Working Americans households probably will experience a potential income drop of 28% in retirement, and 38% retiree households report not having sufficient enough income to cover monthly expenses. This is according to new research from Fidelity today that shows retirement income gaps could force significant sacrifices among workers retiring tomorrow and in 50 years.

The Retirement Savings Assessment, the first industry analysis that provides actionable and quantifiable steps across three generations that quantifies the potential monetary benefits of five straight-forward steps — such as adjusting asset allocation and annuitizing retirement assets.

“While there is evidence that Americans are saving more for retirement, our analysis finds that they need to take additional steps to prepare for the future and take better control of their personal economy,” says Kathleen A. Murphy, president of personal investing, Fidelity Investments. “The study underscores the importance of early engagement in the retirement planning process and the potential impact these five actionable steps can have in helping address the retirement income gap that many Americans are facing today.”

1. Adjusting asset allocation. Twenty-one percent of those surveyed are invested too conservatively with limited exposure to stocks, based on their current age and planned retirement date. This highlights how many investors have improperly allocated their assets and are losing the long-term earnings potential of stocks.’

2. Increasing savings. It may sound like a no-brainer, but respondents indicate they saved an average of $3,500 in 2011, with most still not fully benefiting from the tax-advantaged/deferred savings potential of their workplace or individual retirement accounts. This is especially important for younger investors, who have a longer timeframe and more potential for their money to grow.

3. Adjusting retirement date. The average planned retirement age is 65, but delaying full retirement by a couple of years or continuing to work part-time can help preserve assets so they have a better chance of lasting through retirement. This tactic can be especially powerful for boomers, many of whom Fidelity found are facing a potential drop in retirement income. Recent studies have shown this may already be happening.

4. Annuitizing retirement assets. Fewer than one-fifth of retirees are using an annuity to create a guaranteed lifetime income stream to cover essential expenses, but it can be an important tool to help ensure savings last through retirement – particularly if a retiree lives beyond his or her mid-eighties.

5. Tapping into home equity. Seventy-two percent of respondents own a home and one-third of homeowners have no mortgage. Through downsizing and expense reduction, this home equity could be harnessed to generate income in retirement.

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