Opinions Differ on Retirement Plans

In my travels around the Web recently, I ran across an interesting article at Roanoke.com on rules for retirement. The author, economist and former money manager James P. Savage III, was taking issue with an article he'd read that offered 10 bits of retirement guidance. Savage offered what he considers a more useful set of rules, tailored to those who are preparing to plan for retirement. Here are his four rules, in a nutshell:

• "Get the best education you can. with little or no education the jobs available to you will be few, boring and may be hazardous to your health (which, at least, would cut down on your need for retirement planning)." He encourages lifelong learning, too. (Check out our educational How-to Guides.)
  
  
• "Delay getting married at least until you are in your mid- to late 20s. Having two children will be a challenge for even the most affluent couples. Having more than two children entails too much risk and expense."
  
  
• "Learn how to save money. This requires discipline and practice. Start the learning process early. Learn how owning a home can be a saving and investment program that is the most secure form of saving and investment the average person will be able to accomplish. Forget about the stock market unless and until you have your house paid for and a savings fund in secure, liquid form, equal to at least a couple of years' worth of living expenses."
  
  
• "If you must invest in stock market equity securities and have built up the above-mentioned security cushion, learn about 'no load' mutual funds that do not charge a sales or brokerage commission. Learn how to identify the other fees that are charged even by no-load funds.." (Learn all about mutual funds, and grab a free trial of our Champion Funds newsletter to see which promising funds we're recommending.)

I'm afraid that I, too, must now disagree with a set of retirement guidelines -- his.

I agree about the value of learning and won't quibble with his advice to not rush into early marriage and lots of children. It's also smart to look at mutual fund fees and no-load funds. But I think that waiting perhaps 20 or 30 years until you pay off your home before investing in stocks is far from a good idea. Do that and you'll miss out on decades of compounded growth. Long-term standout stocks such as Microsoft (NYSE: MSFT) and Wal-Mart (NYSE: WMT) made many people rich over decades, not usually in the short run. It's possible to gradually pay off your mortgage while regularly plunking money into the stock market. Such a system offers you the chance of seeing significant appreciation of both your home and stock portfolio in the long run. This makes particular sense if your mortgage interest rate is low, as rates have been in recent years. If you're paying 6.5% on your mortgage and expect to earn 10% or more via your stock investments, making large prepayments on your mortgage isn't the most brilliant idea.

For more comprehensive guidance on how to prepare for a comfy retirement, take advantage of a free trial of our Rule Your Retirement newsletter. See how you like it, at no cost. I suspect you may find it inspiring, motivating, and informative.

Longtime Fool contributor Selena Maranjian owns shares of Microsoft and Wal-Mart.