2030: A "perfect storm" of global resource shortages

 Published: Monday, 23 Sep 2013 | 12:00 AM ET

 

By: John W. Schoen | CNBC.com Economics Reporter

 

 

Majority World | UIG | Getty Images

 

A child drinks water from a WASA run tube well, at a slum in Rayer Bazaar, in Dhaka, Bangladesh.

Corporate leaders give themselves a lousy grade on their efforts to develop sustainable supplies of natural resources strained by a growing global population and a rapidly expanding middle class of consumers.


With demand for everything from food and water to rare earth minerals expected to continue to rise, companies and governments are increasingly undertaking a variety of efforts to develop a more sustainable supply chain, one of the topics highlighted at the Clinton Global Initiative's annual meeting.
 
Among other projects, the Clinton Global Initiative last year helped launch Sustainable WasteResources International to tackle the health and environmental impact of billions of tons of waste produced worldwide.

(Read more: Clinton Global Initiative is 'mobilizing for impact')
This year's week-long conference will bring together more than 1,000 global leaders—some 60 current and former heads of state, including President Barack Obama, along with NGO and philanthropy leaders from over 70 nations— to brainstorm ways to head off increasing strains on the natural resources that keep the global economy on track.
They have a lot of work ahead of them, based on the main finding of a recent survey conducted for the U.N. Global Compact, the world's largest corporate initiative to develop a more sustainable global economy. The survey of more than 1,000 CEOs across the world—the largest of its kind ever conducted— found that two-thirds believe the global economy is not on track to meet the demands of a growing population.

Despite wider awareness of the need to adopt sustainable practices "business efforts on sustainability may have plateaued," according to the report, conducted by Accenture and released Friday.

In the short term, the tough economic climate has made it more difficult for businesses to justify these investments. But the long-term outlook hasn't changed, according to Craig Hanson, director of the People and Ecosystems Program at the World Resources Institute.



"The outlook does look dire for many types of natural resources if we continue on the status quo," he said. "The tough issue is that many of the places that face those resource constraints don't have the technical or human capacity to adjust and deal with an acute shortage."

But corporate CEOs report that they're having a harder time justifying the investment in overhauling their supply chains to promote sustainability. "Signals from consumers are mixed" and "investor interest is patchy," according to the U.N. Global Compact study.


The CEOs also say that for these efforts to succeed, both businesses and governments need to collaborate better to apply solutions across industries and sectors. Both also need to better share the financial impact.


Global businesses may also feel less urgency to advance sustainability at a time when sluggish economic growth has eased the upward pressure on supplies of raw materials and commodity prices. Ongoing advances in supply chain management also may have sparked hopes that future technologies may help head off looming resource crises.


German software giant SAP, for example, is among a broad range of companies helping businesses and governments apply new processes and technologies to squeeze more efficiency out of a variety of resource supply chains. Rapid advances in data analytics, for example, are helping track down and reduce waste.


"There is always the hope that you'll find more," said Peter Graf, chief sustainability officer at SAP, one of the companies participating in the Clinton Global Initiative conference. "Mankind has become more and more sophisticated as over the last 100 years to go and exploit those resources. The problem right now is that demand is outgrowing our ability to find new resources. The risk is that we're outgrowing our ability to find new stuff."

The relentless growth of human population in the modern world has brought dire warnings of resource shortages ever since British economist Thomas Malthus more than 200 years ago predicted that overpopulation would bring a catastrophic famine.

Since then, tight supplies of raw materials and commodities have typically spurred investment in new production, and research in efficiency and substitution of cheaper materials have helped head off shortages. As a result, for much of the last century, the global economy was fueled by a seemingly endless supply of cheap, abundant raw materials.


But the rapid expansion of the global pool of middle-class consumers is straining the world's supplies of natural resources—from energy and minerals to water and food—at a pace that would make Malthus say "I told you so."
"It's not the total number of people, it's the number in the consuming class," Fraser Thompson, a senior fellow at the McKinsey Global Institute, co-author of a 2011 report on resource sustainability. "That's where the real transformational change is happening."


