The Problem Your Grandparents Never Faced

They went through the Great Depression, a dozen presidents, and a couple of world wars. They endured hard times, celebrated the baby boom, and with any luck lived -- or are living -- to a ripe old age. We may have it easier in many ways here in the Digital Age, but in other ways we're shouldering one burden our grandparents didn't have to face.

We're on our own when it comes to retirement.

Regardless of your political views or your analyses of old-guard industries, one thing is for certain: From here on out, we'd be foolish (lowercase "f") to rely on Social Security or traditional pensions to take care of us for the rest of our lives. We've got to take matters into our own hands to ensure our own well-funded retirement. The age of the individual investor is also the age of the individual retiree, and we can't afford to put our retirement plans on hold while waiting for Uncle Sam or our employer's coffers to bail us out.

But don't think of this as a life sentence. You don't have to work for the rest of time just to keep yourself afloat. With some careful planning now, you can ensure a happy and lucrative retirement down the road.

Start saving today
First of all, get started right away socking money into a retirement savings vehicle, such as a 401(k) or an IRA.

I said earlier that you can't rely on your employer to lend a helping hand when your time comes to leave your office for the last time, but that's not entirely true. Many employers are now offering a company match on your 401(k), wherein they'll contribute a certain amount for every dollar you put into your plan. If you don't invest, you're leaving free money on the table, and that's not a wise move!

One of the best deals out in investment land is the IRA and its sister, the Roth IRA. The IRA is self-directed -- no prescribed plans to pick from like most 401(k)s -- and while initially this can prove to be daunting, it's a great way to cherry-pick exactly what you want your retirement portfolio to look like. If you need help, you can use the Fool's Risk Tolerance Profiler to help. (The Profiler is exclusive to subscribers of Motley Fool Rule Your Retirement; non-subscribers can get access with a free 30-day trial.)

For instance, after answering all five questions the profiler has labeled me an "Aggressive" investor. According to the newsletter service's asset-allocation recommendations, the majority of my portfolio should contain large-cap and small-cap holdings. I can do this two ways: by investing in individual stocks, or by investing in the funds that focus on said stocks.

If I don't have time to follow each individual stock, choosing the mutual or index fund route is the way to go. For instance, Fool fund analyst Shannon Zimmerman likes large-cap-focused Yacktman (YACKX), which holds blue chips such as American International Group (NYSE: AIG  ) , Pfizer (NYSE: PFE  ) , Clorox (NYSE: CLX  ) , and Microsoft (Nasdaq: MSFT  ) . For small-cap exposure, it doesn't get much easier than the iSharesRussell 2000 Index (IWM) exchange-traded fund, which gives you instant exposure (with a cheap 0.2% expense ratio) to little guys such as Big Lots (NYSE: BIG  ) , Herman Miller (Nasdaq: MLHR  ) , and Realty Income (NYSE: O  ) . Then I'll sit back for a while -- the longer, the better -- and let the market do its thing.

Plan for what you want
There's a benefit we have that our grandparents didn't: On the whole, the baby boomers and their progeny are likely to live much longer than our predecessors. These additional years of life expectancy mean that if we play our cards right, we'll have more time in retirement than ever before. But how will we spend it?

It all comes down to planning. Take those brokerage commercials that feature retirees skydiving instead of shuffleboarding. We've got more options, more flexibility. By planning what you want to do in retirement, you can start saving for the next chapter in your life right now.

Write down your greatest dreams -- never mind how silly some may seem. Do you want to spend your golden years on a houseboat? Do you want to travel the country or the world while keeping your home base? Do you want to play softball twice a week, or take up painting, or open a yarn store? By writing down these wishes, you make them more real, and by making them more real, you're able to plan for them in a realistic way.

Despite your best-laid plans, some of these dreams may turn out to be unattainable. Or after greater exploration, you may decide you're happier going in another direction anyway. But start socking away money for them now. Balance your future budget with your current one, keeping in mind that some expenses (business attire, gas bills from your commute) may decrease while others (travel expenses, festive nights on the town) may rise. If you're diligent in your savings and investments, there's a good chance you'll be pleasantly surprised once you kiss your boss goodbye.

What are you waiting for?
So start socking away money in well-diversified investments and savings accounts. Whether you're 10 years or 30 years out from retirement, you've got time to fulfill your dreams for the future. The "good old days" of our grandparents may be gone, but you can embark on your "good new days" right now. Why not today?

To learn more about how to plan for a 21st-century retirement, tryMotley Fool Rule Your Retirementtoday. A free trial is yours by clicking here.

Hope Nelson-Popeis online coordinating editor at The Motley Fool. She owns shares of Microsoft but none of the other companies mentioned. Microsoft and Pfizer are Motley Fool Inside Value recommendations. The Motley Fool has adisclosure policy.

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