Millions of Americans are facing their own personal fiscal cliff, with half of middle class investors saying their most important day-to-day financial concern is paying the bills, never mind saving for retirement, according to a survey from Wells Fargo.

 “This is a real wake-up call,” said Laurie Nordquist, co-head of Wells’ Institutional Retirement and Trust unit. “Millions of middle class Americans really are potentially facing a retirement where they could be living in poverty.”

Nordquist said the number of middle class investors who said their biggest financial worry was paying the bills jumped to 52% this year, up from 37% last year. The phone survey canvassed 1,000 middle class Americans, aged 25 to 75, from July to September. Fifty-three percent of middle class investors surveyed said they are not confident they will have saved enough to fund the life they want in retirement, up from 42% in 2011.

Yet even with this recognition, they still underestimate how far behind they are on the path toward meeting their retirement goals. One-third of those surveyed believe they’ll need less than half of their pre-retirement income to live on after leaving the workforce. With the median household income just over $50,000 last year, that works out to $25,000 – close to the poverty line for a family of four.

Middle class Americans have saved a median of $25,000 towards retirement, and they guess they’ll need about $300,000 to retire: both figures are extremely low, Nordquist said.

“It points out it’s been a guessing game: 75% actually said ‘I’ve guessed at how much I’m going to need in retirement.’ It’s 20 years of their life and they’re guessing – that worries us,” she said.

According to the survey, just over one-third of Americans have a written plan for retirement, up from 30% in 2011. However, it’s still difficult to get them to give it time or attention. Planning for retirement ranked third after home remodeling and vacations in the survey respondents’ priorities in the last year.

Advisors can do a few key things to combat this problem, she said. First, they can help investors put a financial plan together, and help them understand how much they’re going to need to live on in retirement. She cited another example of wishful guessing from middle class Americans: they estimate they’ll need $47,000 to cover their health care costs in retirement, when a recent Center for Retirement Research estimate puts the figure closer to $260,000.

“That’s something that advisors can, in fact, level-set,” she said. “In really helping them understand how much they are going to need to save in order to reach a comfortable retirement, and then get them past the guessing game. We don’t want them guessing.”

Advisors can begin by helping investors focus on an outcome, according to Joe Ready, the other co-head of Wells’ Institutional Retirement and Trust group. He said when advisors put concrete monthly income numbers in front of investors, it gives them clarity. Taking the median income of $50,000 a year, and using the 80% pay replacement rule of thumb gets investors to $40,000 of income a year in retirement. That works out to $3,500 a month – far different from the $150 a month the middle class investor would have to live on in retirement with $25,000 of savings.   

Ready said another piece of wooly thinking the investors surveyed exhibit: the way they’re going to close the income gap between what they have saved and when they can retire. Thirty percent said they plan on working into their 80s, yet when asked if their employers would allow that, 73% admitted they did not think so.

After helping investors understand what they’re on track to achieve, and defining goals, advisors can help most by giving investors the next step they can take, Ready said. One of the first suggestions he recommended advisors make is the client max out their savings to their 401(k) plan. Then, the advisor can be available for check-ins, to keep the client on track. He added that it’s time to rectify a problem in perception that the financial industry has allowed to grow: the idea that the markets alone will provide.

“They’re going to have to save their way to retirement,” he said, “They’re not going to be able to invest their way there.”

Advisors can also help with asset allocation. Following the turbulent markets after the 2008 meltdown, 70% of middle class Americans said they are not confident in the stock market. If given $5,000 to invest for retirement, 40% said they would put it in a CD or savings account, 24% would invest in stocks, and 22% plumped for gold or precious metals. Even more alarming, when the survey broke down respondents by age group, it found 82% of workers in their 20s said they would not put the $5,000 in the stock market.

“They’ve got a long runway, we want to make sure they’re making a good decision for their financial future, and that’s where an advisor can help a lot,” Nordquist said.

Advisors who work with 401(k) plan sponsors can help design plans to boost worker participation, using methods like automatic enrollment, and choose good investments. Nordquist and Ready said they see 401(k) plans as a real growth area for advisors.