The National Institute on Retirement Security states that the funds American workers have set aside for retirement are inadequate to the tune of trillions of dollars. Why? Well as the old adage goes, Failing to plan is as good as planning to fail.

One of the first pitfalls in retirement planning is giving up before you ever start. Many people look at projections of what will be needed to retire and conclude it is simply out of reach, so why even try? In conjunction with this defeatist attitude about saving, they may also think Social Security will provide them with a safety net. But the cold hard reality is, Social Security provides nothing more than a meager income at best. It does, however, provide at least a part of what those projections tell you is going to be required.

Do You Already Have One?

A lot of employers provide retirement plans, which, together with Social Security, will get you closer to that projected number. Employer-funded programs these days are mostly what are known as defined contribution plans, which means the only certainty is the amount of money that will be contributed by the employer. Employees, normally, also contribute to the plan. Often these are in 401(k) plans, with which most people are familiar.

Your first objective with these plans should be to contribute enough of your earnings to build up a nest egg that meets your projected goal. The next objective is simply to invest wisely. These plans are administered by investment brokers that offer various investment strategies with varying degrees of risk. When you are a number of years away from retiring, you can take more risk and build the nest egg. As you approach retirement, however, money should be moved to more conservative investments that will hold value.

Other employers may offer defined benefit retirement plans. These plans specify a benefit that will be paid when a certain age and/or years of service plateau is reached. These plans are nice in that they relieve you of worrying about specific investments. They do not, however, typically pay a benefit that meets the projected retirement number.

Should You Do More?

Whether you are in a defined contribution plan, a defined benefit plan, or have no employer plan, the key is to start saving. Do not put it off until you are out of debt. Chances are you will never start. Take advantage of whatever tax-deferred saving instruments are available, such as Individual Retirement Accounts. But don't be lulled into thinking that those IRA's are a panacea, because you still have to pay tax on the withdrawals.

Finally, do not underestimate how much you might actually need. These days, many parents are still supporting adult children. In addition, as life spans have increased, many retirees find themselves having to care for one or more parents whose own retirement income has become very dated. Health care costs are also volatile. Medicare will not cover all your health expenses, and you never know what your health care issues may be. Consider long-term care insurance to cover some of these gaps.