Saving for retirement we define it as "accumulating capital for the sole purpose of creating wealth, to accomplish the goal of being able to achieve what the survey called 'retirement readiness.'"

This was capital earmarked for 20 years down the road and would be used for no other purpose. This is capital that must be accumulated above and beyond your normal living expenses.

How do we accumulate this retirement capital?

Being particularly bored on a long-distance international flight many years ago, I decided to make a list of all the material things I wanted out of life. I had just departed the United Arab Emirates and had seen some of the ostentatious wealth enjoyed by the sheiks and was thinking that it would be cool to have that kind of money. It turned out to be a two-page list.

Then I figured out the cost of acquiring all the items on the list, plus the cost of maintenance.

I came to one conclusion: I needed to win the big lottery annually! It was time for a dose of reality.

1. Understand the difference between needs versus wants. One does not have to be a miser to keep things in perspective. Baby boomers were taught to buy the biggest, most expensive homes they could afford because it was guaranteed to increase in value. For a few decades that was true, but not anymore. By the time you can really afford the McMansion, do you really need it? How many folks have we seen buy a McMansion as their children are becoming teens? A decade later, the nest is empty and maintenance, taxes, and just keeping it clean becomes a real challenge.
   
   Do you really need all the latest computer technology, particularly when your current computer is working just fine? Do you have to have a new car the minute you pay your old one off? When your closet is so full of clothes that you have to start hanging some in the guest bedroom, it might be a clue.
   
   My children agreed that much of what we discussed was a different way of thinking. Many in my generation realized that living within – and below – your means is a good thing when we retired; better the baby boomers get a 20-year head start.

1. Pay yourself first and learn to live on the rest. As I look back, the single greatest words of advice from a mentor about how to save would be that simple sentence. My wife and I would be living from month to month, but doing OK, and then a nice promotion or raise would come along. Two years later we would ask ourselves, "Where did the money go?" Once again we were living month to month, hoping for the next raise or promotion.
   
   We finally 'fessed up to ourselves and determined that the piano which is seldom used and the pool table that was now primarily used for folding clothes were perfect examples of our theory: "The more you make, the more you spend." I will also readily admit that I was probably the worst culprit; if money was available, there was always something cool I could find to spend it on.
   
   When my friend discussed the sentence with me, he really emphasized that you have to pay yourself first. By that he meant save the money where it is not easily accessible, or you will not accumulate any wealth – just more stuff. He was right.
   
   The first step was to look for ways to save money as he suggested. For baby boomers, there are two obvious places to start. First is this: if you have a mortgage, can you make extra or larger payments? At the time, I was paid a monthly draw and then got a commission check each quarter. One thing my friend taught me was to write an extra house-payment check the minute the commission check was deposited; then we could figure out what we would do with the rest.
   
   The second area is some sort of IRA or company retirement plan. The goal is to maximize your contribution to that plan as quickly as possible. Doing it all at once may not seem possible, but you can incrementally increase your deductions. My son told me of a friend's wife who went back into the job market after being a stay-at-home mom. They immediately upped his contribution to his company's 401(k) plan by 10% of her salary. They knew they could live on his salary; they had for years. In addition, she's setting up her own IRA.

1. Commit yourself to being committed. I borrowed that line from a book written by Dennis Connor called The Art of Winning, in which he talked about winning the America's Cup yacht race. It was a book I particularly enjoyed and profited from. There were times in my life where my wife and I would have to both discuss an issue and jointly make a commitment to do something different. Then it became our job to encourage and reinforce each other as we embarked on our new challenge.
   
   Saving money for retirement is a process, not an event. Baby boomers don't have the means to do it all at once, but they have to start somewhere. Start small, but make the commitment. As you watch your savings grow, the natural process is to find ways to make it grow faster. Many savers have told me it becomes a self-fulfilling prophecy: the more it grows, the more excited they become and the more it accelerates. One advantage of saving is the compounding effect. Many folks look forward to the day that their savings earns 10%, then 20% above and beyond what they are contributing.

1. Invest prudently. As you see your wealth begin to accumulate, you need to continually educate yourself about how to invest wisely. This too is a process, not an event.
   
   A mentor once told me that I would accumulate wealth a lot quicker if I would quit trying to hit a five-run home run… there is no such thing. During the Internet boom, many of us wondered if we were the only ones not getting rich overnight. He used the baseball analogy to say that people who accumulate wealth are hitting singles and doubles regularly and consistently moving toward their goals. He was right.

In summary, for baby boomers the challenge is in front of you. You can control your attitude, your efforts, and your behavior. You have seen both boom and bust times and have learned how to survive in both environments. Savers will always find a way to save; the key is to get started now.

That's it for today. But before I go, I have one more thing to share with you today and that is a cool song . Well, here's a singer-songwriter who recently caught my ear – Slaid Cleaves.

He might not be famous yet, but when you've got 68,000 hits on YouTube, you're doing something right.

Here's his song Broke Down. Let me know what you think. Thank you for reading and subscribing to Casey Daily Dispatch.

Vedran Vuk
Casey Senior Analyst