It's rough out there now.

Job losses, inflation fears, and falling retail sales all point to a U.S. economy on the rocks. It's no wonder people are worried about their financial well-being -- especially in the short term.

The current economy may be painful, but you must not stop planning and saving for your future. If anything, today's rough patch is an object lesson in why planning ahead matters so much.

As long as you're drawing a paycheck, you should save for the future. Your very first priority is to establish your emergency fund to protect your family in case of job loss, accident, or other crisis. A solid target for an emergency fund is three months of living expenses. If you're really worried about your job, the economy, or a serious uninsured loss, consider holding six months' worth of expenses for that inevitable rainy day.

A little today, a lot tomorrow
So although the first step to retiring wealthy -- keeping an emergency cash stash -- actually has nothing to do with retirement, it frees you to devote every other saved dollar to your nest egg.

The more you save now, the better your future will be. A young saver committed to socking away just $20 a day can achieve millionaire status in about 26 years.

But as we know, it's rough out there right now, and $20 a day wouldn't be easy, even for the most committed savers. That said, though, in good times or bad, the rules are the same:

  • Spend less than you earn.
  • Invest the rest.
  • Let the market compound your money over time.

"Just" $20 a day!
OK, 20 bucks a day isn't exactly pocket change. So let's forget that amount for now. Focus instead on lower-hanging fruit: funding an individual retirement account (IRA). The 2008 contribution limit for IRAs is $5,000 a year, which comes out to $13.70 per day. Is that still a stretch? Here are a few ideas for where you can cut back:

  • Brown bag your lunch -- save $8 a day.
  • Make your own coffee -- save $3 a day.
  • Quit smoking -- save $3 a day.
  • Carpool, take the bus or train, ride your bike -- save half your commuting expenses.

Here are more ideas about where you can cut back by $13.70 a day. Finding the trimmable fat is the hardest step, especially during tough times. But consider the alternative. If you're not saving anything now, you're setting yourself up for a gruesome retirement.

The benefits
The greatest asset you have is the amount of time between today and your retirement. Take a look at what a single $100 investment 20 years ago in each of these well-known companies would be worth today:


Price on

Price on

Total Dividends
Per Share

$100 Invested
Turned Into:

Campbell Soup (NYSE: CPB)





Deere (NYSE: DE)





General Mills (NYSE: GIS)





Marathon Oil (NYSE: MRO)





Parker-Hannifin (NYSE: PH)





Ryder System (NYSE: R)





Verizon (NYSE: VZ)





$700 turned into ...



All data split-adjusted and may include predecessor companies. 

Add the impact of regular investments to one-time totals -- IRA funding should be an annual priority! -- and you can see how even small amounts add up to a significant nest egg. Of course, past performance is no guarantee of future results, but two factors tie these companies together:

  • They're well-known and large enough to be members of the S&P 500 index.
  • They were strong enough financially to pay dividends 20 years ago.

No matter what the economy looks like today, investing in solid companies and holding them over the long haul can help turn each year's IRA contribution into a substantial nest egg.

Take the first step
Beyond IRAs, you can make automatic investments in 401(k)s or dividend reinvestment plans. Especially if you're cash-strapped, putting your savings on automatic pilot can really help -- you'll soon notice that you don't miss money you've never seen, and all the while that cash is hard at work for your future.

If you want to retire rich, you need to commit to your plan for the long haul. That's where my colleague Robert Brokamp at Motley Fool Rule Your Retirement can help. Every month, he shows you new ways to design, build, and stick to your successful retirement plan.

Once you take that first step, retiring rich is largely a matter of time. To help master the toughest part of your plan, try Rule Your Retirement for the next 30 days, absolutely free.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. The Fool has a disclosure policy.