Will You Be Able to Maintain Your Lifestyle When You Retire? Around 50% of Americans Won't

One of my biggest financial regrets is that I didn't put more money away for my old age when I was in my 20s and 30s. Sure, living in a big city on a tight budget was tough financially. But in hindsight, if I'd socked even small amounts away into a brokerage account, I'd be in a much better position today.

Data from the National Retirement Risk Index shows that I'm not alone. The latest figures from the Center for Retirement Research show that around half of working-age households won't be able to retire with the same standard of living they have now. More worrying? Its data also shows that many households are not aware that they could be in trouble.

Work out how much you'll need each month

It isn't always easy to know how much we might need in our old age, particularly if we try to factor in the cost of unknowns like medical care or assisted living. It's also hard to predict for sure what assets such as stocks or real estate might be worth because markets fluctuate. Finally, there's the ever-present cloud of inflation, which means our money doesn't go as far with every passing year.

All the same, you can set yourself some concrete goals. As Ryan King from Making Money Simple told us, "It's all about having a plan and then working backward to get there." Use your current budget to understand what you spend each month. Then think about how that might change when you retire. For example, you won't need to spend money commuting to work. You might have paid down your mortgage, which would eliminate a significant monthly cost.

"Make sure you've built your investing pot to the level where you can live the lifestyle you want before you retire," says King. "For example, if you know you'll want $2,500 per month, start making the necessary investments today so when you get to your retirement age your investments will be able to give you $2,500 per month."

Some financial planners suggest you'll need about 80% of your current income to live comfortably in your old age. But there's no set answer for everybody. If you're planning to travel the world, your budget will be very different from someone who wants nothing more than to do Wordles and crosswords in the garden.

Calculating your retirement nest egg

Some people set themselves a goal of, say, having $1 million in their retirement account when they stop working. That may be enough, but you'll get a more accurate picture if you use your monthly costs to figure out the size of your ideal retirement fund. You may also need to factor any Social Security payments and other income sources into your calculations.

In terms of getting to an actual figure, the 4% rule is a good starting point. It isn't perfect, and there are other tools you can use as well. The idea is that if you can easily live off 4% of your nest egg in your first year of retirement, you'll have enough money to last another 30 years or more.

Let's work backward from King's example of $2,500 a month. That would mean you'd need $30,000 in your first year of retirement. Using the 4% rule, you'd need $750,000 in your retirement fund to maintain your current lifestyle. Next, think about when you want to retire and use a retirement calculator to figure out how much you need to contribute each month to reach that figure.

It's never too late to save for your old age

If you're worried that you're behind with your retirement savings, try not to panic. Speaking personally, I can't change what I did with my money in my 20s and 30s, but I can do things differently moving forward. Take a look at your budget and see if you can squeeze out any extra cash for your retirement contributions. Perhaps you can sacrifice a subscription service or skip a couple of take-out meals to put more into your retirement fund.

Here are some other steps you might take:

• Use a tax-advantaged account: There are a couple of different tax-advantaged accounts out there. Find out if your employer offers a 401(k) -- and if it will match any contributions you make. If so, look for ways to max out your contributions. If that's not an option, find out which type of individual retirement account (IRA) would work best for you.
• Use catch-up contributions: There are limits to how much you can contribute to tax-advantaged accounts. But if you're over 50, you may be able to put in some extra cash and top up your retirement fund. Put simply, any ways you can reduce your tax bill (either now or in retirement) will mean you have more money in your old age.
• Prioritize your retirement contributions: It's all too easy for retirement contributions to get lost in the pressures of day-to-day bill payments. Consider setting up an automatic payment shortly after your paycheck comes in, so it can't fall off your financial to-do list.
• Give yourself as much time as possible: The longer your money has to work for you, the bigger your nest egg will be. Compound interest -- earning interest on your interest -- can really add up.

When we're young, it's easy to fall into the carefree mindset of "Eat, drink, and be merry, for tomorrow we die." Life is short so we should have fun while we're young. That's all very well, but it would be nice to eat, drink, and be merry well into our golden years as well. That takes a bit of planning, saving, and may also involve some sacrifices along the way.