Is your future retirement in jeopardy? It may be if you are in your 20s, 30s, or 40s. With Social Security facing insolvency in a projected 14 years, employer-funded pensions continuing to decline, and few people saving enough, many in the future are going to find it necessary to work into their 70s and 80s just to survive. Now the good news: it doesn't have to be that way. By planning ahead, not only can you enjoy retirement, you can even give yourself the option of retiring early. And here's even better news: the younger you are today, the easier it can be!

If having to work forever isn't your dream, then it's imperative that you take control and do something about it. Not sure what to do or where to start? Then here are three basic steps to securing your retirement:

(1) spend less, (2) save more, (3) invest wisely.


How do you spend less? First, simplify your life. Most people work to support their assets; the more stuff you own the harder you have to work to buy and maintain those things. Stop trying to keep up with the Joneses and rediscover how the simple things in life-like spending quality time with your spouse and kids, visiting friends, reading, walking-can be as enjoyable as your latest hi-tech purchase. Choose to live with less so that it doesn't cost so much to live.

Second, when you do make purchases, go for less-expensive alternatives in food, clothes, vehicles, vacations, and housing. Find as many free and low-cost activities as you can for entertainment. Comparison shop for the best deals; watch for sales; frequent the clearance racks when clothes shopping; research big-ticket items to get quality and reliability; take advantage of off-peak discounts for travel/recreation, movies, dining out, and seasonal items; and don't buy something if you can't afford to pay with cash. In a nutshell, establish spending priorities reflecting your long-term goals and always "value shop" to maximize what you get for each dollar you spend.


How do you save more? That's easy: spend less and save/invest the difference between what you could have spent and what you actually spent. Consider bonuses, raises, tax refunds, and gifts as "extra money" and invest at least part of them for retirement. Maximize contributions to any tax-deductible, tax-deferred retirement plan available to you. Employer-sponsored plans-like the 401(k)-where money is taken directly from your paycheck and invested in mutual funds or some other asset are especially good because there is often some kind of employer match. That's free money to you-like a raise or bonus. You can also ask your employer or bank to send a check or direct-deposit money from your paycheck into a non-retirement mutual fund account. This is a "forced-savings" arrangement that can work well for people who are less-disciplined in saving and investing on their own.

How do you invest wisely? Over the past 77 years, the average annual return of the stock market has been a little over 10 percent. Although there are no future guarantees, based on historical performance, those focused on accumulating net worth and who plan to invest for the long term will do significantly better in stocks than in bonds, cash (which includes money market accounts and CDs), or most other investments. Investing need not be complicated. You can easily utilize a few mutual funds to diversify your investments and spread out the risks. There's no question that the stock market has its ups and downs. But if you want to grow net worth sufficient for retiring young, and if you plan to invest for the long-term (20 to 30 years or more), then there has been no better means in the past of accomplishing that goal than the stock market.

Retirement offers freedom and control over your life-the opportunity to do whatever you want to do every day for as long as you live. If that sounds good to you, then you're not alone. Surveys reveal that 84 percent of working Americans not only want to retire, but most of them want to start by age 55. It's not an impossible goal, but the onus will be on each individual to make that dream come true.

Most people believe they need to be rich to retire young. They don't. Many people have retired in their 40s or 50s without being rich; but neither were they poor. The net worth you are going to need will depend on the lifestyle you want to live. And the philosophy is quite simple: if you can live on less than most people, you can probably retire earlier than most people. Follow the three simple steps above, start them as early as possible, and enjoy retirement in your 40s, 50s, or 60s while those around you who don't plan ahead will have no choice but to continue working into their 70s or 80s-or maybe forever.



Larry Ferstenou retired over ten years ago at age 42 and is the author of

You CAN Retire Young: How To Retire in Your 40s or 50s Without Being Rich
(American Book Publishing, 2002). More information can be found at