Saving faithfully: the Smiths are on the right path to joining the millionaires' club by the time they retire.

MELVIN AND JENNIFER SMITH HAVE been saver's as long as they can remember. At the age of 8, Jennifer was putting her $5 monthly allowance into a passbook savings account, which listed deposits and balances. Melvin, too, had a savings account at age 8; when he turned 13, his mother encouraged him to purchase his first stock. "I chose Mattel, the toy company. That was my first exposure to the world of stocks and the whole notion of risk and return," says Melvin.

This Cleveland couple has embraced their save-and-invest strategy throughout their adult years as well. The Smiths are proponents of Declaration of Financial Empowerment principle No. 2: to save and invest 10% to 15% of my after-tax income. As a result, they have built a formidable nest egg that will secure their planned retirement at age 55. They'll have the financial freedom to nurture second careers or pursue personal interests rather than work because of financial need.

Together the couple has amassed more than $888,000 by saving a portion of their substantial salaries (Jennifer and Melvin earn a combined salary of about $270,000 annually), by maximizing their contributions to corporate pension plans and by taking advantage of stock options. The Smiths have always set aside money from their paychecks, regardless of size. As their salaries increased over the years, so too did their contributions to their retirement and savings accounts.

"We began by contributing approximately 6% of our salaries to our 401(k) programs," says Melvin, 45, an assistant professor of organizational behavior and faculty director of executive education at Case Western Reserve University. "When we first got married 19 years ago, we put away $150 to $175 per month for each of us, or $300 to $350 a month combined." The Smiths chose to withdraw 6% from each paycheck for several reasons. For starters, their employers matched the contributions. "Up to that amount contributions essentially doubled instantly even before considering investment gains," says Jennifer, 44. Also, the low percentage didn't significantly affect their monthly budget but gave them the crucial benefit of deferring taxes on at least a portion of their incomes.

Today, the Smiths contribute more than 10% of their base salaries--more than $2,000 per month combined. So far, the couple's investment strategy has yielded bountiful financial fruit. Jennifer still has a 401(k) plan with her first employer, IBM, where she worked eight years as an account systems engineer. When she left Big Blue in 1993, Jennifer kept the employer-sponsored retirement account instead of rolling it over to an IRA. "IBM is a good company, and the money is still growing, "Jennifer says. The current balance is $95,000.

With PPG Industries since 1994, Jennifer has moved up the ladder to her present position as IT director for the company's car paint division. In addition to her salary, she collects a bonus each year of $20,000 to $30,000. After 12 years of participating in PPG'S 401(k) plan, Jennifer's account now stands at $146,000. She also owns shares of company stock worth $38,000.

Jennifer has established other investment accounts, including a mutual fund with a balance of $35,000 and a money market account valued at $43,000.

Melvin took a similar path to wealth building. Over a six-year period, he worked at General Motors, General Mills, and IBM. At each company he opened a 401(k), rolling over the funds each time. In 1990 he joined PepsiCo. Inc. and began contributing to a 401(k) plan that he chose not to close or roll over. Sixteen years later, the account is valued at $75,000. When Melvin left PepsiCo in 1994 to join The H.J. Heinz Co., he worked full time for four years at Heinz and then part time while pursuing his doctorate. As he did with his account at PepsiCo, Melvin has kept his 401(k) plan at Heinz; today the plan is worth $116,000.

Along with his salaried position at the university, Melvin earns another $30,000 annually in speaking engagements. To date, he has approximately $80,000 in his $403(b) account, a retirement plan for university, civil government, and nonprofit employees.

By the time the Smiths retire at age 55, their two sons, Ryan, 15, and Evan, 12, will be attending college. The couple has set up 529 college savings plans for each one, with a combined balance of $44,000, to ensure that their children's education costs are covered.

Declaration Of Financial Empowerment

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment, I pledge the following:

1] To use homeownership to build wealth

2] To save and invest 10% to 15% of my after-tax income

3] To commit to a program of retirement planning and investing

4] To engage in sound budget, credit, and tax management practices

5] To measure my personal wealth by net worth, not income

6] To be proactive and knowledgeable about investing, money management, and consumer issues

7] To provide access to programs that will educate my children about business and finance

8] To support the creation and growth of profitable, competitive black-owned enterprises

9] To use a portion of my wealth to strengthen my community

10] To ensure that my wealth is passed on to future generations

The Smiths have built wealth for their golden years by adhering to the following financial strategies:

Use direct deposit to built savings. Direct a portion of your paycheck to a money market account to shore up your savings and emergency cash reserve. By Paving yourself first, you allocate critical funds before dividing your paycheck to pay bills and other living expenses.

Get an early star on retirement savings and investing. It pays to start investing early in retirement savings, whether it's a 401(k), 403(b), or Section 457 plan. There's also a practical benefit to having your employer automatically withdraw the money from your pretax salary. "By having the money taken out directly, we never really missed it, and it forced us to be consistent with our contributions," says Melvin.

Max out your employer-sponsored retirement plan. Invest the maximum contribution amount your employer allows. "Always remember that it's free money that your company is giving you by making matching contributions," Says Jennifer.