How much do you think it costs to retire?

One recent study pegged the average price tag of retirement at about $740,000. This number seeks to include all of your expenses, from health care and housing costs to travel and entertainment expenses.

Its a big number, but its important to remember that this is just an average. The reality is and this is certainly what weve seen in our experience is that the cost of retirement will vary wildly from person to person.

There are a number of factors that will affect how much your retirement will cost, including how healthy you are, how expensive your lifestyle will be and where youll live in retirement.

Perhaps the most important factor that will dictate how much youll need to save for retirement is the age at which you retire. The earlier you retire, the longer your retirement will be and, therefore, the more expensive your retirement will be. Depending on how early you want to retire and what your goals are for retirement, this could mean youll be tasked with accumulating a significant number in savings before you retire.

For those who are working toward an early retirement, here are four tips to help you reach your goal.

Those retiring early face two big hurdles when it comes to saving for retirement. First, you have fewer years to accumulate enough in savings for retirement. Second, you need your savings to last for a longer period of time. This means you need to save aggressively during your working years. A common rule of thumb is to save 10 to 15 percent annually for retirement. For those saving for early retirement, a better goal may be to save at least 15 to 20 percent of your income every year.

There is a tendency for peoples costs of living to increase as their income increases during their lifetimes. This is known as lifestyle creep. That doesnt necessarily mean that you have to keep your cost of living flat from year to year. Imagine youre making $50,000 and are saving 20% of your income ($10,000 in savings). If you get a $5,000 raise, continue to strive to save 20% of income. Youll increase the amount youre saving for retirement ($11,000) while also having $4,000 in additional income for lifestyle expenses.

Life is a series of ups and down. You may not be able to prevent the downs from occurring, but you can take steps to limit their impact. A diversified portfolio may help you withstand a major market downturn. Purchasing good disability insurance helps protect your or your partners income should either of you be no longer able to work. Having a strong emergency fund gives you the flexibility to pay for a sudden expense. Having these in place helps limit how vulnerable you are to these risks derailing your financial plan.

A couple retiring at age 65 will need to spend about $260,000 on health care expenses in retirement, according to Fidelity. Its a daunting number, and its even larger for those who are retiring early.

The best way to save for these costs is with a health savings account. An HSA allows you to make pre-tax contributions that grow tax-deferred. Plus, when you use the money for qualified medical expenses, the distributions arent taxed. No other vehicle offers so many tax incentives, which is why we typically advise people to max out an HSA if theyre eligible to contribute (you must be enrolled in a qualifying high-deductible health plan).

Even though we wrote these tips with those working toward an early retirement in mind, the reality is that these strategies may be important for everyone to consider, no matter when you plan to retire. Yet for those who want to retire early, its even more critical you have these elements in place to help work toward turning your dream of early retirement into reality.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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Your Money: Dreaming of an early retirement? Here's how you can prepare - TwinCities.com-Pioneer Press