Seeking a golden retirement: using shrewd, disciplined investing, the Smiths prepare themselves for life after work.

THE BIRTH OF THEIR FIRST CHILD IN 1984 prompted Johnny and Karen Smith to embark: on a lifetime of savings and retirement planning. "Once you start having kids, your financial focus changes," says Johnny, "You think about how you're going to pay for their college tuition and then you quickly think about your own retirement."

That momentous year presented another set of circumstances. The couple had returned to their hometown of Detroit with better job prospects. Karen started working at the Detroit Receiving Hospital and Johnny at a private physical therapy firm. The couple delayed saving until Johnny had completed his master's degree in physical therapy at the University of Pittsburgh the previous year. "Our financial strategy at the time centered on getting me through school," he says.

With a baby and steady jobs, the couple sought the counsel of a certified financial planner. Although they had nothing saved, they did have a desire to achieve financial goals and, as time has proved, the tenacity to stick to a savings and investment plan.

The couple weighed their options and opened a stock mutual fund with American Fund Family Inc. They also started participating in investment programs offered at their workplaces. Now, after 22 years of consistent contributions, the couple's joint mutual fund stands at $200,000. Karen's veritable annuities account is valued at $20,000, and her tax shelter annuity has amassed $7,000 (she rolled over money from the 403(b) plan that she had during her 19-year stint at the hospital). Johnny has $27,000 in his rollover IBA.

The Smiths have dedicated themselves to Declaration of Financial Empowerment principle No. 3: to commit to a program of retirement planning and investing. They have little debt and have always considered themselves frugal. The couple's children, 22-year-old Monica and 19-year-old Bryant, are fortunate; their parents squirreled money away early on to cover their college education costs.

In 1988, the Smiths opened a prepaid 529 college savings plan, paying an $11,000 flat fee. That money has already paid for the full tuition cost of their daughter's bachelor's degree in sociology at the University of Michigan. This fall, Monica will begin law school at Wayne State University. Bryant's sociology degree at Michigan State University is also paid for under a 529 college savings plan.

Another added benefit of working toward financial freedom came two years ago, when the Smiths made the last mortgage payment on their three-bedroom house. "We bought the house 22 years ago at $35,000; today it's worth $180,000," says Johnny.

The couple also adheres to DOFE principle No. 10: to ensure that my wealth is passed on to future generations. Johnny and Karen have just renewed their term life insurance policies, which guarantee that in the event of premature death, the surviving spouse will receive $100,000. To avoid lengthy and costly probate, the couple established a will 10 years ago. The document stipulates that if Johnny dies, his possessions will go to Karen. If both die, their children will inherit their assets.

Moreover, the Smiths are in the process of establishing an irrevocable trust for the children, which will allow their assets to be managed by the successor trustee (one or more persons chosen by the parents) until the children are old enough to collect.

"My mother always encouraged me to save money," says Karen. Her mother, a welfare recipient, took her to open her first bank account when she was 14 years old. "She would say, 'Don't spend all of your money on a lot of expensive things, only buy what you need.'" The Smiths have passed on this financial knowledge to their son and daughter.

Today, Johnny, 51, and Karen, 46, still have a number of years left before they retire. "I see a lot of skiing, and we love to travel," says Johnny. "We want $1 million by the time we retire. That's what we're aiming for, and we are going in the right direction," he adds.

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

PRINCIPLE 3

To commit to a program of retirement planning and investing

The couple has achieved many of their financial goals, They offer four tips to those wishing to build wealth for retirement through saving and investing:

* Stick faithfully to a systematic program. Just as you allocate dollars to pay your bills your lifestyle, regularly sock away a potion of your income for savings and investments.

* Don't buy anything you can't afford. The Smiths have stuck to this rule. If they do buy big-ticket items, they make sure to pay cash for it. "Anything that we put on a credit card, we pay the balance in the same month the item was bought," Johnny says. Unnecessary liabilities only add up and diminish your assets and overall net worth.

* Work together to achieve your financial goals. This includes not keeping money secrets. "We sit down and discuss everything, what we are going to do. and how we are going to spend our money. What's his is mine. and what's mine is his." says Karen.

* Stay away from credit card debt. Resist the lure of credit cards. Paving interest on borrowed money can keep you from achieving your financial goals.