• Start saving early so your money can grow.money money image by Valentin Mosichev from Fotolia.com
  
  Retirement requires a plan. Without a retirement savings plan you could spend your last years living in poverty. Although you may be able to live comfortably on less money than you are now making, consider the effect of inflation. If you properly prepare financially for your retirement, you will be able to spend your last years pursuing your dreams of travel, more education or volunteering.
  
  

Start Saving Now

• Begin saving for retirement as early as possible. If you are in your 20's or 30's, retirement seems in the far-distant future. However, the money you save today will grow for many years. During this period of your life, your expenses may seem overwhelming. Still, start the habit of saving a few dollars each payday.
  
  

Open an IRA or 401k Account

• If your employer offers a 401k account, take advantage of it. Often the company will match a percentage of the money you contribute. This translates into free money for you. If you do not have a 401k available, open an IRA at a bank or mutual fund company and contribute to it regularly. The tax benefits may offset part of the money you contribute.
  
  

Set Your Goals

• Although you cannot know all possible scenarios during retirement, you must determine some idea of the amount you will need. Several websites can help you do that. At MSN Money, you can plug in a few figures and the program determines how long your money will last. Try several different figures to determine how much you will need.
  
  

Save as Much as Possible

• David Pitt, in USA Today, warns that a third of retiring workers who make less than $70,000 annually will have no money left after 20 years of retirement. Many workers retire earlier and live longer. You not only have to consider the number of years your money must last, but also the effects of inflation. Liz Pulliam Weston, in MSN Money, explains how inflation erodes the value of your money. If the inflation rate averages 3.5 percent, the value of today's dollar will only be 50 cents in 20 years.
  
  

Diversify

• Lisa Scherzer, in The Wall Street Journal, advises that your portfolio should contain no more than 20 percent stock in your employer's company. Stocks, bonds, mutual funds or a safe bank account all have their place in your plan. However, you will not want all of your money in one place. The U.S. Securities and Exchange Commission states that by dividing your investments in these three classifications, you reduce the impact on your total should one category fail. Because each classification offers many choices for investment, a financial planner can help you choose the best places for your money.
  
  

Pay Off Your Debt

• Interest comprises part of every payment you make on car loans, mortgages or credit cards. This money goes out with no return and drains your income. Pay off all your debt before retirement.
  
  

Stay on Track

• Once started, continue saving regularly. Do not be tempted to stop for a few months in order to buy a big-ticket item. The little bit of money diverted today can be a large chunk out of your retirement fund years from now. Monitor your money and asset allocation and rebalance your retirement accounts regularly. The Wall Street Journal recommends rebalancing at least once each year. Since stocks, bonds and other assets rarely move up or down together in lockstep, you need to periodically adjust your accounts to return them to your desired asset allocation.