NEW YORK - Workers facing shrinking retirement benefits are not saving enough to make up for what they will lose, according to a new study.

Seventeen percent of workers said their employers had cut retirement benefits in the last two years, according to the Employee Benefit Research Institute's annual retirement confidence survey, released last month. Among workers whose expected benefits had been cut, nearly two in five said they had done nothing in response.

The vast majority of employees are likely to need additional savings if they hope to retire with the benefits they expected before the shift away from company-sponsored traditional pensions to 401(k) plans, said Jack VanDerhei, the study's coauthor and an associate professor of risk management and insurance at Temple University's Fox School of Business.

"Unfortunately, only 24 percent of those affected indicate that they will save more on their own, and only 8 percent indicate that they will save more in the employer's plan as a result of these changes," he said.

Only 60 percent of workers are currently saving for retirement, and 66 percent say either they or their spouse have saved for retirement, according to the study.

Not surprisingly, younger workers were more likely than older workers to have a small retirement nest egg; 68 percent of workers younger than 35 had total savings and investments of less than $25,000, compared with 31 percent of workers older than 55.

One possible reason is that many younger workers are more focused on paying off debts or making their mortgage payments than on saving for retirement.

"We're putting $2,800 a month toward paying off our credit cards," said Matt Crist, a 29-year-old Web developer who lives in Boston. "Can you imagine all that going into a retirement account every month?"

Almost half of workers who are saving said their total savings and investments (not including the value of their primary home or traditional pension plan) were less than $25,000. Seven in 10 workers who have not saved for retirement say their assets total less than $10,000.

Workers also expressed a level of confidence in their retirement-readiness that did not jibe with reality.

For instance, 24 percent of workers who said they were "very confident" about their financial security in retirement are not currently saving for retirement and 43 percent of "very confident" workers have less than $50,000 in savings.

Workers also underestimated their health costs, according to the study.

Thirty-two percent of workers estimated they and their spouse would need less than $100,000 for health care in retirement; 52 percent said they would need less than $250,000. In contrast, one recent Employee Benefit Research Institute study calculated that, if Medicare benefits remain at current levels, couples will need about $300,000 to cover health expenses if they meet the average life expectancy and as much as $550,000 if they live to 95.

The average 65-year-old man today can expect to live until age 81 and the average 65-year-old woman can expect to live until 84, according to data from the Federal Old-Age and Survivors Insurance and Disability Insurance trustees report.

Finally, the study found what appeared to be unrealistic expectations about pension benefits.

Forty-one percent of workers said they or their spouse had a traditional defined-benefit pension plan from their current or a previous job, but 62 percent expected they would receive retirement income from a defined-benefit pension plan.

The Employee Benefit Research Institute is a private nonprofit organization that does not lobby or take policy positions. The study, which was based on 1,252 telephone interviews with Americans aged 25 and older, was conducted using random-digit dialing and has a margin of error of plus or minus 3 percentage points. The study's 30 underwriters include foundations and financial-services companies.