The Motley Fool

FOOL'S SCHOOL

TURBOCHARGED RETIREMENT

With Social Security's future uncertain and Americans as a wholenot saving enough, many folks' retirement prospects are lookingpretty grim. Yours doesn't have to, though, if you get your goldenyears ducks in a row now.

One good idea is to take full advantage of IRAs and your employer-sponsored retirement plans. By socking away more money in tax-advantaged accounts, you can reduce your taxable income, too. Hereare the details:

- IRAs. The contribution limits have increased to $4,000 per yearfor traditional and Roth IRAs, increasing to $5,000 in 2008. Ifyou're 50 years old or older, you can make an additional $1,000contribution to your IRA.

- 401(k), 403(b) and 457 plans.

You can contribute up to $15,000 in 2006 ($20,000 if you're 50 orolder). If your employer contributes any matching funds to your plan,it's usually a no-brainer to contribute at least enough to receivethe maximum match -- that's free money.

Note that there are some restrictions and rules governingcontributions to retirement plans. If your annual income is in thesix-figure range, for example, your allowable contribution might bereduced.

The more you save and invest for retirement now, the more secureyour future will be. Now is the time to adjust your retirement plans:

u If you have money automatically transferred to a retirementaccount, increase the amount of your contributions.

u If you need to open an IRA,

do it -- don't put it off. (You can learn more about them,including differences between traditional and Roth IRAs, atwww.fool.com/ira and www.irs.gov/retirement/participant/index.html.)

uIf you aren't sure your retirement plan is on track, find out.

uIf you're not comfortable making financial decisions on your own,find an objective financial professional to advise you -- one whowon't try to sell you anything. (We offer tips on finding an adviserat www.fool.com/fa.)

You'll find more guidance in Retire Worry-Free: Money-Smart Waysto Build the Nest Egg You'll Need by the editors of Kiplinger'sPersonal Finance (Kaplan Business, $18).

THE MOTLEY FOOL TAKE

CUPBOARD BARGAINS

If you open your fridge and cupboards today and make a list ofcompanies to invest in, you'll likely do reasonably well.

A number of well-known companies such as Procter & Gamble (NYSE:PG), Clorox (NYSE: CLX), Church & Dwight (NYSE: CHD) and Colgate-Palmolive (NYSE: CL) are trading at reasonable valuations, though notyet at screaming-bargain levels.

There are a number of long-term reasons to keep an eye on all ofthese firms. Most consumer-goods companies carry dividend yieldsgreater than 2 percent and should offer healthy dividend growth. Inaddition, these have generated above-average returns for decades. Buttheir most important advantage is the strength of their brands, whichallows them to raise prices if needed. As signs of inflation becomemore and more obvious, this ability to maintain profit margins overthe long term will become more important.

On the other side of the equation, some of the largest retailersthat sell consumer-goods companies' products are also relativelyaffordable. An argument can be made that Wal-Mart (NYSE: WMT), Target(NYSE: TGT) and Costco (Nasdaq: COST) all are fairly valued -- or inWal-Mart's case, undervalued.

Keep an eye on these companies. A 10 percent drop in price for anyone of them would create an attractive opportunity to build aposition in a high-quality company.

NAME THAT COMPANY

Send your answer to us with Foolish Trivia on the top and you'llbe entered into a drawing for a nifty prize!

Based in London and New York and tracing my roots back to 1724,I'm an international media company with market-leading businesses ineducation, business information and consumer publishing.

With more than 32,000 employees based in 60 countries, I rake inmore than $7 billion annually.

My textbooks, multimedia learning tools and testing programs helpeducate more than 100 million people worldwide.

My publishing names include the Financial Times, Penguin, DorlingKindersley, Scott Foresman, Prentice Hall, Addison Wesley andLongman.

I also provide data to financial institutions and publicinformation systems to government departments.

LAST WEEK

Born in 1852, I'm a financial services giant with more than $490billion in assets and 152,000 employees.

I offer services such as banking, insurance, investments andmortgages to more than 23 million customers worldwide.

I was one of the few companies to maintain regular dividendpayments throughout the Great Depression.

In the 1960s, I introduced automated teller machines.

In 1967, three other banks and I introduced Master Charge, nowknown as MasterCard.

In 1995, I was the first U.S. financial services company to launchInternet banking services, and in 1998 I merged with Norwest.

Answer: Wells Fargo

ASK THE FOOL

Did I hear correctly that I can get health insurance for my pets?

-- H.D., Watertown, N.Y.

You did indeed, and you should consider it, lest you end up oneday having to decide whether to spend thousands of dollars to saveFluffy's life. Pet insurance for dogs and cats typically costsbetween $100 and $500 per year. Your employer might even offer it.Learn more at http://moneycentral.msn.com/content/Insurance/P76008.asp and consider providers such as Veterinary Pet Insurance(www.petinsurance.com or 888-899-4VPI), PetCare(www.petcareinsurance.com, 866-373-7387), or Petshealth(www.petshealthplan.com, 800-807-6724).

How does a stock watch list work?

-- B.L., Abilene, Texas

As you spend time learning about investing in general and readingabout particular companies, jot down the firms you think you mightlike to invest in. Ideally, enter these companies into an onlineportfolio so you can easily track their progress from week to week ormonth to month. Perhaps pretend that you bought one share of each atthe price at which you first noticed the company. (That way you'll beable to quickly see how much it's risen or fallen since then.)

As time permits, research the companies on your list and get toknow them well. When you're ready to buy, you'll be familiar with abunch of firms and will be able to compare them to see which ones arethe most promising. You'll also be able to notice when companies youlike encounter temporary problems and fall significantly in price. Aslong as the problems seem temporary and not fatal (after someresearch), these can be attractive buying opportunities.

Online watch lists are most convenient, but if need be, you canmaintain a list in a paper notebook.

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Write to Us!

Send questions for Ask the Fool and entries for Dumbest (orSmartest) Investments (up to 100 words) and trivia to Fool@fool.comor via mail to Motley Fool, 123 N. Pitt St., Attention: NewspaperMail, Alexandria, Va. 22314. We can't

provide individual financial advice.