A Disastrous Retirement Scenario

A Sicilian man recently lost his primary source of income and access to his home. At 61 years old, this was a tough break, and, sadly, he needed police intervention to get his life back to normal.

What makes a sad story comical?
There's more to this story, though. The gentleman's income? An allowance from his mother.

His home? His mother's, actually.

And did I mention that he was 61?

That's a disastrous retirement scenario
Certainly, moving back in with Mom and Dad can be a great way to save a few bucks. That's especially true if you're young or saddled with debt and stuck in a job that doesn't pay well.

If you find yourself as a young adult living with your folks, there are a few simple steps you can take to ensure a rosy financial future:

• Pay off debts that are keeping you from being independent.
• Invest as heavily as you can for your retirement while your costs of living are low.
• Don't touch your retirement cash until you're ready to retire.

If you follow that guidance, it'll be more or less certain that you won't need to rely on an allowance from your mother when you hit age 60. For instance, if our Sicilian friend had stuck $100 in each of these companies in 1971 at around age 25, check out what he'd have by now:

Includes dividends and spinoffs.

That's not a bad haul from a one-time outlay of $700. Just imagine what his balances would have been if he'd saved along the way and invested on a regular basis.

No excuses
The reality is that most Americans nearing retirement (right around age 61) are in better shape than our Sicilian friend mooching off his mother. But don't get too excited -- the average American is still facing a pretty gruesome retirement fate.

That's why it's imperative that you kick your retirement plan into high gear. If you're young, living at home, and have many years ahead of you, be steadfast with your savings and take advantage of the powers of 401(k)s, IRAs, and compounding interest.

If you're well into your working years -- or even if you're in your early 60s -- the most important thing you can do is develop a game plan. Don't lament the late start or plan to just work for the rest of your life. Figure out what you have, what you need, and how to get there.

For tips, tools, investment recommendations, and discussion boards where you can ask questions to your heart's content, I urge you to join us at Motley Fool Rule Your Retirement. We'll help you get on the right track to the comfortable future you deserve. You can try the service for the next 30 days, free of charge.

This article was originally published on Aug. 9, 2007. It has been updated.

Fool contributor Chuck Saletta wonders whether it's still a bad idea to match wits with a Sicilian when death is on the line. At the time of publication, Chuck did not own shares of any company mentioned in this article. Pfizer has been selected by both Inside Value and Income Investor. The Fool's disclosure policy has developed an immunity to iocaine powder.