The savings survey found that 55 percent of people will have trouble covering housing, health care and food expenses, Fidelity said.
The online survey of 2,200 households, performed from June through October, measured whether workers were on track to cover their estimated post-retirement expenses.
Of those who responded to the survey, 33 percent were on pace to cover 95 percent or more of their estimated expenses, including discretionary expenditures such as travel and entertainment; 12 percent would be able to cover living but not discretionary expenses; 14 percent were not on pace to cover living expenses and would have to make modest adjustments to their retirement plans; and 41 percent were so underfunded for retirement they'd have to make significant lifestyle changes when they quit working.
"When you factor in the expectations many have of an early retirement, along with increasing longevity and sometimes overly conservative asset mixes for investments, you can see why many people are not as prepared as they need to be to cover their expected expenses in retirement," said John Sweeney, Fidelity's executive vice president of retirement and investment strategies.
Fidelity said workers can take several steps to improve their preparation for retirement, including: increasing the amount they're saving, better allocating how their money is invested, and deferring retirement.
"Although it requires discipline and some trade-offs, there are important steps people can take to accelerate their retirement savings and get closer to where they need to be in the long run, no matter what their age or income level," Sweeney said.
The survey found that baby boomers (born between 1946 and 1964) were best prepared for retirement, on pace to save 81 percent of what they'll need in retirement and those from Generation Y (born between 1978 and 1988) were least prepared. On average, the younger workers were on pace to have just over 60 percent of the money they'll need to cover retirement expenses.
"This number is a concern, since the survey indicated many anticipate retiring early, despite the fact they probably won't have the benefit of a pension, as their parents did," Fidelity said. "The good news for this generation: Time is on their side, which means they can improve their situation by increasing their savings rate and investing for growth."