The economist Franco Modigliani, along with co-authors such as Richard Brumberg and Albert Ando, proposed a new approach which became known as the "life cycle model." As with pretty much anything in economics, it can get complicated. But here's a simple way to think about it. Economists generally assume that the "marginal utility" or satisfaction derived from consumption is declining. Say, the first piece of pizza tastes fantastic; the third or fifth piece isn't nearly as good.

If you've only got so much money to last over your lifetime, you'll want to spread it out over time rather than consuming a lot in some years and very little in others. Households save in good years and draw down their savings in bad years to try to keep their real standard of living steady over time. The chart below, drawn from a paper by Alicia Munnell, Anthony Webb and Wenliang Hou, illustrates in simple terms how households maintain a steady level of consumption over time even as their incomes can vary considerably.

When Modigliani was awarded the 1985 Nobel Prize in Economics, the Royal Swedish Academy of Sciences' described the life cycle model as "a new paradigm in studies of consumption and saving, and is today the basis of most dynamic models used for such studies," saying that "it has proved an ideal tool for analyses of the effects of different pension systems." Practically every academic paper on retirement income adequacy will either explicitly or implicitly reference the life cycle model as a guidepost for how households think about saving for retirement.

And those academic studies tend to find a more encouraging picture than the "retirement crisis" that popular studies and the news media often portray.

Two studies by University of Wisconsin economists John Karl Scholz and Ananth Seshadri and their co-authors apply the life cycle model to data from the Health and Retirement Study. The Scholz-Seshadri articles, which won TIAA-CREF's Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security, project that 75% to 85% of U.S. households are saving adequately for retirement. Importantly, where saving shortfalls occur they tend to be pretty modest.