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Color of Money: Dreaming of retirement? Don't forget to plan.

Michelle Singletary on

WASHINGTON -- The go-to strategy to encourage people to save for their retirement years has been to frighten them with the numbers.

The average cost of retirement is more than $700,000, according to a study released this year by Merrill Lynch. If you want a swanky retirement, you'll obviously need more. Fidelity Investments estimates that health care and medical expenses alone will total $275,000 for the average 65-year-old couple retiring in 2017.

And then there's the scariest number of all. If you retire at 65, you could live another 25 years. The horror: You could outlive your savings.

This scared-straight approach is supposed to make us save more. But as television host Phil McGraw likes to say, "How's that working for you?"

It's not.

Despite dire reports of a looming retirement crisis, many households have little if anything saved. A GoBankingRates survey found that 55 percent of Americans have put away less than $10,000 for retirement.

"Ninety-two percent of working families have retirement account balances that do not meet recommended savings targets," wrote researcher Nari Rhee in a report for the National Institute on Retirement Security. "The 'American Dream' of retiring after a lifetime of work will be long delayed, if not impossible, for many."

Scared?

Don't be, says Chris Hogan, a former debt collector, banker and now financial coach for Ramsey Solutions.

Hogan's tactic is to motivate not intimidate. His book "Retire Inspired: It's Not an Age, It's a Financial Number" (Ramsey Press, $24.99) is the Color of Money Book Club selection for this month.

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