Consider health care
One area many people don't consider in their retirement planning is medical costs.
Often, younger workers assume that Medicare covers everything, but it doesn't.
After the age of 65, the average couple will spend about $260,000 out of pocket on health care, including insurance premiums and nursing home care, according to a 2010 study by the Center for Retirement Research at Boston College.
"The problem is most households don't have $260,000 in the first place," says Webb. "What it means is that in practical terms, a lot of households face the risk of impoverishment or ending up on Medicaid."