Patty Stewart of Redlands, Calif., is beginning to think she won't be able to retire at 65. Or 67. Or possibly ever.

Like millions of other people, Stewart is counting on her 401(k) and her home equity to pay for retirement. But since the start of the year, the value of her 401(k) has fallen about 4 percent, and rising consumer prices have forced her to reduce her contributions to it. Meantime, home prices in her neighborhood are off about 25 percent over the past two years, making it less likely she can rely on her home equity to supplement her retirement income.

"The calculators tell me I'm going to need $1.3 million to $1.5 million" for retirement, says Stewart, 49. "That doesn't seem like it's something that will ever happen."

She might be right. For years, stock investors have been led to expect average annual returns of 8 percent to 10 percent. Similarly, many people have assumed that their homes would appreciate by roughly 10 percent a year.

Both assumptions, though, rest on two decades of outsized returns — returns that were inflated by low interest rates that fueled bubbles in the values of stocks and real estate. Now, many financial analysts are predicting a prolonged period of below-average returns on both stocks and home equity.

If they're right, Americans need to face a sobering fact: They're not likely to have as much money for retirement as they'd projected. Which means that many of us will have to save more, expect less and work longer than we'd planned.

Investors who rely on historical returns for the past 50 years will "probably overestimate what we're likely to see in the future," says Chris Jones, a retirement-plan consultant.

Consider a 45-year-old with $100,000 in savings and income of $50,000 this year.

If that worker contributed 8 percent of income to his 401(k) plan for 20 years, received an annual raise of 4 percent and earned an average return of 10 percent, he'd retire at 65 with $878,862.

By contrast, if his average investment return were only 8 percent, he'd end up with much less — about $652,000. And if he earned an average return of only 6 percent, he'd retire with just $486,310."

Many financial planners say they believe workers who start saving while they're young will still be able to meet their retirement goals.

The reality, though, is that many Americans are already far behind in saving for retirement.

Nearly half of American workers have less than $25,000 in retirement savings, according to the Employee Benefit Research Institute. Thirty-six percent of workers 55 and older have less than $25,000 in savings.

Some economists believe the economy is headed for a period that will more closely resemble the bearish 1970s than the vibrant 1980s and '90s. And for investors, the '70s were quite bleak.

From Dec. 31, 1969, through Dec. 31, 1979, the Dow Jones industrial average gained a grand total of just 38.38 points, or 4.8 percent.

During the 1972-1973 bear market, the Dow fell 45.1 percent over 482 trading days. From 1966 through 1982, not counting dividends, the Dow's performance was essentially flat.

Already, the economic slowdown is causing Americans to rethink their retirement plans. More than one-quarter of workers ages 45-64 say they've postponed plans for retirement because of the sputtering economy, according to a new survey by the AARP.

Of course, pessimists have been wrong in the past. Through the years, the U.S. economy has proved remarkably resilient. But analysts who are now convinced that investors need to lower their expectations for stock returns point to headwinds, such as inflation and taxes.

Most retirement calculators assume an annual inflation rate of about 3 percent. But that figure reflects two decades of below-average inflation.

Since 1960, the average inflation rate has been higher — about 4.3 percent. And some not-so-distant periods have seen raging inflation. From 1970 through 1980, for instance, the average annual inflation rate was 8.2 percent.

Wall Street analysts — and lots of folks on Main Street, too — argue that the widening federal budget deficit, combined with rising demands on the Social Security and Medicare programs, will force the next presidential administration to raise taxes.

If higher taxes lead to lower stock prices, as is often the case, investors would earn less. Retirees would pay higher taxes on their withdrawals, reducing their after-tax income.

During the height of the recent housing boom, Americans saw their homes appreciate much faster than the mutual funds in their 401(k) accounts.

But the collapse of the housing market has wiped out billions of dollars in home equity.

Nearly 9 million homeowners are "upside down," which means they owe more on their mortgages than their homes are worth, according to Moody's www.Economy.com.

And the factors that are weighing on their investment returns — inflation and a sluggish economy — are the very factors that make it harder for workers to save more.