Making a retirement plan requires more knowledge than you might think. You’ll need to understand how inflation affects your investment account; how much income Social Security provides, and how much you need to subsidize it; and how much you can withdraw from investment accounts without draining your nest egg.

Unfortunately, millions of Americans are lacking these basic facts. This is based on a recent report from the Insured Retirement Institute (IRI), which surveyed adults to determine their readiness for their later years. Here’s what the troubling data showed about three crucial retirement realities many people simply don’t know.

1. Americans are confused about how much income growth is needed to offset inflation

According to the IRI data, just 26% of workers were correctly able to identify the level of income growth that would be necessary to offset normal inflation over time.

Unfortunately, a failure to understand the consequences of inflation – or the returns necessary to offset it – can be an especially big problem in today’s environment with prices surging nationwide. If you’re invested too conservatively, your assets may not earn enough to avoid a steep reduction in buying power. And even assuming a normal inflation rate of around 3% per year, if you had $60,000 in income at 65, you’d need around $80,000 by 75 to maintain the same buying power.

Not considering inflation’s impact can also be a major issue when setting long-term retirement goals. If you’re planning to retire in 30 years, $1 million may seem like a generous nest egg, but its inflation-adjusted value would mean you’d actually end up with the equivalent of just $411,987 in 2022 dollars (assuming 3% annual inflation over time).

When setting savings goals, or looking at how far your nest egg will stretch, always take the time to think about how the rising price of goods and services impacts you. The good news is, there are online calculators that can help you develop a better understanding of the ways in which inflation affects your nest egg.

2. Most people don’t know how much income Social Security will provide

Americans aren’t just confused about how far their savings might go.

Only 42% of Americans correctly identified the average Social Security benefit. And close to four in 10 survey respondents overestimated the average, while a small number underestimated income from retirement benefits.

The problem is, the average could be much lower than expected for the millions of Americans who guessed incorrectly. In 2022, for example, it’s $1,657. If you’re anticipating higher benefits, this could leave you with insufficient income to cover the essentials.

The reality every future retiree must come to terms with is that they can expect Social Security to replace around 40% of preretirement income, while they’ll typically need 80% or more. So when setting retirement goals, aim for a nest egg large enough to produce about 40% of what you were earning prior to leaving the workforce – at a minimum.

3. Retirement withdrawal rates are a mystery to many

Finally, IRI found about half of Americans weren’t sure how much they could safely take out of investment accounts without worrying about running out of money while still relying on it. When asked about the amount of monthly income to withdraw from a $100,000 retirement account to make sure they still had funds at 95, only 28% of respondents correctly guessed $325.

If you don’t know how to safely set a withdrawal rate, you could end up taking too much from your account and be left broke as a senior. Or you could take out too little and struggle needlessly. There are a number of techniques to help you figure out a safe amount, but two common ones include following the 4% rule or using required minimum distribution tables from the IRS.