Let's make sure we've got this right:

  • 401(k) still struggling to get back to anywhere close to where it was two years ago? Check!
  • Mortgage problems spreading to prime borrowers? Check!
  • Savings accounts are earning next to nothing at banks that are still on financial life support? Check!

Hmmm. That filly at Aqueduct seems to have closed pretty fast in her latest race -- maybe taking what's left of my retirement savings and betting it all on her to win isn't such a bad idea after all.

Check that thought
Yes, despite the recent rally, the stock market is far from out of the woods. Although the market hasn't bounced back to get rid of all of its losses from the past couple of years, this still may be one of those rare moments in market history when we have the opportunity to create fabulous wealth to secure our retirement years.

Yet few answer the call. Research shows that nearly half of all workers in the country have less than $25,000 in total savings, and more than 20% have no savings whatsoever. Despite the gloom that permeates the newspapers, we might want to consider how fortunate we are to see the market go on sale right when we need to add money the most!

Cozy as an old sweater
These ideas may be as familiar to you as your Labrador retriever. But considering that outside of employer-sponsored plans, many people save virtually nothing, our loyalty to these concepts should not waver.

Stocks remain the best way to save for retirement, and there's no better time to begin than when they go on sale -- like they are today. If you don't have the fortitude to invest in individual stocks, choose mutual funds that do.

There are a number of high-quality, low-cost managed funds that have done well. Sequoia (SEQUX) follows the tradition of buying excellent businesses at good prices that its founder William Ruane learned alongside Warren Buffett while studying under Benjamin Graham. Investing in Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) definitely hasn't hurt Sequoia's long-term returns, but other investments, including TJX (NYSE:TJX) and Whole Foods (NASDAQ:WFMI), have taken up the slack more recently for the fund. Over the past decade, Sequoia's 2.6% average annual return has far outpaced the S&P 500's loss.

On the other hand, if you want to choose your own stocks, do so carefully so you can reap the rewards at retirement. Choosing consistent dividend payers like Procter & Gamble (NYSE:PG) is one way to be rewarded for your patience. Over the past 15 years, the share price for the household products maker has grown at a compounded annual rate of 12%. Right now, many companies, including PepsiCo (NYSE:PEP) and SYSCO (NYSE:SYY), combine attractive yields with good track records of strong long-term returns.

The smart bet
Just as mutual funds may be a perfect substitute for buying stocks when you don't have the time or knowledge to research them on your own, a subscription to Rule Your Retirement may be the perfect substitute for hiring a financial advisor who may have conflicts of interest. You want to make sure your advisor isn't trying to sell you something that will fund his or her own retirement before ensuring your success.

Steps you should take right now include making sure you're contributing at least as much to your 401(k) as necessary to earn any matching contributions from your employer. It's free money. Then take the next step and invest some money in an index fund. With the S&P 500 down 40% from its record highs, you'll be buying many more shares of the market when it's super cheap. After that, you can begin your search for mutual funds like Sequoia to invest in, or individual stocks like the dividend payers above, which will pay you to wait for share prices to bounce back.

A time to remember
There are many stocks we can choose to retire on, and given how important a secure retirement is, deciding which path offers us the right opportunity is key. Whichever way you go, though, the most important thing is to get started today.

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Berkshire Hathaway and Whole Foods are Motley Fool Stock Advisor picks. Berkshire Hathaway and SYSCO are Inside Value selections. PepsiCo, Procter & Gamble, and SYSCO are Income Investor selections. The Fool owns shares of Procter & Gamble and Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.

This article, written by Rich Duprey, was originally published Oct. 20, 2008. It has been updated by Dan Caplinger, who owns shares of Berkshire Hathaway. The Motley Fool has a disclosure policy.