The numbers are stark. While the current world population of about 7 billion is projected to top 8 billion by 2030, almost all of that growth is expected to come in the developing world. That means the current population of consumers— people with more than $10 a day to spend— is expected to more than double from 1.8 billion to 4.8 billion.

Still, experts in sustainability say the story of the human race doesn't have to end badly.
After dire predictions of "peak" oil a decade ago, for example, rising energy prices spurred investment in new production. New technologies prompted a boom in production of "unconventional" shale deposits. Consumers have switched to higher efficiency cars, bending the demand curve for gasoline, which has been in decline since 2007.

But the solutions to energy shortages are more difficult to apply to resources like water or food, especially in the developing world where demand is expected to grow even more rapidly than at any time in history.

(Read more: How Google Earth surveillance will protect forests)
As Thompson explains, much of the resources that exist are in harsh geographic locations with limited access to infrastructure. And much of the supply is in countries fraught with political risk. That makes sustainable resource development more difficult.

One solution is to use a much larger share of resources more than once. But while it's easy enough to recycle an aluminum can; it's a lot harder to reuse the raw materials used to make cars or shoes.

"The only way out of that is the way we design products (for recycling) in the first place," according to SAP's Graf. "Because a lot of what we do right now ends up on landfills."

Those technologies have the potential to substantially alter the projections of looming shortages, according to Fernando Miralles a hydrologist at the Inter-American Development Bank (IAB).

"What people fail to consider is that these trends will drive the development of different approaches and different technologies that will help solve the problem," said Miralles.

"Trying to say that you're doomed because you're not going to be able to solve it with today's technology is a self-defeating premise."


The IAB, for example is helping officials in Argentina develop new water infrastructure, introduce more efficient agriculture practices and spur conservation in the northern part of the country where both urban residents and farmers face a projected 20 percent decline in water supplies by 2050 because of climate change, he said.


Many of the world's major cities lose as much as 50 percent of their waiter supply to leaks; rebuilding aging infrastructure could go a long way toward heading off shortages. Improved efficiencies in agriculture—the biggest source of water demand—could stretch supplies by substituting drop irrigation for sprayers or lining irrigation ditches with plastic.


As Graf sums it up: "We can sit here and hope and wait that research or someone will come along and figure it out and let us continue to do what we've done in the past, or we can take the bull by the horns and optimize our use of resources today."


—By CNBC's John W. Schoen. Follow him on Twitter

@johnwschoen.

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The Emerging Irony of US Energy Independence

 

 Published: Monday, 3 Jun 2013 | 1:02 PM ET

 

By: Michael Levi

Getty Images

Oil workers on a hydrofracking site.

 

For the first time in decades, pundits are talking seriously about U.S. energy independence. Yet the changes are anchored in precisely the opposite phenomenon. The United States is more entangled in the global energy system than it has ever been—and ever-rising world demand for energy will remain at the root of transformations in American energy for years to come.
It's richly ironic.

Take the emergence of shale gas as an economic engine and geopolitical disruptor. Entrepreneurs would never have figured out how to efficiently combine horizontal drilling and hydraulic fracturing—the masterstroke that has allowed companies to unlock natural gas trapped in shale—if rising natural gas prices in the 2000s had not created an economic incentive to experiment.
Those high natural gas prices, in turn, can be traced to ever-higher prices for oil, since the two fuels competed in U.S. industry until a few years ago, keeping their prices roughly in line. And those oil prices? We would never have experienced them if rapidly growing use in China and beyond hadn't strained available supplies.


One can tell an even more powerful story for the U.S. oil boom that in 2012 led to the largest ever one-year increase in American crude production. Tight oil, which is driving the gains, is benefiting not only from the technologies first developed to extract natural gas, but is being buoyed even today by continuing high oil prices. Shale gas has largely survived a collapse in U.S. natural gas prices, but most tight oil development would not survive an oil price crash. The growth we're seeing from Ohio to Texas thus continues to ultimately owe its continued strength in large part to ever-rising oil demand overseas.

