How to prepare for retirement? Do people even understand the concept at the first place? Most young adults do not even know they actually have to save for their retirement!

For most people, a retirement lifestyle includes having a nice holiday, doing whatever they want, spend as much and basically living a fairytale life at the age of 50 and above. Some people even want to retire early and that should be applauded.

But there is an obvious problem with this mindset. Social Security will be in effect during your mid-60s. Therefore, you need to ensure there is a large amount of cash that is enough to support yourself for another 20 years or more. A period that long ultimately means bigger savings, namely the retirement account. The amount of this savings is bigger than most people imagine them to be.

As a rule of thumb, the earlier your intended retirement age, the more savings you have to do. This also means you have to save sooner and faster. Nobody wants to work part-time after they retire!

The thing is most people wish to retire. And that they want it to be faster and sooner. But statistics have shown that young adults aged between 20 to 32 years of age (50%) and adults aged between 32 to 55 years old (25%) have not started saving at all! In this case, these people better accelerate their saving rates or else they will pay for the consequences during retirement age.

You need to know what you need to retire

The general public need about 70 to 80 percent of their income (before retiring) if they want to continue their standards of living. For example, you are earning $100,000 a year before retirement age. You typically will need $70,000 to -$80,000 if you want to continue the same lifestyle. Take note that this 70 to 80 percent guideline is only an aggregate value. Some people will even need more than that.

The following will explain the possible cases you will face when you retire:-

You will need to save 65 percent of your income if you want to continue your 'pre'-retirement lifestyle

- if you save a big amount (up to 15 percent or more) of your annual salary
- if you earn a high salary
- will sooner or later settle your home mortgage loan before retiring
- do not get excited about having the same exact lifestyle that your high income brings

You will need to save 75 percent of your income if you want to continue your 'pre'-retirement lifestyle

- if you save a good amount (5 to 15 percent) of your annual salary
- will attain some mortgage debt or rent before retiring
- expect a comparable living lifestyle with your 'pre'-retirement days

You will need to save 75 percent of your income if you want to continue your 'pre'-retirement lifestyle

- save very little or none (less than 5 percent) of your annual salary
- will have a big house loan debt to settle or rentals even after you retire
- expect you want the current lifestyle

Please do not get shocked at the figures. It is simply the facts of life when retiring.