Early, wise retirement plans ensure long-term security

If you're not saving for your retirement, start right now. The longer you wait to nurture your nest egg, the smaller that egg will be when you retire.

Many people retire only to suddenly discover they didn't save enough to secure their financial future. Most consultants, however, say it's never too late to buckle down.

For instance, experts suggest that before retiring, you try living on your retirement budget for a year. That way, you won't be shocked later on, and you'll get a realistic idea of what your retirement lifestyle will be.

Once you've estimated how much money you will need for a comfortable retirement, you'll know how much you need to save. Some financial advisers recommend an aggressive savings plan if you find you aren't saving enough. "Aggressive" translates to approximately 30 percent of your income.

Another way to help increase your savings is to seek out and use tax-deferred investments rather than low-interest CDs or money-market accounts. You should also diversify your portfolio and invest in growth stocks.

In addition to outright saving, you may need to modify your retirement expectations. Instead of demanding a month-long cruise, settle for a few getaway weekends.

Another option is to delay retiring for a few years. With advanced medical technology increasing life expectancy more than ever, there may be no health-related reason to stop working; and by working just four more years, you could substantially save more. Of course, you have to enjoy your job for this to really work.

Every year thousands upon thousands of workers retire. The first decision they often have to make regards the form of their pensions. Will it be a lump sum, or will it be the traditional monthly stipend for eternity?

Many financial advisers and retirees opt for the lump-sum pension. It takes a little work, but putting that hard-earned money into the right investments could very well turn a mediocre retirement into an enjoyable one.

However, if you don't have the option of taking a lump-sum payout, you need to investigate the right pension annuity. According to Kiplinger's, there are several annuities and, depending on your situation, choosing the wrong one could be a costly mistake.

Kiplinger's recommends that if your savings are short, opt for the joint-and-survivor annuity. If your spouse is ailing, go for the single-life annuity. If you're in poor health, choose the joint-and-survivor annuity.

With so many money decisions to make, it's easy to make a mistake. Once you've chosen your payout option, it's nearly impossible to rectify it.

The financial wizards at Kemper Financial cite a few mistakes retirees commonly make with their money.

For one, they suggest that you forgo short-term CDs and concentrate on longer-term, growth-oriented investments.

Also, the retiree-to-be should anticipate the rising cost of living and/or the impact of inflation. Consider putting a portion of your nest egg into stocks or stock mutual funds.

Don't put all your money into a single-investment class. Maintain a diversified investment portfolio.

Avoid tapping your retirement income sources too fast or too early. It's better to let your tax-deferred money grow as long as possible.

If possible, secure a qualified, trustworthy financial adviser to help sort through the paperwork of choosing the best payout option available.

Even though you've stopped working, your money needs to keep slaving away. In retirement, you should focus on investing rather than saving. Short-term CDs will not bring in barrels of cash, but investing in the right growth-oriented mutual funds or stocks could mean living on the interest rather than the principal.

The American Association of Retired Persons Investment Program from Scudder suggests you explore government-insured bank savings accounts. These are considered the safest investments for your money. They offer low risk of loss to your principal, but offer a lower return on your investment.

They also recommend money market investments. These short-term investments (between 90 days and one year) offer low risk on eroding your principal, but may not help if inflation rises. These are an important part of a diversified portfolio. The major benefit of these types of investment is their liquidity.

Bonds, on the other hand, are less volatile than stocks but don't offer the same potential for growth. However, they do make good sense for investors seeking a high level of steady income who can tolerate some fluctuation in the value of the investment.

Stocks offer the greatest potential for high returns, but are a very volatile and unstable area of investing.

Mutual funds offer a low-investment option that can provide long-term growth returns. The more you put in, the higher your return.

After having put in all those years of hard work, it only makes sense to invest your retirement funds wisely. Then the only thing left to do is enjoy.