Catherine Pulsifer once defined retirement like this:

R etire, now it is your time to:

E xperience all that life has to offer,

T ake time to smell the roses,

I nvestigate your hobbies,

R evitalize your dreams, and,

E mbark on a new way of life!

Retirement is definitely a time to do what you want, when you want... if you had put some planning into your finances!

According to the U.S. Census Bureau, as of 2007, 47% of workers have no retirement savings at all. The rest have very little. Of workers age 55 to 64, 69% have household retirement account balances of less than $100,000. Most of these people will be forced to extend their work years or accept living in poverty.

How much do you need to retire?

Studies indicate that retirees will need to between 80% and 90% of their pre-retirement income to maintain their current standard of living. So, a reasonable target is one that will provide you with an annual income similar to the income you have now. Then you need to consider a "safe" withdrawal rate. This is the percentage of your retirement nest egg you will withdraw each year during your retirement. Research indicates that, if they have saved enough, retirees can best preserve their assets if their annual withdrawal rate is 6% or less. This provides a quick and dirty formula for determining the total amount you need to save by retirement: divide your desired annual income by the withdrawal rate.

So, for example, if you want to target a retirement income of $60,000 per year, you need to save $1 million ($60,000 / 0.06).

Clearly, planning for retirement is not something that you do shortly before you stop working. Because of the magic of compounding, the earlier you start, the less you'll have to save on a monthly basis. Lower rates of return or higher inflation, of course, will require a much higher contribution.

Planning for retirement is a lifelong process. Throughout your working years, your planning will undergo a series of stages in which you will evaluate your progress and targets and make decisions to ensure you reach them. The earlier you start, the better off you'll be. The key is to save, save, save! The more time you have on your side, the better your outcome should be. This requires discipline, self study and time.