The time has come for Americans to face the reality of retirement planning. Considering that defined benefit plans are moving closer to full extinction each year, it’s now more important than ever for individuals to save for retirement. This is not an easy process for the majority of the workforce. However, you can improve your odds of an ideal retirement by educating yourself and planning for it as soon as possible.

With stagnant wages, rising living expenses, and an overall weak labor market, there are many obstacles facing employees trying to save for retirement, but no one cares about your financial future as much as you do. Let’s take a look at five charts from a recent JPMorgan Chase presentation that are crucial to the retirement planning process.

Source: JPMorgan Chase

1. Life expectancy

As you near the typical retirement age, the probability of you living for another decade or two is remarkably high. Men aged 65 today have a 78 percent chance of living another 10 years, while women have an 85 percent chance. Interestingly, the odds of a long life increase dramatically for couples. In fact, couples aged 65 today have an astounding 97 percent chance that at least one of them lives another 10 years and an 89 percent chance that one experiences their 80-year birthday. It almost comes down to a coin flip that at least one person in the relationship lives to 90.

In short, you should plan on living to at least 90 years old or perhaps even longer, depending on your family history. While more people are working beyond the age of 65, that doesn’t mean you should assume you will be able to do so. JPMorgan found that almost 70 percent of actual retirees left the workforce before age 65, primarily due to health problems or disabilities.

Source: JPMorgan Chase

2. Saving early

We’ve all heard it before: You need to start saving for retirement as soon as possible. It’s a simple concept, but many people fail to understand the long-term effects of saving and investing early in life. As the chart above shows, a person who merely invested $5,000 annually between the ages of 25 and 35 would have $602,070 at age 65, assuming a 7 percent annual return. In comparison, a person who invested $5,000 between the ages of 35 and 65 would have only $540,741.

Market returns are not guaranteed and are certainly more volatile than 7 percent each year, but the math shows the benefits of compounding returns. The earlier you start, the better your chances will be of reaching your financial goals. Your chances also improve if you start early and keep a consistent pace. A person who invests $5,000 annually between the ages of 25 and 65 could accumulate more than $1 million for retirement.

Source: JPMorgan Chase

3. Spending habits

Predicting your exact income needs for retirement decades in advance is impossible, but you should recognize that you may have more expenses than you think. On average, most American households peak in their spending at the age of 45. However, as the chart above shows, there are still significant costs after the peak and during retirement.

The average spending for 65- to 74-year-olds totaled $44,886 per year — not exactly chump change. If you plan on traveling a lot in retirement, your costs could be even higher. Additionally, healthcare is the one category of spending that failed to log a decrease. If you invest in nothing else for retirement, at least invest in your health. Eliminating mortgage debt and making sure your house fits your actual needs is also helpful in reducing retirement expenses, as housing-related costs represented the largest portion of spending among all age groups.

Source: JPMorgan Chase

4. Investing

Due to inflation eroding the value of money, it’s not enough to simply let your savings sit in cash. One dollar invested in Treasury bills in 1950 would have only grown to $16 in 2013. However, that same dollar invested in large-cap stocks would have grown to $969, while small-cap stocks would have grown that dollar into $4,260. There are certainly other investment choices than stocks, but this illustration reminds investors that cash is a terrible wealth generator over the long term.

Warren Buffett once explained how investors should view cash. He said: “The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time. And you don’t want to pay too much for them so you have to have some discipline about what you pay.”

“But the thing to do is find a good business and stick with it. We always keep enough cash around so I feel very comfortable and don’t worry about sleeping at night. But it’s not because I like cash as an investment. Cash is a bad investment over time. But you always want to have enough so that nobody else can determine your future essentially.”

Source: JPMorgan Chase

5. Market timing

Unless you’re a day trader, you should not be trying to time the market. With the rise of smartphones and tablets, investors are constantly plugged into financial markets, but that doesn’t mean you should always be doing something with your portfolio. The average Joe is typically better off with a diversified portfolio built for the long term. Trying to time the market can be disastrous, especially when it comes to stocks.

As the chart above shows, $10,000 invested between December 31, 1993, and December 31, 2013, would have grown to $58,332 if it was constantly invested in the S&P 500. If you missed the 10 best days during that period, the investment would have grown to only $29,111, almost half of the amount if you simply left the money untouched. Critics rightly point out that missing the worst days in the market is even better for a portfolio, but that is a dangerous strategy for most investors.

Even if you rightly time the market and avoid the worst days, you are then left with the agonizing decision of when to get back into the market. You need to know yourself and your limitations when investing.

More From Wall St. Cheat Sheet:

• Is Your Home Better Off Now Than Four Years Ago?
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• 3 Underrated Dividend Stocks for Your Portfolio

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