

But for many, that's still not enough money to ensure a secure retirement. Not when, according to Fidelity, the average 65-year-old couple retiring today will spend about $220,000 on health-care costs alone.

Just last week, Fidelity Investments noted that families are also saving more for college, but it's still not enough to cover the likely costs.

(Read more: Financial Q&A: Your 401(k) and how to catch up)

Reality is setting in with American workers. A poll conducted earlier this summer by JPMorgan Asset Management found that while half say they would like to retire before the age of 65, only 20 percent believe they will realistically be able to do so. This leaves two options: working longer or saving more.

But how much more should you save?

Figuring out how much money you may need in retirement income is an important factor in determining how much you need to save now. Assume you want to retire at age 67 and may live until your 93rd birthday.

(Read more: Boomers find second acts pursuing encore careers)

Fidelity took a look at how much 401(k) investors at various ages would need to save for every $1,000 they'll need to generate in retirement income to make their money last, assuming a 5.5 percent annual return and not taking taxes into account. Here's what Fidelity's analysis showed:

  • A 25-year-old just starting to save would only need put away about $160 each month to generate $1,000 in monthly retirement income.
  • Start saving at age 35 and you'll need to contribute almost $270 a month to generate the same income.
  • For every $1,000 in monthly income, a 45-year-old just beginning to save for retirement would have to put away nearly $500 every month.
  • A 55-year-old just starting to build a nest egg would have to make monthly contributions of $1,154 for every $1,000 in monthly retirement income—that's double the amount of a 45-year-old and more than seven times the sum that a 25-year-old would need to stash away.

"The rule of thumb is that you should save anywhere from 10 to 15 percent of your income towards retirement," said Beth McHugh, vice president of market insights at Fidelity. Yet, most workers are only putting away 6 to 7 percent of the annual income into a 401(k) or workplace retirement plan, the firm has found. Some who have delayed retirement savings may have to put away 20 to 25 percent of their income.

Smaller increases can also help. "Even incremental changes—a 1 percent change today—can make a big difference and create hundreds of dollars in potential income in retirement," McHugh said.

(Read more: Retirement alchemy: Less becomes more)

Mike Alfred, CEO and co-founder of Brightscope, a company that analyzes and rates 401(k) plans, agrees that the amount of savings is the most important factor when it comes to retirement savings.

"Most people aren't saving enough money. In the absence of saving an adequate amount there is no other magic bullet," he said. "You can choose the best investments in the world but if your only putting $500 a year into your IRA or your 401(k) plan you're just not going to get there."

—By CNBC's Sharon Epperson. Follow her on Twitter @sharon_epperson.