Sure, putting money toward your retirement may not be as exciting as purchasing a new car or taking a lavish vacation, but taking stock of your financial future will help you set the tone for being able to afford and sustain such items later, in some cases twice over. Just ask today's retiring boomers whose retirement plans have fallen short. Even for those with Social Security, pensions, and savings, most 401(k) or IRA participants appear to have insufficient savings, according to the Employee Benefit Research Institute. Facing shortfalls, many people are postponing retirement, working a part-time job, traveling less, and facing foreclosure. Moreover, roughly a third of both workers and retirees who participated in the EBRI study said they had to dip into their savings last year to pay for basic expenses. But besides the economy playing a role in dwindling retirement funds, some started saving too late or suspended contributions when they lost their jobs; others didn't realize that contributing 5% with a 3% company match would not sustain them during their retirement years. "We know from previous surveys that far too many people had false confidence in the past,†says Jack VanDerhei, EBRI research director and co-author of the report. "People's expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.†Today more workers than ever have been pessimistic about their retirement outlook. According to a Prudential research study, African Americans recognize that they are behind in retirement planning and saving, and less likely than the general population to feel that they will meet their financial goals (21% vs. 34%). A study by Ariel/Hewitt of nearly 3 million employees further notes that regardless of age or income, African American and Hispanic workers have lower participation rates and contribute less to 401(k) plans than their white and Asian counterparts. As a result, their 401(k) account balances are negatively affected and chances for a comfortable retirement are significantly compromised. (Continued on next page) The stark reality is that you simply can't rely on Social Security, play a guessing game, or hope to hit the Lotto. Saving for retirement takes careful planning, setting realistic goals, and, most importantly, time. For many young workers entering the workforce, retirement may be the last thing on their mind, but at black enterprise we believe that you can never start too early. Use the following examples to help you get on the path to a bountiful retirement. INVEST, EVEN WHEN YOU'RE NOT ELIGIBLE Growing up in a single-parent home on a tight budget, the principle of saving was strictly enforced in Kason Davis's household. Though at the age of 14 Davis could not grasp the concept of saving and would have preferred buying a pair of the newest Air Jordans or video games, his mother's lessons now prove beneficial to him. "My mother always told me that it was more important to purchase necessities and put aside a set amount of money in savings,†explains Davis, now 28. "She would always say the more I saved now, the quicker I could retire.†Davis was reintroduced to the concept of saving and retirement planning during the summer of 2003 as an intern at Procter & Gamble. "During our intern orientation one of the employees spoke briefly about the importance of 401(k) investing and retirement planning,†says the Houston resident. "Although I wasn't eligible to invest as an intern in the company 401(k) plan, we were eligible to invest in the company's stock through its shareholder program.†After interning with the company for three summers he invested a total of $3,000 in company stock and reaped a $700 gain. (Continued on next page) "That's when I realized the growth potential that retirement savings provided,†he says. "I calculated on my intern salary that if I contributed that same amount each year and continued to get $700 every three years, I had the potential to earn $7,000 in interest in 30 years.†Saving for retirement became his first priority when he joined Caterpillar–the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines–full time in 2006 as an electrical engineer. The 28-year-old has come a long way since saving $3,000. Working for just five years, Davis has more than $70,000 in his 401(k). His strategy: Davis invests 10% of his monthly paycheck, or $674, and his company matches 6%, or $405. He currently holds 30% in company stock and 50% in an aggressive mutual fund in his 401(k). "I know this is overexposure to company stock and high-risk mutual funds, but I prefer a riskier portfolio while I am young and plan to slowly reduce my exposure to risky holdings as I get older.†Outside of his 401(k) he also invests in a Roth IRA, which currently holds $11,584. He and his wife also run their own website design company, AQUE Consulting, and contribute revenues from the business to their IRAs and other investments, having added $3,000 so far this year. "I opened a Roth after I started investing in my 401(k) because it's important to look at other forms of investing for retirement, and the Roth allows me more flexibility in my investing options.