Are you saving enough for retirement? If you are like most U.S. residents, probably not.

The Employee Benefit Research Institute's 2023 Retirement Confidence Survey reports that 64 percent of workers feel at least somewhat confident regarding their ability to live comfortably throughout retirement, with only 18 percent feeling very confident. There has been a decline in confidence compared to the year prior, mostly due to high inflation. Despite this, two-thirds of workers are still confident in their ability to cover basic expenses and medical expenses during their retirement.

The good news is that you can avoid falling into this 'confidence trap' by preparing yourself for retirement now. The key is to assess your retirement needs early by determining what lifestyle you want to live and how much money you need each year to afford it. Then start saving money as early as possible and learn the basics of the various retirement-savings vehicles available to you.

Assessing Your Retirement Needs

Not calculating how much you'll need is a worker's biggest mistake as their retirement years draw closer. If you do not know how much money you will need to live the lifestyle you want in your retirement years, you are far less likely to save enough money each month to reach these goals.

The amount of money you need to save each month will vary depending on your goals. For example, your savings needs will differ depending on whether you want to travel the globe after retirement or prefer to spend your post-work days visiting your grandchildren who live less than an hour's drive away.

Know, too, that your health will play a significant factor in how much you will need to live comfortably after retirement. If you or your spouse require a considerable amount of medical care, your savings, no matter how much insurance coverage you have, will be more likely to dwindle at a faster rate.

Most people rely on three sources of funding for their retirement years:

• Social security.
• The savings they have built over the years.
• Either their pension or 401(k) plan.

Combining these three funding streams must equal or be larger than the amount of money that you determine you need each year to live comfortably in your retirement.

Starting Early

The best move is to start saving for retirement as early as possible. The later you wait, the more difficult it will be to save enough.

In their article Penny Saved, Penny Earned, Vanguard Group researchers Maria Bruno and Yan Zilbering show how vital saving early is.

According to their research, investors who saved 6 percent of their salaries in a portfolio split evenly between stocks and bonds starting at age 25 enjoyed a median portfolio balance at retirement of nearly $360,000.

That figure fell to $237,000 for investors who waited until 35 to start investing and $128,000 for those who waited until age 45.

The message here is simple: It is never too early to save for retirement.

Those workers in their 20s and early 30s might be especially well-suited for saving for retirement. Setting aside retirement money once children, mortgage payments, and auto loans enter the picture becomes more challenging. However, young workers who get into the habit of saving early for retirement will be more likely to continue their savings even as their monthly expenses rise.

Retirement-Savings Vehicles

If you have decided to boost your retirement savings, the good news is that you have plenty of financial vehicles to choose from when saving for your retirement years.

While pension plans are becoming rarities, many workers do have the option of participating in their company's 401(k) plan. If your company offers such a plan, you will be wise to participate and contribute as much of each paycheck as allowed. The more you save each month, the more comfortable you will be in your retirement years.

An Individual Retirement Account, better known as an IRA, is probably the best known of these vehicles. If your employer does not offer a retirement plan, you can deduct your contributions to a traditional IRA from your gross income. That pays off at tax time; you will pay lower taxes because your reported income will be lower. However, your contributions to an IRA are not deductible if you have a retirement plan at work.

You can start withdrawing money from an IRA at the age of 59-and-a-half without paying any penalties. When you withdraw money from a traditional IRA, though, you will pay taxes.

A Roth IRA operates differently. The contributions to a Roth IRA are never tax-deductible, but the earnings on these contributions grow tax-free. Meaning, you end up paying taxes when you contribute money to a Roth IRA, but you do not pay them when you withdraw it.

You can also withdraw money from a Roth IRA before turning 59-and-a-half and not pay any penalties.

There is one thing that both Roth and traditional IRAs do have in common: The money you deposit in both types of IRAs will grow tax-free.

IRAs are a significant source of retirement savings. However, investors can also earn retirement income through such savings vehicles as stocks, bonds, and annuities. The best plan is to rely on several types of retirement savings vehicles. That way, if one type does not perform well -- say the stock market falters -- your other vehicles can help cushion the blow.