Saving for retirement is important for a number of factors, but it can often be overwhelming to investors due to the multitude of options and issues related. Here are the basics and a plan on how to execute and get started.
Most financial planers recommend saving 10-15% of your annual pretax salary. The rate you save depends on how early you start your savings and where you want to be at retirement. If you are say 25 or younger, you might only have to save 10% to get you where you want to be, if you are getting a later start or maybe you are young with the goal of early retirement, you might want to save 15%-25%. Check out a calculator and see where you are.
The savings vehicle is an important aspect of retirement savings as there are a few tax favorable tools that the IRS allows us to use. The 401k/traditional IRA/403b are all similar plans where you are able to save your pretax dollars with taxes being taken when you later withdraw the money in retirement. The idea here is that you will be living on less in retirement, so your tax rate will be lower. The 401k has an added benefit in that it often comes with a company match. This is a great incentive to save as the money would otherwise be left on the table.
The next class of savings is post tax retirement savings. The Roth IRA/Roth 401k/HSA/ESA/529 are all types of savings where you contribute taxed dollars to an account that can later be used for its intended purpose with no tax being assessed on withdraw. The Roth can be used for retirement and while it has income limits it is beneficial even when your tax rate isn't that high due to the ability to grow your investments and never be taxed on the gains.
With this I would recommend the following allocation. If you have a 401k with a match at work, contribute first to the this up to the match amount. It is free money! Next max the Roth IRA for yourself and your spouse and if you have the ability to contribute to an HSA, max it out as well. Now go back to your 401k or start your 403b/IRA if you don't have a 401k and max it out. With this I would stop the progression based on the percentage of your salary you want to save towards retirement. It is easy to get carried away here and not be saving towards more current needs, like a house, car replacement, etc. Also, if you want to retire early, remember that none of this money can be accessed without penalty until you are 59 1/2 at the earliest.
So, what should you look for in investments now that you are socking money away? Low cost index funds for one. They are cheap, as low as 1%, and they perform, at least they have performed. They get beat, but it is really hard to predict which ones will outperform. Stay away from insurance products which often times are sold based on commissions and heavily pushed by brokers and "advisers". It doesn't mean that these are bad products, but often times many of the benefits that they offer are already realized in the savings vehicle that you have chosen (roth/401k/traditional IRA).