'I'm Not Concerned': Saudi Oil Minister

Friday, 31 May 2013 | 5:09 AM ET 

 

Ali Naimi, Saudi Arabia oil minister, tells CNBC he is not concerned about U.S. shale oil or of a slowdown in Asia. 

 

A similar pattern prevails for Detroit and the U.S. automobile industry. In the last seven years, U.S. oil consumption has fallen by about 10 percent, driven by new technology, stricter regulation and higher oil prices. (This number is big: It's about the same as the gain in U.S. oil production.)
But it's not just the high prices that can be traced to developments overseas. During the 2000s, as more major international powers (notably China) emerged as big oil consumers, U.S. policymakers became seized with the national security risks that U.S. dependence on oil continues to create. Part of their response was to mandate better fuel efficiency for cars and trucks. The results at home are only beginning to unfold.

Global demand for fuel does even more to explain what's happening in renewable energy, where U.S. production has doubled in the last four years as prices have plunged. The surge in wind and solar deployment in the United States has been propelled by public policy that subsidizes new facilities. That, in turn, has been spurred by an intense belief that rising climate change risks mean that an all-out push for emissions-free energy is essential. And why the increasing worries that carbon emissions must be quickly brought under control? The biggest driver of rising emissions is—you guessed it—ever-higher demand for energy in the developing world, which is being met overwhelmingly by high-carbon coal.

As all these trends accelerate in the coming years, the influence of rising world demand on American energy will increase, not recede. Without ever-rising global appetite for oil, prices could crash, taking the U.S. oil boom down with them and pushing U.S. oil use back up, too. Overseas demand for natural gas has already sparked a flurry of interest in exporting the fuel from the United States to Europe and Asia, which will further alter the U.S. energy landscape. Carbon emissions from the developing world will almost certainly rise, intensifying pressure on the United States to push ahead with emissions-free fuels.

Over the last two years, I've traveled around the United States, exploring immense changes unfolding in American energy. Each transformation has its own local character, from the shale gas surge in Pennsylvania and tight oil boom in North Dakota to the emergence of a clean energy economy around Silicon Valley and historic changes in the cars being produced in Detroit. Yet a far-less-local thread links all of these: Their ultimate spark, inevitably, is skyrocketing demand for energy on the other side of the world.


_ By Michael Levi, for CNBC.com
Levi is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations and director of its program on energy security and climate change. He is author of The Power Surge: Energy, Opportunity, and the Battle for America's Future.

Health-Law Implementation to Vary by State

There is just one federal health law, but the way Americans experience the debut of its main provisions on Oct. 1 will vary widely depending on where they live.
Every state, whether it supports the law or not, will have a health-insurance exchange where people will shop for coverage—the health overhaul's centerpiece.

But some states are running their own exchanges, while others are letting the federal government handle that task. Some are pushing ahead with the biggest expansion of Medicaid—the federal-state program for the poor—since its creation in the 1960s. Others aren't extending local eligibility rules for Medicaid. Some are giving generous funds to "navigators" who are supposed to help people sign up. Elsewhere, navigators face restrictions. 

 

"Your prices, your consumer experience will differ dramatically across states or even regions in states," said Joel Ario, managing director at Manatt Health Solutions, a New York-based health-care consulting practice. Rural areas will likely have fewer insurer choices than urban areas, where insurers are competing more vigorously for new customers.

The divergences could make it harder to judge the law's success, at least initially. With the health law, President Barack Obama envisioned expanding medical coverage for most of the 48 million people who currently don't have it and placed confidence in governments to run the system smoothly. Critics called his plan a government takeover of health care that would result in bureaucracy run amok and higher costs. After coverage begins Jan. 1, gauging which of those scenarios will be closer to the truth could vary depending on the conditions in each area.

In general, the states that declined to run their own exchanges are the ones where conservative legislators and voters have been most hostile to "Obamacare." Many of those states also have had historically tight eligibility for Medicaid and are generally declining to expand it now. And they are also the states most likely to have added restrictions on navigators.
Not all the differences fall along a red state-blue state divide. Both Kentucky and Missouri voted against Mr. Obama, but Kentucky is running its own exchange and using state employees to encourage enrollment, while Missouri is relying on the federal government's exchange and barring state employees from helping.

