One quarter of the 33 million pre-retirees living in the U.S. feel very prepared for retirement, according to a new study by LIMRA. In 2010, that number was 30 percent.

"Pre-retirees' circumstances have not improved over the past several years with fewer pre-retiree households having $100,000 or more in financial assets (45 percent in 2007 to 38 percent in 2010)," said Matthew Drinkwater, associate managing director of Retirement Research. "Even more troubling, our survey revealed that pre-retirees have unrealistic expectations regarding how much income they will need and their ability to work in retirement."

On average, surveyed pre-retirees believed they would need less than two-thirds of their current income during retirement.  This is less than the 70 to 80 percent level commonly recommended.  In addition, pre-retirees said they would need to withdraw 9 percent of their assets annually to pay basic living and discretionary expenses. Based on historical investment returns, this withdrawal rate will result in some pre-retirees running out of money in retirement, which is likely to last 20 or more years.