Saving for retirement carries a whole new meaning today. In 1950, there were 16.5 people paying into Social Security for every beneficiary. In 2010, that ratio became 2.9 to 1.

As for pensions, they are rare these days. Employer-sponsored plans only pay up to 25 percent of your pre-retirement income. So it’s no longer enough to rely on these types of funding for your retirement. You need to intelligently plan, save, and invest your own money to ensure you live comfortably during your post-work years.

Four Basic Steps to Begin Planning

•  Calculate how much you may to need in retirement.
•  Look for wiggle room in monthly budget.
•  Max out your tax-advantaged options.
•  Allocate additional savings to one or more non-tax-advantaged plans.

Time is your greatest financial asset.
The earlier you start saving, the more money you will amass. But remember you aren’t simply collecting cash in a bucket. Because of compound interest, the interest earned every year is added to your principal so your final amount grows at an increasing rate—not in a linear fashion.

Invest to beat inflation.
Inflation eats away at our purchasing power, so simply leaving our savings under the mattress for 30 years doesn’t do us any good. What this boils down to is real vs. nominal interest rates. The nominal interest rate is simply the stated rate that you might see on a savings account (e.g. a 1 percent on your $10,000 savings). The real interest rate, on the other hand, factors in inflation, as measured by the government’s Consumer Price Index (CPI). The real rate is the nominal rate minus inflation. What 2 percent inflation means is that, on average, the things you buy every day are 2 percent more expensive than they were last year. So, your $10,100 is really worth $9,898 in purchasing power!

Calculate how much you are likely to need in retirement.
As a rule of thumb, many financial experts believe that, by a certain age, you should accrue a certain amount based on your current salary multiplied by a designated factor, as follows: For example, if you’re making $100,000 per year, you should have $300,000 in retirement savings by the time you’re 45.

Ultimately, these numbers are different for every person and family. Consider the following factors, and adjust to your specific needs.

Consider the lifestyle you want, healthcare costs, and when you expect to retire. Estimate monthly Social Security and pension payments. Calculate how much you need to save yourself.

Subtract Social Security and pension payments from expenses. The remaining is what you’ll need for retirement through other savings methods.