The price of insurance policies available on the exchanges varies by area—and just as importantly, the perception of the prices is likely to be different. Some states have long had tight restrictions on the kind of policies that can be sold to individuals and small businesses, resulting in relatively higher prices. People in those states aren't likely to see big premium jumps. In states that left insurers with a freer hand, some people face greater price increases.

In Atlanta, before Georgia's new federally run health exchange kicks off, the cheapest plan available now has a monthly base rate of $43 for a healthy 30-year-old male nonsmoker, reflecting the state's light regulation. The median plan starts at $108 a month, according to a federal database of plans. Next year, that same customer will likely have to pay at least $188 a month, although some lower-income people could get subsidies toward premium costs.

Under the new system, insurers must accept all comers and can't charge sick people more. Currently, insurers in some states are allowed to offer healthy people skimpy plans with low rates, but those will go away when new federal requirements kick in this fall.

"I was always skeptical of Obamacare," Georgia Insurance Commissioner Ralph Hudgens, a Republican, said in a statement. "But I never imagined that it would lead to rates being doubled or tripled. Increases of this magnitude will make coverage less affordable and increase the number of uninsured in Georgia." Nationwide, people who forgo coverage next year face a fine of at least $95.
By contrast, health insurance has long cost more in New York, in part because the state has barred insurers from rejecting customers over pre-existing conditions. In the new health exchanges, the lowest-cost plan for a person living in Albany, regardless of age or tobacco usage, will be $237 a month, according to the state insurance regulator.

"These plans and rates deliver on the promise that the exchange will offer quality health insurance coverage at a price that works for New Yorkers," said the executive director of the New York Health Benefit Exchange, Donna Frescatore, who was appointed by Democratic Gov. Andrew Cuomo.

Write to Amy Schatz at Amy.Schatz@wsj.com and Louise Radnofsky at louise.radnofsky@wsj.com

Yep, it's another housing bubble

 

Published: Tuesday, 10 Sep 2013 | 6:00 AM ET

By: John Carney | Senior Editor, CNBC.com 

 

 

Four months ago something troubling happened in the housing market. The home price affordability index tracked by the National Association of Realtors slipped below it's long-term trend line, marking a possible beginning of a housing bubble.
On Monday, we got the fourth month of home affordability data coming in below trend, which is a strong confirmation that the housing market is once again in a bubble. (The NAR index is published with a two-month delay, so the latest numbers are for July).

Is housing back in a bubble?

 

Mark Hanson, Hanson Advisors, breaks down the latest data on housing with CNBC's Rick Santelli.

The affordability index measures the household income needed to qualify for a traditional mortgage on a median-priced single family home. So it's looking at a mortgage with a 20 percent down payment and a monthly payment below 25 percent of income at the currently effective rate on conventional mortgages.
When the index is at 100, that means that a household earning the median income has exactly the amount it needs to qualify for a conventional mortgage on a median-priced home. When it is above 100, it signals that the median income is higher than needed to qualify for a mortgage. An AI score of 130, for example, would indicate that households earning the median income would have 30 percent more income than needed to qualify.

Rising interest rates and rising home prices put downward pressure on the affordability index, meaning homes are becoming less affordable. Rising incomes put upward pressure on the index, meaning homes are more affordable.
The index has been dropping rapidly since peaking in January at 210.7. We're now down to 157.8, according to the preliminary numbers released for July on Monday. Home prices have been rising and interest rates climbing, while wages haven't kept up. That's how we got to the lowest level of affordability seen since July of 2009.
According to the NAR, this shouldn't be dire news. A score of 157.8 officially indicates that a household earning the median income has 57.8 percent more income than needed to get a mortgage on a median priced home.

Unfortunately, it's not clear that the index is very useful on its face. The index has never, in fact, dipped below 100 since the late 1990s. Even during the height of the last housing bubble, the indexes lowest score was 101—the affordability nadir hit in July 2006. This is what has led folks like Barry Ritholtz to declare the index "useless." 
 
