You can never be too young to start thinking about retirement and your future. Retirement seems like a lifetime away when you’re 20, 30, or even 40, but life moves fast, and if you’re not prepared, it sneaks up on you. You receive that first paycheck, and all you want to do is go out and spend it. You’re not considering putting money away for when you’re sixty-five. You’re more concerned with right now. Though it’s a hard concept to understand when you’re young, the best time to start retirement planning is the day you receive your first paycheck.

I read an interesting article while researching this post that discussed the four stages of life. The stages are birth, school, career, and death. Traditionally you used your career to finance your decline as you headed towards death. The tables have turned a bit on this way of thinking, though, as people today are living healthier lives, which in turn keeps them alive longer. Longer life means more money needed for retirement. My father worked and slaved at a career until the day he died. He didn’t even get a chance to enjoy retirement.

With the average life expectancy increasing each year, if you are lucky enough to retire at 65, there is a good chance you will need 20-30 years of retirement income to fund your lifestyle. That is a terrifying thought for many, including myself.

So what is the best way to begin preparing for retirement? You could hire a financial planner early on in life, and you undoubtedly have a terrific plan put together, or you could follow these eight retirement planning steps to help keep it simple and get you on the right path.

Map out your future

Mapping your future may seem like a tough thing to do when you’ve just graduated college, and you’re in your 20’s but give some thought as to where you might see yourself in the future. Are you going to be someone who wants to firmly plant their roots in a big city and raise a family? Will you be someone living rurally in the suburbs or maybe a world traveler who doesn’t need a home base but instead works in a different location regularly.

Mapping your future doesn’t have to be precise, but more of a general outline. Savings amounts may vary based on how you see yourself in the future.

When do you want to retire

I want to retire every day from the moment I started working but logically determine what age you’d like to work until. You can’t begin to plan the amount of money you will need in retirement until you’ve identified at what age you want to retire. If you plan to retire at 50, you will need more money than the person who wants to retire at 65. The extra years of work will also allow you to build more savings.

What will it cost to retire (estimate)

When you retire, you will have less income coming into your home, unless, of course, you take some part-time job to make a little extra income. Your bills should be less, considering your children will most likely have moved out or at the very least, are contributing to the home. Your cell phone bill and auto insurance should also be reduced once your children are off your plans.

You will also have some income in the form of social security or pension coming in monthly. Hopefully, by retirement, your mortgage will be paid off since that is usually the largest budget item for most families. Financial experts suggest you use about 70% of your current expenses to gauge future costs, but keep in mind the price of everything continues to go up yearly.

It is best to be aggressive in this area and save extra as you never know when chaos will strike. Better to be safe than sorry.

How much will you need

Here’s where it starts to get scary, but not if you plan retirement early. Let’s look at how to estimate the amount of savings you will need to live out your retirement.

This exercise begins by looking at your projected income to your projected expenses:

1. Add your social security and any additional income together based on your anticipated retirement date.
2. This total will be subtracted from your total expenses.
3. The difference between these two numbers is either positive or negative. If the amount is negative, then you will need to make that amount up via savings.
4. Any shortfalls in Step 3 will need to be made up of any retirement plans (401(k), IRA, Roth, etc.).

Now that you know your numbers, all you have to do is start saving. Easy right??

Start saving

Looking at the numbers above can be eye-opening for many of us. That’s why we plan in advance. You will need to have money throughout your retirement to have financial security. For some people to achieve the savings necessary, they scale back on spending earlier on. You may need to live on less to save more. Whatever you save by cutting expenses should be banked.

Invest your savings

A traditional savings account is useless at this point, offering little return on your money. Instead, look into mutual funds that correspond with your date of retirement. There are many funds out there that fit this profile that is easy to manage and won’t cost you too much extra in fees etc. You don’t need to be an expert in finance to participate in these types of funds.

They often offer a series of questions to determine if you are looking at an aggressive savings structure or one that is more moderate. Other options for additional income is real estate property that you can rent to provide extra income. The property can be sold if need be most times for a profit.

As with all these tips, please consult a financial expert who can help out together a plan for you and choose the right mutual funds for your goals.

Maximize your 401K

If you have the opportunity to participate in a company-sponsored 401K program, do so. This money is pre-tax, and often companies match a defined contribution amount, which is free money. The other benefit of a 401K or other retirement plan is that the money is not easily accessible, like a savings account. Money that is difficult to access will guarantee that your retirement funds are safe from constant withdrawals and declining balances. You’d be surprised how quickly the money in your 401K adds when you’re not looking at it regularly, as your savings or checking accounts.

Start today!

The sooner you begin planning for retirement, the better off you will be. Take advantage of forced savings plans like 401k plans and forced savings plans.

It may seem like it’s early to think about retirement when you get your first “real” job, but this is the best time to start on the road to financial freedom later in life.

How do you save for retirement, and do you think you’ve done enough at this point in your life? Comment below.