Thinking about retirement alternately excites and scares me. I get excited because I have visions of myself sipping refreshing, adult beverages on a white sandy beach, reveling in my accumulated wealth. I get scared because that’s about the same time I realize I don't have any accumulated wealth.

Oh, I do have a few dollars tucked away here and there. If I’m lucky (and inflation ceases to exist) I might have enough to sustain my current standard of living for about 12 months after I retire. It’s probably also worth mentioning that my current standard of living doesn't include exotic sandy beaches…or expensive, adult beverages. So, now that I’m in my 40s, it’s clearly more than high time for me to get serious about saving towards retirement. If you can relate to this story, I hope the research I’m doing to figure out what I need to save will be helpful to you, too!

What you need before starting to save

If there’s one clear and present truth that stalks every adult's dreams of retirement, it’s this: if you don't have enough saved up to retire on your goal date, you’ll have to keep working until you do. There just isn't any way around this cold, hard, oh-so-factual fact. But starting to save from a zero dollars balance can be as intimidating as starting to eat healthy after a lifetime of fast food or starting to exercise when everyone else in the gym looks like a professional bodybuilder. So before you even start, be sure to gather these tools together.

  • Faith in yourself: If you don't speak sweetly to yourself when you’re just starting out with anything new, you won’t succeed. You must become your own short-term cheerleader—celebrating yourself for each little penny tucked away—if you want to succeed with your long-term retirement savings goals.
  • A savings account: If you don't have much or any savings right now, you do not want to put what little cash you have into an investment where you can't get to the money if emergency strikes. So start a savings account. Let the funds accumulate until you have enough for an emergency—leave that money there. Then start transferring funds into a money market account or another investment account that’s less liquid (less easily accessible).
  • A plan: If you want to achieve any goal, having a plan is essential. So make a plan that you know you can stick to, even if it starts you out with very small savings goals.
  • A start date: Saving a dollar a week is doable for nearly everyone—so start as small as you need to, but just be sure to start.

The truth about how much you need before you retire

In 2012, the New York Times reported that an estimated three quarters of Americans nearing retirement age had just $30,000 in retirement savings socked away. This adds up to a daily living allowance of just dollars per day. The article also states that if you want to maintain your current standard of living when you retire, you need to earn approximately 20 times the amount of your desired annual retirement income—this in addition to any Social Security benefits due you. Here’s an example you can use to calculate what you need in savings to retire with a certain income at a certain time.

  • $50,000 annual income at retirement X 20 = $1,000,000

Retirement calculator

The American Association of Retired Persons (AARP) has a handy retirement calculator that will guide you through a series of questions (including your marital status, desired retirement age, pension expectations and more) to estimate whether you’re currently saving enough to retire. After you complete the short online worksheet, you’ll be able to view the shortfall (or overage) between what you’re saving now and what you need to save to retire by your target date, at your desired income. You can also calculate what you need to save if you plan to continue working part-time into your retirement years.

5 tips to start saving for free

These tips can get you started with saving for retirement without spending a penny.

  • Set up a savings account: Make sure you choose a free account—most banks offer free savings accounts if you have a checking account at the same bank.
  • Link your checking and savings accounts: This way, you can set up auto-drafts from checking to savings every month or even every week if you can swing it.
  • Ask your employer about company-sponsored, retirement planning benefits: Many employers offer 401K retirement plans—many are pre-tax and some come with matching funds (this is just like getting free money—in fact, it is getting free money).
  • Find out if your employer also offers free investment advice: If your employer offers any kind of retirement savings program, chances are it comes with free investment advice from the plan administrator or third-party investment company—so use it!
  • If you’re self-employed or own your own small business, open a SEP-IRA: If you, like me, work for yourself, you’re eligible to start what’s called a "Simplified Employee Pension Investment Retirement Account." This account functions like a standard IRA in that deposits are pre-tax and will reduce your annual taxable income.