A recent paper by three economists from Robert Morris University in Pennsylvania, however, suggests that the index can be used to detect housing bubbles. Adora Holstein, Brian O'Roark, and Min Lu track the index against its long-term trend line. When the index falls below trend, it marks a possible start of a housing bubble. They suggest that when the monthly affordability index value falls below trend for at least three months, a housing bubble probably exists.
Using the monthly composite home affordability index from FRED, the database maintained by the St. Louis Federal Reserve bank, we can chart out every single monthly index report and construct a long-term trend line.

As the Robert Morris economists found, affordability fell below its long-term trend in the beginning of 2004—marking the beginning of the housing bubble. Homes remained below the long-term trend for affordability until December 2008.
This year affordability fell below the long-term trend in April. We remained below trend in the May, June and July reports.

If the Robert Morris economists are right about below trend affordability indicating a housing bubble, we're definitely there right now.
This does not mean that home prices are poised crash immediately. Keep in mind that home prices continued to climb for over two years after affordability fell below trend, peaking in April 2006. But it may mean that the Federal Reserve might need to start raising interest rates sooner than some expect in order to deflate our new housing bubble.

—By CNBC's John Carney. Follow me on Twitter @Carney

Crowdfunding college and other clever ways to cut costs...

 Published: Friday, 30 Aug 2013 | 12:19 PM ET

By: Mary Thompson | CNBC Reporter

With the cost of a college education increasing at a pace roughly double the pace of inflation, students are looking at new ways to pay for their degrees, cut the costs of classes in innovative ways and maximize alumni connections after graduation to jumpstart their careers.


Teaching online could cut the bottom line of a college education 

Imagine being able to cut the cost of a college education by a third. The University at Albany, The State University of New York, said it might be possible using MOOCs—massive open online courses.
The SUNY System is one of a small but growing number of universities and university systems adding MOOCs to their course lineup. Online courses have been around for years, but improvements in interactive technology, a tech-savvy generation and a desire by schools to keep costs under control, all appear to be coming together to form an inflection point for their use.
Like the SUNY System, San Jose State University sees potential to reach more students using MOOCs.

"So right now we have a tremendous amount of trouble meeting a demand we have," said SJSU professor Ron Rogers. "And so these courses are a potential way for us to allow access to students."


The school recently completed a pilot program, offering five MOOCs through the online platform Udacity. The courses are designed and monitored by SJSU professors. They are open to far more students than a class taught on campus, so students will not have to wait a semester or two for a place in a required class, helping to keep them on track to graduate in four years. The classes also cost a lot less.

Incoming freshman Harriet Kansiime took a MOOC over the summer to fulfill a SJSU math requirement. It cost her $150, far less than the $1,700 it would have cost her to take it on campus.
"First of all, the cost of having to travel to San Jose State every day, that saved me a lot of money," Kansiime said of the gas savings. "And I was able to study at my own pace."
While MOOCs are traditionally free online, the colleges that are using, or experimenting with them, note there will be a cost if a student wants credit for taking these courses. Colleges will charge fees to transfer credits and the professors who monitor students and give tests need to be paid as well.
Right now, SJSU feels MOOCs are best used to teach courses in certain disciplines.
"I think courses in science, technology, math and engineering are easier initially to transition to this type of online setting," said Rogers. "But it really depends on the instructor, what they are willing to try and how innovative people want to be."

While critics say MOOCs cannot replace the traditional college experience, folding them into a curriculum means a college may be able to reach more of its own students, and others looking to take a class at a lower cost.
Finding a helping hand in a crowd
Eighty-five percent of Americans still find value in obtaining a college degree, according to a recent study by Sallie Mae, though families are contributing a smaller portion of their savings to paying for a child's higher education.
As a result, some students are looking for financial help from the crowd, or more specifically crowdfunding.

