Everyone wants to have a comfortable and enjoyable retirement, but without adequate planning it probably won't happen. People are living longer than ever, which is obviously good news, but that means retirement is becoming more expensive. Some people believe that they can count on Social Security and don't need to plan on their own, but this is a dangerous strategy, as it will cover only a fraction of a typical retiree's expenses, and the long-term health of the Social Security system is very much in doubt.
The first step in retirement planning is estimating how much money you'll need. A popular rule-of-thumb claims that you will only need about 70% of your pre-retirement income to maintain your lifestyle in retirement. While you will probably save some money currently being spent on work-related items (such as formal clothes and commuting), other costs go up in retirement (health care, hobbies, etc). 70% may be a useful rule of thumb, but some people find 50% is plenty while others feel they need 100%. Some of the sites we link to provide more accurate estimates based on your specific circumstances.
The second step in retirement planning is figuring out where the money you're going to need will come from. Visit the Social Security Administration site to get an estimate of how much you'll receive, and add to this any pension you'll be receiving from your employer. Unfortunately, traditional pensions and Social Security together probably won't come close to providing you with what you'll need. In addition, unless you're nearing retirement, you shouldn't count on ever seeing any of the money you've been paying into Social Security, because the future of the system is very much in doubt.
This is why it's so important to take your financial matters into your own hands. If you have a 401(k) program at work (or a 403(b) or 457), it's usually wise to contribute as much as you can. This is even more true if your employer provides some matching of your contributions. If you have no retirement plan at work, contribute to a traditional IRA or a Roth IRA. Your contributions to your 401(k) or IRA are tax-deferred, so that you don't pay any income taxes on your contributions until the money is withdrawn (usually in retirement, when your tax bracket will probably be lower).
Since tax laws are always changing and your retirement may be many years away, you should also start saving and investing on your own, outside your tax-deferred plan.