We can agree that the first step toward retirement is choosing the age when you want to stop working. But unfortunately, that's the beginning and the end of their retirement planning for many people.

If you're in your 40s or 50s and you haven't started thinking about how you will actually achieve your retirement and what you'll do when you stop working, then it's time to get serious.

The five following items are the major reasons why people are forced to keep working far longer than they expected. Read on to see how to fix these issues and increase your chances of retiring on time!

1. Underestimating How Much Money You'll Need to Retire

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It's hard to guess how much money you need to save to retire comfortably, but it's probably more than you realize. Generally, you'll want to cover 70% to 90% of your working income with a combination of your savings and social security income. So, someone who makes $60,000 will need $42,000 to $54,000 each year of their retirement. Is that less or more than you thought?

Either way, the Economic Policy institute finds that people aged 56 to 61 have a median savings of just $17,000 put aside for their retirement. In fact: more than 40% of baby boomers approaching retirement don't have any savings at all.

Solution: Accelerate Your Savings

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Sample Stars/Shutterstock

The good news is that if you're behind on your savings, you should still be able to retire on time if you increase how much you're saving during the last ten years that you're working. You can even accomplish this without entirely devastating your current plans and lifestyle. How? Enter the certificate of deposit, also known as a CD.

A CD is like an accelerated savings account. Essentially, you deposit a sum of money for the bank to hold for a fixed term of anywhere from 1 to 5 years. You can't access this money before the end of the fixed term without incurring a penalty, unless you specifically choose a CD that has no penalty. But during its time sitting in the bank, your money can gain twice as much interest every year than if you'd put it in a high interest saving account. Unlike investing in individual stocks or mutual funds, CDs are considerably lower risk and are ideally suited for shorter-term savings goals.

2. High Living Expenses

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Many people have difficulty saving for their retirement because their cost of living is too high and they don't have much left over after paying bills to deposit into their savings. Some picture themselves getting by with the small amount they've saved in their tax-free retirement savings accounts because they plan on transitioning to a thrifty lifestyle once they retire. Unfortunately, this assumption has two flaws that will lead to an inability to retire on time.

Firstly, not putting money aside now is just postponing the fact that you must put money aside. If you don't do it now, you'll have to do it later. That will almost certainly mean having to work past your projected retirement age.

Second, it's harder to give up an expensive lifestyle with a big house and nice car than you might imagine. Living a luxurious lifestyle right before you want to retire will make it that much more difficult to give it up. Then, if you reach retirement age and realize you want to keep these luxuries, you'll have to keep working to save extra for a more comfortable retirement.

Solution: Decrease Your Lifestyle Spending

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So, what's the solution? Simple: begin to gradually decrease your lifestyle spending ahead of time. Look at how much you make a month. Driving the newest car can be expensive, and so are cable TV, premium mobile phone plans, and eating dinner out several times a week. If you begin to cut down on your monthly spending, you'll have more money left over to put into your saving account, a certificate of deposit, or another investment that will get you to your savings goal faster.

3. Overspending on Housing

a large suburban house

Apartment living is very common in Europe and other parts of the world, but it doesn't really jive with the white picket fenced American Dream. If you're living in North America and you own a house, there's a good chance that it's bigger or more expensive than you need. As of 2017, the number of Americans who can't afford to pay for their homes is up by 146%. The problem begins during house shopping, when people fall in love with a house and then start pulling strings to see how they can pay for it. Unfortunately, this results in mortgage and maintenance costs that eat up too much of the family budget to have any left over for retirement savings or investing.

Solution: Downsize

large couch in a small room
Robert Kneschke/Shutterstock

If having a bigger house than you need is making it impossible to save money for retirement, then consider downsizing in the years before you stop working. This will allow you to put more of your income towards your retirement and increase the chances that you will be able to retire on time. Downsizing earlier will also make your transition to budget-friendly retirement living easier. Finally, keep in mind that the city where you choose to retire can make a big difference in the quality of life you can achieve with your savings and pension.

4. Investing Too Aggressively or Not At All

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The search for bigger returns leads many people to invest heavily in stocks, which yield higher returns than savings but are riskier thanks to market volatility. Aside from running the risk of losing your money, successfully investing in stocks works best as a long-term strategy and the best options are growth stocks and income stocks or funds (such as mutual funds or EFTs) that pay regular, increasing dividends over time. This means that if you don't have 20 years to pursue investing in stocks, you might be running a higher risk and you won't be making as much money. The flip side of risky investing plans is not investing at all because you're afraid of the risk. The result is that you'll short-change yourself and make far less money than you need.

Solution: Get Higher Returns on Your Money

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Putting your money in a certificate of deposit is a good middle ground that gets you higher returns than regular or high interest savings accounts while avoiding most of the risk that comes with investing. When you lock your money down for one to five years with a certificate of deposit, you're locking into a particular interest rate. The risk is that if interest rates go up in general, the interest on your money won't go up because you've locked in. To reduce this risk, you can consider putting your money in a one-year certificate of deposit that will lock in the interest rate but won't force you to stick to it for too long if interest rates do go up. The next year you could simply put your money in another one-year CD and reap the benefits of higher interest all over again.

5. Not Having a Plan

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Many people choose an age that seems best to retire and leave their “retirement plan” at that. However, if you don't create a solid plan for your retirement, you may find yourself a year or two away from it and you won't be ready. You may not have enough saved or you might not have thought about what you'll be doing with all your free time! Creating a plan in advance is essential to making sure you retire on time, or as early as possible.

Solution: Create a Retirement Plan

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A retirement plan should begin with how much money you think you'll need each month to cover housing, food, and other monthly costs that will ensure a comfortable lifestyle. Cross-check this with your sources of income, including your Social Security, savings, and perhaps part-time work. If there is a gap between how much money you'll have each month, then you'll need to fill it by padding out your retirement savings and possibly working a few years longer than you originally planned.

It won't be the end of the world if you have to work a few extra years before you retire, but it's best to make the most of it. The less time you have until retirement, the more important it is to gain the highest returns possible on your money. Whether you are two years or ten years from retirement, putting your money in a certificate of deposit will increase your earnings and help you grow your retirement savings faster.

Be Prepared!

When it comes to retiring on time, the more you plan ahead, the more likely it is to happen. By creating a monthly budget, considering your sources of income, and boosting your money's interest earning potential as soon as possible, you will be giving yourself the best chance of retiring on schedule.