"I raised $20,000," said Jennifer Schoolcraft, a student at Roosevelt University. Schoolcraft will use the money to pay for her bachelor's degree in sociology, after which she plans to go to graduate school to become an occupational therapist.
"In exchange for that $20,000, after I graduate from school and am employed, a certain percentage of my income is taken out and gets delivered back to backers," said Schoolcraft.
Schoolcraft found her backers through Pave, an online crowdfunding platform linking investors with approved applicants. The investors are interested in putting their money to work in people, rather than products or companies, according to Pave co-founder Justin Mitchell.


With Pave, it's not a loan, it's an investment. The graduating students will always pay a percentage of their incomes for 10 years, regardless of their salaries. If the graduate lands a high-paying job, the investors may get back much more than they invested.


"It's a brand-new idea and we didn't know what the uptake would be," Mitchell said of the December launch. "Roughly 4,000 prospects have expressed interest so far and perhaps 1,000 people have expressed interest in becoming a backer."
Here is how Pave works: A person submits an application telling their story and outlining why they need the money and how they will use it. Pave approves the application and puts it online for potential backers to see. The backers then decide if they want to invest, and how much they want to invest.

If the applicant is a student, six months after graduating they start returning a negotiated percentage of their income to the backers. The percentage will vary based on things such as loan size and the applicant's profession, though it can never exceed 10 percent of their income. The payments continue for 10 years.

"This aligns interests entirely between backers and prospects," said Mitchell. "The better a prospect does, the better a backer ends up doing."

If a prospect does really well, and they payback more than five times the original investment in less than 10 years, they can negotiate a release from the agreement. Pave does not expect this to happen often, instead estimating investors will likely receive annual returns ranging from 5 to 8 percent on their investment.


The risk for backers is that they might never get back all of their original investment.

Pave makes its money taking 3 percent of the original investment and charging an annual service fee of 1.5 percent. The company will work with the applicant over time to make sure they are able to, and are making the payments.

Founded in 2012, Pave has funded 19 people so far. Mitchell said roughly half of them are students looking to fund an education, or pay down student debt, suggesting in a time of skyrocketing tuition, it might take a crowd, not a village, to help a student get a college degree.
Angel alumni give wings to start-ups

Fidelity Investment's former investment whiz Peter Lynch, used to tell people, "invest in what you know." These days a growing number of alumni are doing just that, investing in companies started by students and graduates of their alma maters.

"If you go to college campuses nowadays it is remarkable the level of entrepreneurial activity happening there," said Pavan Nigam, co-founder of the medical website WebMD and currently the founding partner of the venture firm Inspovation Ventures.
He is also a graduate of the University of Wisconsin and the founder of the Silicon Valley Badgers, a group of Wisconsin alumni who mentor currents students and sometimes fund the students' ideas.

Nigam said the bond provided by a common college experience can be key to maintaining a good working relationship between an entrepreneur and their investors.

Hill Street Studios | Blend Images | Getty Images

 

"Generally investors like to invest in people who are like, maybe one or two degrees of separation max away from them," said Nigam. "Because they can know them, they can validate them, they can have people vouch for them."

The Angel Capital Association estimates there are about 50 alumni angel groups across the country with ties to schools ranging from Harvard, to the University of Hawaii, to Marquette, to the University of Missouri
Nigam maintains the angel alumni groups work best for schools with a lot of school spirit, and those with strong entrepreneurial, math, science and computer programs. Schools like Wisconsin, Northwestern, Duke and Notre Dame
Baylor University also is one of those schools. Graduate David Grubbs turned to the Baylor Angel Network this year when his firm Vendevor needed a critical round of funding.

"Having the university connection plays a big role in fundraising, you have an instant connection with the investors," he said. "And so they are looking to do anything they can to help the university and we are a viable investment and we are coming out of Baylor—those are two great things for them to really get behind and help.
Vendevor is a plug-in payment processing platform. For a range of fees it allows small and medium-size businesses to quickly set up their own e-commerce sites.



