LONDON, England (The Conversation) — Retirement planning sounds about as exciting as watching paint dry, especially when you’re in your 20s, but it’s actually the key to unlocking your future freedom. The earlier you start saving, the more time your money will have to grow. And you need to have a plan for how much you need to save and how you’re going to do it.

Unfortunately, retirement planning is often something that’s overlooked, even by people in their late 40s. And even if they want to start planning, they may find the idea of it overwhelming or be unsure where to start.

Here’s how you can start planning your retirement and taking charge of your financial future.

1. Calculate your outgoings

You are likely to have less money to live on in retirement than as a working person — this is why it’s important to have a rough estimate of how much you will need in the future. Preparing a budget is one way to do that. Try to keep the age at which you wish to retire in the back of your mind.

You can break your future spending down into two main categories — essential and non-essential.

Essential expenditure covers the unavoidable costs of living. It includes things such as rent or mortgage costs, utilities, groceries, and transport, for example. It can also include debts like loans and credit card debts, although it’s best to try to clear this type of expenditure before you retire.

Non-essential expenditure covers lifestyle costs such as dining out, holidays and hobbies.

You can use a spreadsheet to work out all these costs, and there are various retirement budget planners available online to help you too.

2. Calculate your pension income

You now need to estimate how much money you will have coming in.

The first step is to check how much of a State pension you are likely to get in future. This estimate, based on your national insurance contributions, provides an idea of the financial support you can expect.

The next step is to consider your income from any private pensions you may have, which come in two main types — defined contribution pensions and defined benefit pensions.

Defined contribution pensions, also called money purchase pensions, are usually either personal or stakeholder pensions. So, they can be private pensions which you’ve arranged yourself or workplace pensions arranged by your employer.

Defined benefit pensions, also known as final salary or career average pensions, are usually arranged by your employer. The amount you’re paid is based on how many years you’ve been a member of the employer’s pension scheme and the salary you’ve earned when you leave or retire.

In both defined contribution and defined benefit pensions you can choose to take up to a set percentage of the amount built up as a tax-free lump sum.

It’s easy to lose track of your pensions, especially if you change jobs regularly, but there are ways to track them down.

3. Calculate any other income

Retirement income can often involve more than pensions, and you will need to take all of it into account.

Although arguably unlikely due to the state of the market, you may also have decided to invest in property. This type of investment could provide a rental income in future or a lump sum if you decide to sell up, for example.

It’s also possible that you may want to continue working in some way as you get older.

4. Retirement road map

Having assessed your potential retirement income and outgoings, you can now make a proper plan. Throughout this process you should have had a retirement age in mind. While you’re not obliged to stop working entirely to access your pension, current regulations dictate a minimum age.

You now need to identify any gaps in income. With people living longer you may potentially need to plan for income that can last 20 years or more.

If you do have gaps, consider adjusting your plans. This could involve extending your working life, increasing your savings, or strategically accessing funds from your pensions.

Chris Perry is principal lecturer in finance, Cardiff Metropolitan University.