While they were raising their three kids in North Caldwell, N.J., Ruth and Alex Karr found many ways to spend money that seemed preferable to investing it in retirement accounts.

"We always talked about putting money away," says Ruth Karr, 77. "But we always had something to spend it on -- the house, children, grandchildren. It took what we made to keep abreast."

So they never would have landed at Cedar Crest -- an upscale retirement community in Pompton Plains, N.J., with its own television studio, fitness complex and day spa -- if they hadn't inherited nearly $400,000 from Ruth's father about 20 years ago. The Karrs plunked down $150,000 to move into their two-bedroom ground-floor apartment here in 2003; they spend another $3,000 a month for maintenance, which comes from investments and Social Security. Inside a retirement community

"Until then we didn't have anything beyond a modest savings -- definitely less than $250,000, plus the house," says Ruth. "And I never thought I would get any money from my father. I guess I just never really expected to retire."

Financial advisers would cringe at the Karrs' story. Unforeseen inheritances aren't what clients are supposed to be planning for. Are Americans ready for retirement?

Given the financial state of many middle-class families, however, saving that 10% of income recommended by most planners is extraordinarily difficult. Yet, for those who dream of golden years like the Karrs', it can be an absolute necessity.

"People have no idea what they probably need to save," says Ron Kelemen, CFP, a fee-only financial planner with The H Group in Salem, Ore. "And I don't feel optimistic, especially when I read about what people have saved today."

Ready for the reality check? For every $1,000 a month that you want to collect in retirement, Kelemen says, you'll need to have put aside about $200,000, invested conservatively to get a 5% to 6% rate of return. So if you want to have an income of $72,000 a year -- $6,000 a month -- you should have about $1 million to $1.5 million saved in your retirement account.

Calculator: How much do you need to save for retirement?

And if $1.5 million sounds like a lot -- well, it ought to.

"That should be a wake-up call," says Kelemen. "Now I know a lot of people think their house is the ticket, and that they'll downsize. But I see a lot of McMansions going up. And I haven't seen all these giant inheritances. What I see instead are parents going through that money with higher health-care costs and,

because they're just living longer, with more elevated lifestyles."

Like many financial advisers, Kelemen tells clients not to bank on Social Security as a source of income -- especially if they are still in their 30s or 40s. Even the Social Security Administration offers a bleak assessment: Given the current rate of payouts and the expected number of retirees, the Social Security trust fund will be exhausted by 2041, and "there will be enough money to pay only 75 cents for each dollar of scheduled benefits." That's straight from the statement you get each year stating how much of a payout you can expect. How did you prepare for retirement?

"The middle class is hurt by the fact that two legs of the three legs for retirement are disappearing -- Social Security and pensions," says Andy Brincefield, CFP, a financial adviser with the Consolidated Planning in Charlotte, N.C. "They just can't count on Social Security the same way."

Talk back: Are you confident you'll have enough to retire on?

People are living longer now than when Social Security was created, they're drawing from the fund longer than originally planned. In 1940, five years after President Franklin Roosevelt signed the Social Security Act, there were just 9 million Americans who had reached their 65th birthday or beyond, according to the Social Security Administration. Sixty years later, 34.9 million Americans were in the same age range -- and they're a far healthier lot.

Calculator: What's your life expectancy?

Politicians have proposed several ways to revamp the Social Security system, hoping to ensure funds for later generations. One proposal calls for needs-based payouts, for instance. But no solution seems imminent.

Which brings us to the next problem: Not all of today's retirees will be happy to spend the next 30 years knitting ponchos for their grandchildren or sunning themselves at a golf-course community in Jacksonville.

Instead, today's retirees are taking trips. To the Himalayas.

"We have what we call ultimate challenge trips to Kilimanjaro and Everest Base Camp, and these very often involve retirees," says Kim Beck, marketing director for adventure company Mountain Travel Sobek. At more than $5,000 per person, not including airfare, these are not trips for those on a tight budget. Because many about to enter their golden years don't want to pull back on spending, financial analysts say you've got to plan -- and plan well ahead.

Doreen Johnson, 37, seems to be taking this advice. Even though Johnson thinks of herself as "not the best

saver," she says, she began contributing to a 401(k) starting with her first job after college, faithfully socking away 8% a year. In July 2007, when she started a new job as an executive assistant at a media and financial services company, she bumped that up to 10% -- and now puts an additional 3% into a stock savings plan.

"If I have money in my wallet I will spend it," Johnson says. "I want to have fun, which requires, in some way, a disposable income. But I figure I will need about $2 million to retire and I worry about that."

I worry, too. For my husband and me to reach even $1 million by retirement, we'd have to sock away about $15,000 a year in investments that earn 5% interest over the next 30 years. I don't see how that's possible right now -- between living expenses, the occasional ballet class and new winter gear for a growing child.

We do put aside a small amount, because I certainly don't believe I'll have an inheritance to lean on, nor Social Security. So I guess I worry -- in that way that makes financial advisers shudder -- that I too will never retire.

Take MSN Money's Retirement IQ Test to see how much you know.

Karr sees her own children procrastinating when it comes to retirement savings. She's not surprised -- they're just following in her footsteps -- but in this case, she wishes they wouldn't.

"Are my own children prepared?" asks Karr. "I would say not at all. I still worry about what I spend. My husband and I are pretty conservative. So if I had to do it all over again, would I have saved more? Absolutely."

Talk back: Do you feel squeezed in the middle class?

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Published Feb. 4, 2008