†(Continued on next page) Davis says that based on his current goals he would like to retire early. "Ideally I want to retire from corporate America at age 55 and concentrate on something I truly enjoy,†Davis says of how he envisions his golden years. "If I can pull $7,000 from my account each month I would be comfortable.†INVEST, EVEN WHEN YOU HAVE DEBT After graduating from college, Jennifer Tyus, a law school student at Washington University in St. Louis, and April Tyus, a medical student at Saint Louis University, both had hefty student loan bills. For many recent graduates, retirement is placed on the back burner when debt and new living expenses put competing demands on a paycheck. But these St. Louis sisters knew their retirement savings didn't have to suffer while they paid down their debts. "My father taught us a different way of looking at our 401(k),†says Jennifer. "It wasn't money that I would be missing out on, but actually it would put me in a lower taxable income bracket and would be compounding over the years.†Their father, Jerone, retired from his accounting position at the age of 58 and is now traveling the world and enjoying the fruits of his 38 years of labor. "People think they're missing that money from their paycheck and are so focused on the money that they don't realize the tax advantages,†says Jennifer, who has chosen to aggressively save for retirement in her company's 401(k) plan. Since joining her firm at the age of 25, the now 32-year-old maxes out her 401(k) each year contributing the maximum allowable by the IRS, which is $16,500. Her company currently matches 60 cents on the dollar of her contribution. (Continued on next page) Her sister, April, has been just as diligent. "I started investing with an IRA because my company didn't have a 401(k) at the time.†April invested about $10,000 into her Roth IRA over three years until her job set up a 401(k) plan in 2007. Through automatic payroll deductions she maxes out her contributions each year and has more than $66,000 in her 401(k), along with a 3% match from her employer, and $13,600 in her IRA. Many people, start too late because they think they don't make enough, but April says, "You can still put something away. Do the best you can. It's better than putting nothing away. And the interest is going to compound over the years.†She adds: "You can't just live for today. Don't put it off and say ‘I'm going to do it later,' because time passes by quickly. The earlier you start investing, the better the position you're going to be in in the future.†INVEST, EVEN IN A DOWN ECONOMY In the early 1980s, 401(k)s were just being introduced to the American workforce and Robert A. Jacobs, who was 30 at the time, was among the first group of workers to participate. "I thought it was a great thing because one of the huge benefits of the 401(k) at the time is that the company contributed 6% to it, and that's just free money,†says the Oakland, California, resident. Prior to the introduction of a 401(k), he invested 10% of his pay into high-yield savings accounts. By age 30, he already had $30,000 in savings. Jacobs has accumulated close to $700,000 in his 401(k) and nearly $300,000 in mutual funds and about $20,000 in individual stocks. Even after being laid off in 2008 after nearly 20 years with Oji Ilford USA, a photo supply manufacturer, and left unemployed for 14 months before starting his own consulting firm, Jacobs chose not to suspend his contributions. "One of the basic rules is that regardless of the situation you are in you should still try to save something; put something away from whatever income you get,†he says. Although less than he was saving while employed, he's still committed to allocating 5% to his retirement savings. (Continued on next page) Jacobs first converted his 401(k) into a traditional IRA, which consists of a series of no-load mutual funds in addition to a small percentage, less than 4%, of individual stocks. Jacobs says he has been successful in saving for retirement by learning and applying the asset allocation model, diversification strategies, dollar-cost averaging, and starting early. By following these models, he and his wife, Josephine Lee, have been able to protect their assets from market fluctuations. "During those rare occasions when I was able to anticipate market declines, I shifted our asset allocation from a fully invested position to a much more conservative 40% stocks, 30% bonds, and 30% cash allocation. This not only helped ensure we had cash available to reinvest near the bottom of market decline cycles, but it also helped to minimize but not prevent losses,†explains Jacobs. They now hold about 70% in stocks, 30% in bonds, and very little cash, which is a fairly aggressive position for his age and one he does not recommend for others close to retirement or who have very little experience in investing. The layoff and the birth of his son five years ago have pushed back Jacobs' retirement goal of 62. But due to careful planning in the past, in addition to his home, he and his wife combined have more than $1.2 million in liquid assets and a total net worth of about $1.7 million.