Half of Americans will have to reduce their lifestyle in retirement; what about other nations?

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In spite of rising home values, and in spite of a runaway bull market, 50% of working-age households will still be forced to live a lower lifestyle in retirement.

That's according to a new report on the National Retirement Risk Index from the Center for Retirement Research.

The Center noted that, since the last time the Index was updated three years ago, "low unemployment, rising wages, strong stock market growth, and rising house prices... should have improved households' preparedness for retirement." They did, but only by 2%. And that still leaves fully Half of American Households in a tight spot.

"Many of today's workers need to save more and/or work longer to achieve a secure retirement," the researchers concluded. Let's take a look at two critical reasons for this, and what people should do now to protect themselves:

Problem #1: People continue to live longer, but aren't working longer

According to the Social Security Administration, 25% of people turning 65 today will live past 90, and one out of ten will live past 95, yet most financial planners base their projections of how much money you'll need on your living to age 85 or so.

What if you're one of the lucky ones who hangs on until 100 or longer? And just how "lucky" will you feel if you can't provide for yourself during those final years?

Solution: Assume you'll live to at least age 100 when determining how long your money will need to last you.

Problem #2: Underestimating health-care and long-term care costs in retirement

The numbers are shocking, and almost no one is accurately accounting for this: A 65-year-old couple retiring now will need $250,000 just to cover out-of-pocket health-care costs during retirement, plus another $255,000 to cover one average stay for one person in a nursing home.

Whoa! That's over half a million dollars you'll need just for medical care... but most people close to retirement don't even have that much in total retirement savings.

Solution: Increase the amount you save every single year, and put more of your savings in financial vehicles that are safe and sure to grow over the years.