The trifecta of rising medical costs, increasing longevity, and vanishing pension plans and retiree medical benefits threatens to price most people out of a comfortable retirement, according to a recent study by Hewitt Associates.

   The study analyzed the projected retirement levels of nearly 2 million employees at 72 large U.S. companies. After accounting for inflation and medical costs, Hewitt concluded that the average employee would need to replace 126% of their final pay at retirement versus conventional wisdom replacement targets ranging from 70% to 90%. If that holds true, many people will have the very tall order of needing to earn more income in retirement than they did during their working years.

   "Without changes in behavior, most workers will either need to significantly reduce their spending or work longer in order to have enough to last through retirement," said Alison Borland, defined contribution consulting practice leader at Hewitt, a Lincolnshire, Ill.-based human resources consulting and outsourcing company.

   Hewitt says that only 19% of employees in its study are on course to meet all of their estimated retirement needs. And only 67% are expected to meet 80% of their estimated retirement needs. The latter group includes those who contribute 8% of pay to their 401(k) plan.

   Those who don't contribute anything to their 401(k) are forecasted to meet just 40% of their estimated retirement needs, according to Hewitt.

   The study says people can bolster their retirement savings by working longer. Employees who postpone retirement from age 65 until 67 and contribute 2% more a year to their 401(k)--in addition to an existing 8% contribution--can boost their income replacement rates to 107%.