I'd like to put a stake into the idea that just being more "responsible" about expenses leads to a comfortable retirement without an income that is well over the median.
This has an echo to when I was a teenager, encouraged to save every penny I earned for college. I'm glad I didn't, because what I could earn and save was literally spit in the wind compared to college expenses. It did not pay for even one quarter of room and board, much less tuition. My family had no money, I worked evenings and weekends from the age I could legally work to when I flew to college. I wish I'd spent every penny I earned (and wish more that I'd just worked less...working some had value in pocket money that let me participate in stuff my wealthier friends took for granted) because I couldn't get those hours of my life back, and the saving made absolutely no difference in my odds of paying for college.
I say this as someone who hit the genetic lottery on intelligence, getting a nearly free ride at a top university, graduating only 20k in debt in 1988. Someone who is looking at early retirement because of both good fortune and good decisions, but the fortune weighs higher. I've worked minimum wage, hell I've worked less than minimum wage, I've done it as an adult full-time with overtime and with the BS part-time hours that are typical these days. I know what it could buy in 1990, and it's a hell of a lot more than it buys now. I've also worked an entry level office job for years, at steady income that was about poverty level, but just being steady makes a difference.
Here's my analysis below the fold. Think about it before you judge anybody for how they spend their money. You must take care of three priorities first before saving for retirement makes sense.
Priority 1 - Health for you and your dependents
To live long enough to retire, you have to take care of the basics. This all assumes an able-bodied, employable person. The expenses listed below must include all dependents. Obviously not having dependents makes things easier, but aside from choices to use birth control there's limits to how much control you have. My wife was disabled at age 30, overnight going from a healthy, high income earner to total disability (and only after 8 years of court battles with the US Govt, declared disabled and earning what her SS insurance should have paid all along). Bad stuff can happen to anyone, including birth control failing (not bad always, but expensive).
The basics include shelter warm/cool enough to not risk illness, food sufficient and healthy enough to sustain strength and ward off injury, transportation to your work, maintenance of clothing sufficient to keep your job and, as important as the rest, something set aside for emotional and mental health...something you spend just to make you happy, caring enough about life to work through the hardships.
Priority 2 - Income Insurance
Retirement funds work on the principle of compounded interest. To make small amounts grow into meaningful amounts takes at least a decade, usually more given the ups and downs of markets. Furthermore they work better if you can put a steady amount into your retirement funds, in good times and bad. (This is known as Dollar Cost Averaging, a fancy name for buying more stuff when it is cheap during a downturn and less when it's expensive during a bubble, enforced without emotion or timing the market because you put the same % of income away regardless of market conditions). Finally the tax-advantaged nature of most retirement funds only remain if you don't draw on that money before you're 60 (there are a few exceptions, but not many) and if you aren't earning decent money, the tax advantages are also minimal in any event.
Where most people go wrong with 401K/IRA type investments is that they put money into them without thinking about what happens if they lose their income. If you raid the retirement fund to counter an emergency, you're actually worse off than if you had put the money in a mattress...and there are better uses for that extra cash flow than a mattress too.
If your basics are taken care of, the next stream for your money falls into income protection. There are several layers to this. One is insurance - making sure maximum out of pocket for a catastrophe (health, automobile home) is something you can survive without tapping retirement funds, and if you have dependents life insurance is the most important, making sure your dependents can survive if you don't. Disability and unemployment insurance are iffy, they're often hard to collect on if you can't afford a lawyer, but can still be of value. To use insurance though, you also need an emergency fund, sufficient to pay all the max-out-of-pockets in an especially bad year, and, if a home or car owner, sufficient to pay for a major repair on no notice. This fund is also your best unemployment insurance, enough to pay all of your "basic survival" expenses plus minimum debt payments and insurance for a number of months based on the current job market (traditionally 6 months, in recent years this is more like a year for most people).
Finally if you've got all that covered, consider investing in ongoing education/training to improve your odds of getting a better job later. More income makes everything easier, but I recommend doing this on a cash-and-carry basis. Going further into debt for education that doesn't have a high paying job guaranteed at the end is another trap. Improve yourself, but find a way to do it that you can afford. Even at minimum wage, some jobs have management training or opportunities to improve skills in various ways that will transfer elsewhere. Look for them.
Priority 3 - Unsecured debt
The main reason for this category is that debt makes just living more expensive, which also makes #2 harder and increases the odds you'll tap your retirement fund instead of your emergency fund, skimp on insurance, healthy food, transport or some other essential to security in life.
Regarding secured debt - I'm not fond of debt to buy a car, but if it costs less than average repairs on a junker and makes the cost more predictable and/or a new/reliable car is important to the kind of work you do, it's not so bad. If you lose the job that needs it, you can give the car back to the dealer and the debt goes away. Likewise cost of home ownership is higher than most folks think (repairs, insurance, property tax add to the mortgage) but renting has another set of risks and in the end you can walk away from a home if it becomes unaffordable. You can't walk away from unsecured debt, especially with modern bankruptcy laws.
All I have to say about this is that you have to be doing more than minimum payments. You need to be paying down this debt before investing in retirement. It doesn't have to be gone, but it has to be going away in a near term (< 5 years) timeframe to make putting extra money into a retirement fund worthwhile compared to just clearing the debt.
