The road to retirement might be a difficult one for people if preparations aren't made many years before age 65.

According to the U.S. Department of Labor, fewer than half of Americans know how much they have or have calculated how much they need to save for retirement. Yet experts estimate that people will need about 70 to 90 percent of their current - or pre-retirement - income to continue living the same lifestyle as they do while working.

Financial adviser Dave Steele with Edward Jones Investments said retirement planning should begin early in life, with diverse investments that include personal investments, Social Security and employer investments, if available.

"The key is not to start (saving) a year before retirement," Steele said. "You have to work on this your entire life."

In addition to thinking about the cost of living and inflation increases when planning for retirement, people should also consider unforeseen health care or extended-care needs that might not be evident at the beginning of retirement.

Today, an average American spends about 20 years in retirement, according to the Department of Labor. When the Social Security system began in the late 1930s, benefits began at age 65, when the average life expectancy was about age 65 or less.

"It was never meant to be a retirement," Steele said.

Social Security was meant to be more of a safety net for people who lived longer than expected. With an increased life expectancy today, people live many more years after the traditional age of retirement.

Steele recommended preparing and planning for retirement by figuring a basic budget needed to maintain the kind of lifestyle a person wants to live in retirement.

First, begin with the necessary expenses, which include daily living costs, like food and housing. Next, look at discretionary needs such as travel or hobbies, he said. Also consider any legacy needs - money that will be left for heirs or to charity.

"Some people are quite unpleasantly surprised," Steele said about figuring out a retirement plan. "Most people don't fully comprehend how small their Social Security is going to be."

People who fail to properly prepare for their retirement often have to remain in the work force full-time or part-time to support the lifestyle they're accustomed to living.

"We're seeing people work longer or postpone a dream retirement," Steele said.
Start saving, keep saving and stick to your goals

If you are already saving, whether for retirement or another goal, keep going! Saving is a rewarding habit. If you're not saving, it's time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Devise a plan, stick to it and set goals. It's never too early or too late to start saving.

Know your retirement needs

Retirement is expensive. Experts estimate that you will need about 70 percent of your preretirement income - lower earners, 90 percent or more - to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead.

Contribute to employer's retirement savings plan

If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can. Taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate.

Learn about pension plans

If your employer has a traditional pension plan, check to see if you are covered by the plan and understand how it works. Ask for an individual benefit statement to see what your benefit is worth. Before you change jobs, find out what will happen to your pension benefit. Learn what benefits you may have from a previous employer. Find out if you will be entitled to benefits from your spouse's plan.

Consider basic investment principles

How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you'll have saved at retirement. Know how your savings or pension plan is invested and investigate your plan's investment options. Put your savings in different types of investments. By diversifying this way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand-in-hand.