Several people, friends, relatives and others I have talked to recently seem quite agitated about their retirement outlook. This is understandable. Between frozen incomes, stock crashes and our financial institutions becoming nearly insolvent and being cared for by the government---it is enough for the most positive minded chap to lose confidence, and worry if his or her retirement nest egg will be there when needed.

I have found that when faced with mounting worries about anything, it is good to take bite size chunks of the problem and look for simple solution. I have one for retirement. It is a three step solution and works no matter how near or far you are from your retirement day. Of course, having time on your side does produce accelerated results so this is specially true for young professionals.

How do you build a reliable nest egg for your retirement?

SAVE, INVEST, TRACK

SAVE: Live a frugal life, but not a cheap life. I shake my head at the wasteful, peer-pressured expenditures many of us indulge in. Realize early on that spending anything at retail is for loonies. If you have to spend retail, make it such a special occasion that you do not need to repeat it except rarely. Here is an example. Paying $25 for an entrée at a restaurant? When you and your spouse can make the same entrée for less than $5. We both love fish. A Tilapia entrée costs between $15 and $30, depending upon how many stars Zagat has hung on the place you are eating at. You can easily make the dish at home for about $2.50 for each of you. That is a saving of $10 to $25. Multiply that by the times you eat out, and you begin to see the savings---not to mention paying 5 times cost for the bottle of wine.

So am I suggesting never go out to eat. Of course not. What I am saying is simply this---make that restaurant trip such a special occasion that you not only make the occasion memorable, it will be more than just another restaurant outing for both of you. On days when there is nothing special going on, resist the urge to waste your money on paying for the overhead at the restaurant---turn it into a home cooking adventure. It may not be as memorable, but it will be exciting---and save you both a bundle.

INVEST: Simple rule is that on an annual basis, your investments should yield you 2 to 3 times the inflation rate. If you achieve that consistently you will be ahead of the game. Here is a real life example.

Assume your current savings are $50,000 and you can save $1,500 a month over the next twenty years. You desire to have $2 million in TODAY'S DOLLARS in accumulated savings. Inflation is expected to be 3% and your investments yield you 6% or twice the inflation rate. Here is what happens in 20 years.

Your current rate of savings would leave you $2,750,186 short of that goal!

One reason? Your nominal rate of return of 6% translates into a real rate of only 2.91% after adjusting for an annual 3% rate of inflation-just not enough to reach your accumulated savings goal, even after 20 years!

Moral: It is extremely importance to save, invest wisely and do it consistently. Savings are generally within your control---of course barring unforeseen expenditures.

Before you get disappointed, remember, your accumulated savings also includes equity in your home, and your yield can increase through capital gains.

TRACK: It is also very important to keep track of your expenditures, budgets, investment outcomes and take a real interest in all matters fiscal. There are lots of pieces of information available that can deepen your knowledge, confidence and decision making ability in how to save and invest wisely. Even if you have a financial advisor, your goals are very personal, and he or she can only advise you based on some general formula.

GOOD LUCK WITH YOUR RETIREMENT PLANNING AND PLAN IMPLEMENTATION---TRUST ME IT IS EASY, BUT NOT EASY WORK! WORK HARD AT IT BECAUSE IT IS THE SECOND MOST IMPORTANT MONETARY DECISION YOU WILL PROBABLY MAKE---THE FIRST BEING BUYING A HOUSE.