Semi-retired person here. I choose to keep working, but I do not need to work for financial reasons, and I have officially been retired since 2009. This may be too much detail, but I wanted to present a real-life result of the financial plan that we put into effect almost 35 years ago.
I know that a discussion of Social Security is off the table in a lof of current discussions, because people fear that it will disappear, but I would like to add a bit about how it has affected our decisions as a couple. I think there is a lot of fear about financial security, but if you live within your means and plan for the faraway future, it is likely to work out fine. That said, we are definitely on the frugal side. Both of our parents married during The Great Depression, so we have both been affected by that.
My husband retired at age 50 from a union job. He had a small pension, but wonderful health insurance that covers us both until he dies. He thought he would start a second career, but my career was just taking off (after a lot of years of being underpaid and overworked), and because he had some medical issues, and I was working 8 days a week, it was better for him to be at home. He started drawing Social Security at age 62 and continues to draw his pension (which will disappear when he dies).
I worked full-time from 1991-2009, after finishing a graduate degree that led me to a wonderful job with a modest income (I never made my age before retiring)--but my employer had wonderful matching programs for its 403B, which I took full advantage of, and I had SEP funds over the years for free-lance work and IRA's. I point this out because situations change over the years, and the catch-up programs toward the end of my full-time employment allowed me to save about 25% of my income tax-free as a matching contribution in my emloyer's program(I don't remember the exact numbers or terminology--we both threw money into the pot).
During the last few years I was working full-time, we no longer had a mortgage, so we saved for a down payment on a retirement home. Of course, we bought it just as the market crashed, but the value has ostensibly returned and we are not planning to sell it anyway. We put down $50,000 and financed $150,000 for 15 years (in 2007), but we refinanced a few times, because the rates were too cheap to pass up, given our retirement account earnings.
We bought a home that was close enough to my employer so that I could work part-time. I started collecting Social Security at age 62, because my older siblings died at 68 and 70, and I expected to join them. I am still in good health, and I am still working. Although our retirement accounts are bigger than I could ever have imagined them, we are only drawing out enough to pay our mortgage, because my husband is past the age of mandatory distributions. My accounts remain untouched, and I have continued to make IRA contributions.
My part-time job pays me about $2,000 a month, and theoretically, I could contribute the entire amount to retirement savings instead of just doing the IRAs--but I like a big emergency fund.
We are in Michigan, and my husband (and I), because he was over 70 at the time of a tax law change, were grandfathered into an income tax plan that does not tax us on any retirement income (so effectively, the state tax pays the federal tax bill--assuming that I'm still working and contributing to an IRA). The deductions for both of us are higher because of our age.
I know I have rambled on, but I would just like to say that we live very well on a total income of about $75,000, which is what we bring home while I'm still working. When I reach 70 1/2 or so, our mortgage will be paid off--or close to it, so we will have an automatic $12,000 annual raise in available funds. I will have to start drawing 4% or so out of my IRA (which earns around 3%). In short, I could quit work tomorrow, and we will never have any financial problems.
If my husband dies before I do, I will have to get Medicare Part B coverage, but other than that, I do not anticipate any change in income level. We have put a new roof on the house and put down new floors this year. We decided to finance half the purchase price of a new car two years ago, and we have $400 payments for another year (.09% interest). No one can predict the future, but we tried our best to plan for the worst, and we are amazed at the quality of life we have.
So keep putting away as much as you can afford; make sure to maximize any employer retirement plans as well as regular IRA's. Get regular exercise, make sure that all members of your family see the doctor and dentist regularly, and raise your children to be as independent as possible (we had one come back home at age 40 for an 18-month educational interval, but it made her more independent in the long run--it's the age of the boomerang children).