It's no secret that not many people retire wealthy. In fact, most people retire broke. So what makes the difference between someone who is able to live out the remainder of their life in comfort without a worry about money and someone who spends the time they have left constantly stuck in a position or worry and confinement to their home because they can't afford to do anything or go anywhere? The answer lies in planning ahead.

People who retire wealthy don't just happen to do so by accident. These people not only plan ahead, but they also work and stick to their plan. It's easy to put off a lot of the things that will give us that financial security when we no longer work such as saving and investing. It's difficult to have to choose to either enjoy your money while you're still young or to cut back on spending in ordert to have a better retirement life. These are just decisions you have to make. There are ways for you to do both though and I'll be discussing that in a bit. For now, let's just look at what you can do the have a better retirement.

Saving

It's easy to want to spend what you make in order to enjoy your youth while you're still young. That's one of the main reasons most people retire broke. They sacrifice a comfortable lifestyle in their later years for the best lifestyle they can afford in their younger years and end up paying for it. The mentality of enjoying your money while you're still young, although will make the first part of your life more fun, it may lead to a pretty sad second part of life.

I'm sure you have heard the advice of saving your money. This is critical. The general advice is to save 10% of all the income you make. This really just comes down to making it a habit. The best way to do this is to make it automatic. You can set this up with your bank and/or your company. When you don't even see the money in the first place, it's easier not to be tempted to use it. From there, you just need to have the discipline to not use the money in there.

Investing

When you start, you want to put your money in savings in order to keep in simple and get in the habit of doing it. Of course, with savings interest rate at 2% or sometimes lower, retiring wealthy may be a stretch unless if you start when you are born. Once you get in the habit of saving 10% of your income, you want to start being a little bit more aggressive in order to get a higher return on your money.

With the current recession, it's sometime difficult to have any confidence to put your hard earned money into the stock market but if you have at least 10 years until retirement, then you'll have less to worry about. Stocks always go in cycles. After every recession there will be growth. Over the last 50 years, if you had your money in the stock market for more than 10 years, you will have made money 100% of the time. The percentage drops as you reduce the number of years you have your money in the stock market. This is why it's wise to have your money invested for the long term. This doesn't mean you never sell, it just means you shouldn't be day trading or doing this for the short-term. The market is brutal and chances are, you'll be eaten alive.

You can opt to put your money into a safer investment vehicle like CD's or certificate of deposit. This will generally give you a higher rate of return than a savings account will but you won't be able to pull out your money for a period of time depending on which CD you get. The longer you have to hold your money, the more interest you will get in return.

You have heard it over and over to diversify your portfolio. You don't want to put all of your eggs into one basket because if that basket drops, there goes all of your eggs. So in terms of risk, you want to have safe as well as risky investments as well. If you want to be more aggressive to get higher returns, here are other things you can do.

1. Invest in Real Estate

The best time to buy a home is during a recession. This is when you will be able to find homes for a great price. Most millionaires own a house and at least one other investment property that they rent out. This should give you some clue as to what you need to do yourself in order to retire wealthy.

2. Start a business

Another common thing that the wealthy have in common is that most of them own a business. It's much harder to be financially indepedent when your only source of income is from a job that has a limit to how much you can make. On top of that, people with jobs are taxed way more than business owners do even though businesses make more money in general. In order to start one, you will need knowledge, money, and a plan. Certain businesses will take more time and money than others and the income potential will be different as well depending on what kind of business you have.

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To retire wealthy, one of the best things you can do is find someone who actually retired wealthy and find out what they did and do the same thing. If you don't have that many years left, your chances will be smaller but it doesn't mean that you can't turn things around within a few year's time. In fact, if you can start building some residual income, your retirement can become quite comfortable. You won't exactly be wealthy, but you'll have enough money coming in each month to be able to maintain your current lifestyle. If you think about it, that's what retiring wealthy is about anyway. If you have millions at retirement, you'll be using that to live for the remainder of your life. All of this planning was to have enough money saved up so you can stop working and not have to worry about money.

The reason why most people retire at such an old age is because it takes a long time to actually have enough money saved so that you no longer have to work. This is why you don't see very many 30 year olds retiring. It would take a huge amount of money to live off of without working for the next 40-60 years. However, if you create residual income, meaning money that keeps coming in whether or not you work, you can retire the day you make enough of this income to cover all of your expenses for your current lifestyle.

To retire wealthy is a mere dream for most people, but if you're young, with some planning and discipline, it's very achievable. If you're older, you have less options but if you work right now on building some residual income, you should be okay within 5 years or so if you know what you're doing.

Whatever your situation, the time is now. START NOW!

Learn more about how to obtain residual income.

Here is a short video series on retirement in general from Ben Stein. The things he talks about will help you retire well, probably not retire wealthy, but either way, it's much better than retiring broke.