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Hot Retirement Tips

Time, as they say, is money -- and that's particularly true when it comes to the money you sock away for retirement. So let's cut to the chase. Here are three hot tips for serious retirement savers.

1. Get going now.
Time is your biggest ally when it comes to saving for retirement. All else being equal, an investor who begins plunking down his hard-earned savings when he's 25 has a huge advantage over someone who waits until he's 40. Thanks to the miracle of compound interest, that advantage amounts to far more than just the additional principal the young whipper-snapper kicked in.

Consider this: An investment of $10,000 that earns 10% annually over the course of 40 years will amount to nearly $453,000. Over the course of just 25 years, however, that same 10 grand increases to a mere $108,347.

2. The perfect portfolio is a work in progress.
As you get older, your timeline and tolerance for volatility necessarily change. With that in mind, it's crucial to recalibrate your portfolio so that, as retirement approaches, you focus more on preserving the wealth you've built up and intend to live on in your dotage.

On that front, getting your equity-to-bond exposure right is a critical calculation, as is ensuring that you're kicking in enough moola each month to fund your future needs.

You should also ensure that your asset-allocation game plan makes sense on a more "granular" level.

For example, a portfolio that features hefty exposure to souped-up companies such as Google (Nasdaq: GOOG  ) , Genentech (NYSE: DNA  ) , Las Vegas Sands (NYSE: LVS  ) , and Research In Motion (Nasdaq: RIMM  ) -- each of which sports a price-to-earnings ratio that dwarfs that of the broader market -- may make sense for a 30-year-old with three decades of employment ahead of him.

But a 50-year-old looking at just 15 (give or take) more years of regular paychecks should be more conservative. Bonds, for example, should take up more of his portfolio's pie chart, while his equity exposure focuses mainly on more buttoned-down fare such as Bank of America (NYSE: BAC  ) , Dow Chemical (NYSE: DOW  ) , and Johnson & Johnson (NYSE: JNJ  ) , all of which are dividend-paying blue-chip stalwarts that have delivered the goods (and then some) over the course of many years.

Whatever you do, don't assume that a buy-and-hold investment philosophy (admirable as it may be) means that your portfolio is a "set it and forget it" entity. Pity, for example, the poor equity-heavy retiree who left his job for a life of leisure just before the market melted down in early 2000.

3. You are the best person to control your financial future.
At the Fool, we firmly believe that individual investors, when empowered with tools and information, can easily surpass the returns they'll likely receive by relying on the "wisdom" of a broker. And there's a built-in competitive advantage that comes with following your own advice: You won't have to pay an inflated sales charge for the privilege of doing so!

The Fool, of course, is full of advice and commentary designed to help you hit your golden years with a fat nest egg in tow. In addition to our Retirement, IRA, and Savings centers, there's Robert Brokamp's Rule Your Retirement, a service that's 100% dedicated to the cause of helping you plan well and become wealthy.

You'll benefit from the online planning tools and timely advice from retirement-obsessed Brokamp, as well as a world-class discussion board community. Rule Your Retirement also provides access to the insights of such investment wonks as Ben Stein and Joel Greenblatt, whose book, The Little Book That Beats the Market, includes Greenblatt's "Magic Formula" for investing.

Ben and Joel were interviewed for the pages of Rule Your Retirement, and if you think you might be interested in taking a gander at their thoughts -- not to mention the entire Rule Your Retirement shebang -- you're in luck. A free 30-day guest pass is just a mouse-click away. You're under no obligation to subscribe, of course, so just click here to get started. The service recently celebrated its two-year anniversary with a special release, "The Eight Steps to Ruling Your Retirement," which maps out what you need to do to get your financial ducks in a row. It's yours when you sign up.

This article was originally published April 4, 2006. It has been updated.

Shannon Zimmerman is the lead analyst for the Fool's Champion Funds newsletter service and doesn't own any of the companies mentioned. Bank of America, Dow Chemical, and Johnson & Johnson are Income Investor recommendations. The Fool has a strictdisclosure policy.

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