An all-American recipe for a retirement disaster

Many Americans' retirement prospects appear less than sparkling.

The country is facing a retirement crisis as its citizens live longer, which will result in greater demands on their assets. Yet many workers are failing to save enough -- or anything at all -- for their golden years, according to a new study from investment firm BlackRock.

Four out of 10 Americans said they haven't started saving for retirement, either through an employer program or their own savings, according to the BlackRock Global Investor Pulse Survey, which polled 27,500 people across 20 nations, including 4,000 Americans. The study also found that relatively few Americans are taking steps to ready themselves for a longer retirement given today's prolonged life expectancies, with only one-third of U.S. workers saying they're either socking away more money or reducing spending to prepare.

"In 1950 the life expectancy was 68 and now it's closer to 80, so that means that this whole generation of Baby Boomers is going to live in retirement 20 to 25 years, [compared with] the previous generation of 14 years," Robert Kapito, president of BlackRock, told CBS News. "And while that is the case and people recognize this, only about two-thirds of workers have saved anything, and most of them have less than $25,000. I don't know how you live, but I don't think that's going to be enough for people in retirement."

BlackRock is the world's largest money manager and sells investment products such as mutual funds and exchange-traded funds.

Even when Americans do put away funds for retirement, they're often making an investment misstep that could lower their long-term financial prospects: Many are keeping the majority of their investments in cash, the study found.

Almost two-thirds of total U.S. household savings and investments are held in cash and cash-related products, according to the survey. That's higher than in many other regions, such as Asia, where investors keep only about half of their savings and investments in cash.

On top of that, Americans are also planning to add to their cash holdings during the next year, the study found. Households hold an average of about 18 percent of their investments in stocks, according to BlackRock. with the rest in bonds, property and other assets.

So what's wrong with keeping a healthy stockpile of cash on hand? After all, financial planners often advise Americans to keep three-to-six months of cash at the ready in order to carry them over in emergencies.

The problem, Kapito explains, is that keeping investments in cash or cash-related products in today's low-interest rate environment means that many Americans are losing out on potential returns.

"Another startling factor is that people are holding more cash than any other time in their portfolios," he noted. "And cash is earning nothing. So the longer that they are holding cash, the further and further they are getting behind in saving for their future."

Of course, U.S. workers have their reasons for leaning so heavily on cash. The top motivation? It makes Americans feel safe, the study found.

That could be a reflection of the fallout from the Great Recession. And while the economy is showing signs of improvement, most Americans remain glum about the country's financial health, with only one in four saying they believe the U.S. economy is improving. Only 27 percent of American respondents said they believe the job market is improving.

While it may seem as if U.S. workers are in denial about the financial realities of retirement, the study found that three-quarters are concerned about being able to live comfortably once they step back from full-time work.

The gap between the reality of Americans' low participation in saving for retirement and their very real concerns about running out of money may reside in the economic realities facing many workers: Stagnant wages combined with a higher cost of living means many don't have two nickels to rub together. Three-quarters of Americans said they're finding it difficult to both save for retirement and handle their day-to-day expenses.

With the shift to investment plans such as 401(k)s, that puts the onus on workers themselves to contribute money to their retirements. So does that mean Americans are slacking off? Not necessarily, as some might simply be unable to save more because of factors beyond their control. Respondents cited issues ranging from low earnings, high living costs and unplanned expenses as reasons why they can't set aside more.

Interestingly, the generations that felt the most squeezed financially are Baby Boomers and Gen Xers. The least-stretched generation is the so-called Silent Generation (generally defined as those born between 1928 and 1945), with the Millennials following on their heels. By contrast, Millennials (those born after 1980) might be more optimistic because they had less to lose when the recession hit, Kapito noted.

"A lot of them weren't living in homes that went down in value, and a lot of them didn't experience as much of a loss as some of the other generations," he said.

Most Americans don't have that much socked away for retirement, either. While some experts say retirees will need $1 million saved to live on $40,000 a year in retirement for 30 years, most workers have far less than that, even those who comparably well off.

On average, each American has saved a total of only about $58,000 for their retirements. For affluent investors, or those with at least $250,000 in investible assets, the average retirement savings is $342,592, which means they are better prepared to face retirement than the rest of U.S. workers. For those with less than $250,000 in investible assets, the average retirement account amounts to only $29,358.

It may be no surprise that men are better prepared for retirement than women, given the wage gap that still exists between the genders. With women making 78 cents for every dollar earned by men, that means female workers may simply have less to work with. BlackRock found that women have $34,881 saved for retirement, less than half of the $76,787 saved by men, on average.

Almost two-thirds of Americans say Social Security will be crucial to their ability to support themselves once they retire. But Social Security was designed only to "supplement your income," Kapito said. With the switch away from traditional pensions to 401(k)s, Americans need better financial education about issues such as how keeping their savings in cash in a low-interest-rate environment is harmful in the long term.

"Governments are going to be under pressure to care for the elderly," he noted. "Your parents are going to move back in to live with you. That could be frightening for some people. People spend the most on health care during the last 1o years of their life. If they don't have any money to live on, who's going to pay for that?"