This spring, Grubbs and his co-founders, two other recent Baylor graduates, submitted their business plan to the network, a group of alumni looking to invest in start-ups. They were one of four companies selected from a pool of 20 to 40 applicants.
After Vendevor presented at the "Angel Breakfast," the network did six weeks of due diligence on the company trying to poke holes in Vendevor's thesis. Once due diligence was completed the network and Vendevor took two weeks to negotiate the terms of what eventually was a purchase of preferred stock.
Grubbs plans to use the proceeds from the sale to hire a graphic artist, another staff employee and for marketing. It is an investment he believes will help expand revenue from around six figures this year to close to seven figures by year-end 2014.

There is another benefit in reaching out to alumni, Grubbs said their assistance goes beyond just a monetary investment.

"As we start to grow, we are looking for strategic partners, we are looking for people who may want to potentially acquire us," he said. "And that network really comes behind us and helps to push us along.

—By CNBC's Mary Thompson.

How to not outlive your money: Don't wing it on your 401(k)

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 Published: Tuesday, 27 Aug 2013 | 12:41 PM ET

By: Sharon Epperson | CNBC Senior Commodities Correspondent and Personal Finance Correspondent

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Without a plan for retirement, many people say they just plan to "wing it." Surveys show many workers feel overwhelmed by day-to-day financial pressures, worried about paying monthly expenses and job security.

While they may participate in their company's 401(k) plan or another workplace retirement plan, many workers don't know what to invest in or how much to save. As a result, they're not saving enough.

A new analysis released Tuesday by Fidelity, the nation's largest retirement plan provider, found the average 401(k) balance was $80,600 at the end of June, up nearly 11 percent from the same quarter a year ago. For steady savers who were continuously employed in a workplace plan for the past decade, the average balance rose to $211,800, nearly 19 percent higher than a year ago.

But for many, that's still not enough money to ensure a secure retirement. Not when, according to Fidelity, the average 65-year-old couple retiring today will spend about $220,000 on health-care costs alone.

Just last week, Fidelity Investments noted that families are also saving more for college, but it's still not enough to cover the likely costs.

Reality is setting in with American workers. A poll conducted earlier this summer by JPMorgan Asset Management found that while half say they would like to retire before the age of 65, only 20 percent believe they will realistically be able to do so. This leaves two options: working longer or saving more.

But how much more should you save?

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'Winging' retirement is trending

When it comes to retirement, many people just want to "wing it." CNBC's Sharon Epperson reports.

Figuring out how much money you may need in retirement income is an important factor in determining how much you need to save now. Assume you want to retire at age 67 and may live until your 93rd birthday.

Fidelity took a look at how much 401(k) investors at various ages would need to save for every $1,000 they'll need to generate in retirement income to make their money last, assuming a 5.5 percent annual return and not taking taxes into account. Here's what Fidelity's analysis showed:

• A 25-year-old just starting to save would only need put away about $160 each month to generate $1,000 in monthly retirement income.
• Start saving at age 35 and you'll need to contribute almost $270 a month to generate the same income.
• For every $1,000 in monthly income, a 45-year-old just beginning to save for retirement would have to put away nearly $500 every month.
• A 55-year-old just starting to build a nest egg would have to make monthly contributions of $1,154 for every $1,000 in monthly retirement income—that's double the amount of a 45-year-old and more than seven times the sum that a 25-year-old would need to stash away.

"The rule of thumb is that you should save anywhere from 10 to 15 percent of your income towards retirement," said Beth McHugh, vice president of market insights at Fidelity. Yet, most workers are only putting away 6 to 7 percent of the annual income into a 401(k) or workplace retirement plan, the firm has found. Some who have delayed retirement savings may have to put away 20 to 25 percent of their income.

Smaller increases can also help. "Even incremental changes—a 1 percent change today—can make a big difference and create hundreds of dollars in potential income in retirement," McHugh said.

Mike Alfred, CEO and co-founder of Brightscope, a company that analyzes and rates 401(k) plans, agrees that the amount of savings is the most important factor when it comes to retirement savings.

"Most people aren't saving enough money. In the absence of saving an adequate amount there is no other magic bullet," he said. "You can choose the best investments in the world but if your only putting $500 a year into your IRA or your 401(k) plan you're just not going to get there."

—By CNBC's Sharon Epperson. Follow her on Twitter @