Build a Secure Retirement

A small amount of money, equal to the cost of a latte per day, invested in a stable mutual fund will grow to provide a foundation for a solid retirement income. Wealth is built long-term through basic, easy-to-follow plans. Here are tips to help you build the wealth you need for a secure retirement:

#1 Understand Your Life Stage

If you're young, begin setting aside small monthly amounts of money. Sacrifice financially in order to keep your expenses low and generate the highest possible amount of savings. If you work for a company that offers matching to your 401(K), take advantage of it and set aside the maximum. I started saving for retirement in my mid-20s. I've never had a high annual income, but our retirement income is in good shape.

If you're older, understand where your money flows by creating a simple home budget and don't worry about trying to strike riches through the lottery. Set aside your pennies and they, too, will grow. Begin saving seriously and find ways to put extra aside. Make sure you develop a skill that has monetary value to supplement your income or guard against layoffs in your 50s and 60s.

#2 Forget What Others Think

Do you see your friends buying new cars or buying cars for their children while you drive a car that's 3 - 5 years old (or older in our case)? Does investing in a solid mutual fund or other investment vehicle mean you'll have to forgo new furniture for the next few years? Or do you need to explain to your kids or yourself why you don't need a new plasma television? If so, that's fine. Status symbols are not wealth builders. If you can't pay cash and have enough money left to invest for your retirement then you don't need the item.

#3 Get Expert Advice

Sit down with a financial adviser who cares about your situation and your retirement needs. Interview them and ask them why they chose their profession. The more passionately they talk and the more interested they are in you, the more likely they will work to serve your interests and not just put products in your portfolio that provide them a high commission.

I actually fired one financial adviser who talked my wife and I into an annuity through Allstate when I was in my early 40s. It was not a wise investment vehicle for my age. He wasn't being dishonest, but he called us less than once a year and he took us to lunch when he wanted to sell me a product that would benefit him more than me.

#4 Educate Yourself

Investopedia and Motley Fool are two web sites that offer practical, easy-to-follow advice where you can easily educate yourself using free investment tutorials. Bloomberg.com is a financial news service where you can get a solid overview of the day's financial news.

#5 Educate Your Children

If you have children, they can sap your financial strength by throwing away their own money and then looking to you to bail them out. We've taken great pains, and I've tried not to nag, on helping them understand compound interest and what a regular $25 investment in a mutual fund will do for their future.

I will help them financially, but I will not let them be dependent on me. In turn, planning for your own retirement means you don't want to lay your financial burdens on them, either.

#6 Take a Long-Term View to Finances

Every day, there are news reports which scream disaster. Recent headlines ask if we're heading to recession. Or the Dow dips dramatically in a day and then rises sharply again. If you have a long-term view of the stock market or real estate appreciation then you'll understand how to diversify in both down cycles and up cycles. Plus, you'll see how profitable the stock market is or assets like real estate perform over a period of decades.

Become an independent thinker even as you seek advice from others who specialize in finances.

#7 Plan Your Estate

We set up a living trust recently, especially because 2 of our 6 adopted children are developmentally delayed and will need long-term assistance. Just like you would interview a financial planner, interview a law firm or attorney who specializes in living trusts and estate planning. Some non-profit organizations in your community will offer a service, too.

#8 Review Your Finances Annually or Twice a Year

Go about your day-to-day routine and you don't need to log on to a stock market report daily or weekly to stay on top of your finances. Even if you have a financial planner, spend one to two times per year reviewing how your investment vehicles are working for you.

#9 Diversify Locally, Nationally and Internationally

My wife and I are investigating easy-to-manage real estate investment property in a local area that has promise but where housing prices are low enough for us to invest with little risk. Local real estate has promise. Make sure local taxes are favorable and the region has a steady economic base.

Next, check your mutual funds and see what percentages are in U.S. companies and what percentage account for international investments. Experts may differ on exact percentages, but make sure you can take advantage of growth around the globe.

#10 Find Small Ways to Save and Invest

I recently bought a cartridge for my printer at Staples. The cost was $28. But I had 3 print cartridges to return and they gave me $9 credit. Then, I had a toner cartridge which I never opened and they gave me credit for that item, too. I only owed them 28 cents. Now, I take that savings of almost $28 and send it to one of my funds. That's a simple way to put my money to work for me whether short-term or long-term.

Finally, don't procrastinate. Each month, make it a point to accomplish one specific step to realize full potential for your retirement income.