Priority 4 - Retirement
If you are actually making enough money to cover physical, emotional, mental health for yourself and your dependents, properly protect yourself against income loss and have a plan to pay off all unsecured debt in near term and STILL have money left over, congratulations. You can now think about retirement.
It is at this inflection point that "scrimping and saving" might have some value. In 1992 I got a job for 20k/year (this is about 40k/year in today's dollars), full time, with benefits. Taking advantage of all of the benefits cut that down some but profit sharing added a bit, and employee stock purchase gave me a guaranteed 15% return on my money every 6 months, if I could somehow do with 10% income cut on a month-to-month basis. I could also fund a 401K to the level of the company match, which ate another 6% of pre-tax money, a bit less in post-tax paycheck.
I was living very cheaply, had a girlfriend living with me that was getting part-time work and helping with expenses, still had my 20k of student loan debt plus a few thousand of other unsecured debts from doing near minimum wage work for about 18 months (and being flat broke before that period, plus student loan debt).
With a guaranteed income stream, and a lifestyle that could live on maybe 15k/year with some income protection covered (ie, I could afford a car repair now without adding to my debt, I had health insurance for the first time in years and could afford copays for teeth cleaning, etc), I was able to work on both the student loan debt and fund my 401k (at the time, just enough to get full company match. Only when income rose did I raise it enough to cap the payout). Because retirement funding was capped in how much I could contribute, I could look at what was left over, decide it would pay off my other debt in a reasonable time (about 2 years, as it turned out, rather than the 3 I'd planned, for various reasons) and be ok. Without my wife's income, which was still low but in today's dollars pushed our household into the 60K range, I couldn't have done all of that at once, even subtracting out her expenses.
I also didn't establish an emergency fund and just got lucky that nothing especially bad happened (my emergency fund was credit cards, actually, enough for copays, car repairs and such, but not enough to pay for extended unemployment).
If I were to do it over again, I'd have put the 401k money into an emergency fund until it was large enough, having it grow while paying off short term debt.
Without that income though? I had the "luxury" of renting a two room condo in a run-down neighborhood, no kids, one car in our family that was quite unreliable, a bus system that could turn a 10 minute trip to work into a 1-2 hour trip...still doable though in a pinch and a small grocery store across the street, so I didn't need a car to eat. Our entertainment budget was similar to our gas budget...small....but we had it. There wasn't a single thing in our list of expenses large enough to give up to even build a meaningful emergency reserve, much less insurance, pay down student debt etc. So it would have been stupid to try to cut costs with our tiny entertainment fund, or eat worse, cheaper food, or live in a place that was cheaper but further from work (my wife could walk to her job).
By staying in that lifestyle after I got a steady job, we put our household into a much more stable state. Even so, lets say I did everything right but didn't have the internet bubble to get me out of underemployed, back into my career and get my salary back to where my education/training was supposed to have put it by year 2000. Lets say I was still working that 20k/year job, with pay raises that roughly equaled inflation, and my wife never made the transition from temp work to professional work. This is actually much more typical than what happened to me. Lets say I was never unemployed, funded my retirement plan at maximum company match and got historical returns for S&P500 for that period.
Today I'd have about 150k in my 401k. That's only about 3 years of our household income, maybe 4 years given it costs less to be retired than to work. It's better than most people seem to do. On the other hand, I'm not yet 50. If the same situation endured for 40 years, which would get me into social security eligibility, I've got a nest egg of about 675k (about 425k in today's dollars)...so about 10 years of savings. Might be enough if social security pays for about half.
However...that assumes I live the same lifestyle I lived as a childless young man for 40 years, with a significant income from my partner, and no income interrupted for longer than our income protection/emergency fund could handle.
Should I somehow be able to afford the IRS limits (about 16k of my money+4.5k match for 401k, another 11k for Roth IRAs) the equation changes considerably. But that reduces a 60k before-tax income for our household to 33k...that would put us back into "housesharing with friends for 40 years" territory.
Bottom line
Retirement savings is a luxury for those who are making enough to not incur debt or have to raid their retirement fund while still meeting all other obligations. It takes a LONG time of steady contributions and compounding interest to get enough money to make a difference in retirement (25 years isn't enough....really it takes 40 years if you're at the inflection point where starting to save is possible but you can't max out IRS limits of contributions).
Retirement savings is a pretty good deal if you never raid it. In 2009, my savings in those accounts halved. Had I been thrown out of work at the same time, my emergency fund would have lasted about 6 months, and I'd have been looking at either selling my house at the nadir of the housing market...or taking massive penalties and selling retirement fund accounts at the nadir of the stock market. Either way my net worth and eventual retirement prospects would have taken a tremendous blow that simply surviving the next few years without selling either pretty much recovered entirely.
(as I continued to hold my job, all of my extra money went into extending my emergency fund by about a factor of 3...that was a very bad scare. I can now go about 2 years without being forced to sell my home or other assets, and in a 2009 scenario where I sell my home in 2010 instead of 2008-2009 to stay liquid is significantly better than being forced to sell in summer of 2009)