To my mind, retirement planning is the most difficult and important financial challenge most Americans will ever face. And while I was eager to read the results of the 18th annual Retirement Confidence Survey, conducted by the nonprofit Employee Benefit Research Institute (EBRI), the findings were mostly discouraging:

- Confidence about having enough money for retirement eroded in every age group and income level. Younger workers and those with lower wages demonstrated the biggest declines in confidence.

- Just 18 percent of all workers were "very confident" about being able to afford a comfortable retirement, down from 27 percent in 2007. This represents the largest one-year drop in the history of the survey. Meanwhile, only 43 percent are "somewhat confident" that they'll have enough money for retirement.

- Consistently, pessimism is on the rise: 37 percent of respondents said they are either "not too confident" or "not at all confident" that they could live comfortably through retirement, marking a seven-year high.

Perhaps this shouldn't be surprising. Times are, very obviously, tough. Most stock market indices have fallen from this time a year ago. The housing market has experienced a deep decline, the price of gasoline is hovering at $4 per gallon in some parts of the country, and medical costs are soaring. In this uncertain economic climate, it's not surprising that Americans' confidence about their ability to retire comfortably has declined significantly.

What's particularly concerning about this declining confidence is that it hasn't compelled people to save and invest more. The majority of workers have done some retirement saving: 72 percent said that they and/or their spouse had saved some money for retirement, slightly up from 2007 but down from the high point of 78 percent in 2000. But the wealth amassed by the average American remains quite low: 49 percent of workers said they have less than $25,000 in total savings and investments, excluding home equity or defined benefit pension assets.

And people consistently underestimate their retirement needs: A full 25 percent believe they'll need less than $250,000 for retirement, while another 16 percent believe they'll need between $250,000 and $499,999. To round out the picture, 23 percent think they'll need $500,000 to $999,999, 18 percent believe they'll need $1 million or more and another 12 percent don't know. Obviously, the wealth you'll need for retirement depends a lot on your lifestyle, but a retirement that lasts 25 or 30 years can require a lot more than this.

Some workers can look forward to a pension and most will receive some Social Security benefits. The disconnect is that 31 percent of those surveyed expect Social Security to be a major source of income - this despite the fact that the Social Security Administration suggests that "if you have average earnings, your Social Security retirement benefits will replace only about 40 percent" of your pre-retirement earnings.

Where does this leave us? The reality is that, when it comes to financing retirement, a good chunk of the money will have to come from your own resources - defined contribution plans like 401(k) programs, IRAs and Roth IRAs and personal savings. But as the survey results demonstrate, most people haven't given the realities of a financially comfortable retirement nearly enough thought or effort. Continued...