The headlines have a strangely unreal ring about them these days.

The Federal Reserve’s easy money policy is either about to end or last for years more, housing is in recovery or it’s an illusion, and people aren’t buying cars because they apparently don’t want to drive anyway.

Add to all that this strange twist: Goldman Sachs thinks individual investors need access to hedge funds.

If you’re not familiar with the concept, hedge funds are run by active managers who attempt to avoid losses, which is a form of market timing. They often use leverage to amplify gains and invest derivatives and similarly exotic instruments. In short, they’re traders, big time.

It’s a strategy that has had some success in the past, as well as some catastrophic failures. But why hedge funds? Why now?

The Goldman argument is that ordinary investors need help. Specifically, that they need protection from the downside of the market, which seems to show up every few years like clockwork.

Hedge managers love crazy markets. Their aim in life is to ride those rogue waves to ever-higher peaks while avoiding the crashes in between. Goldman’s spin is to take the concept to the retail market.

They don’t expect anyone to put a lot of money into hedge funds. It’s being sold as an alternative strategy to complement core holdings, presumably the ordinary stocks and bonds that make up most retirement plans.

It’s easy to see the attraction of the whole idea: You get access to the minds of Goldman Sachs at a very low minimum, just $1,000. A kid mowing lawns for the summer could afford it.

Yet the fees are incredibly stiff, as high as 3.30%, unless Goldman decides to raise them later, which it could, to as high as 4.03%. (Call it an early investor discount, if you like.) Morgan Stanley and Blackstone are launching similar funds.

That’s expensive for a mutual fund in a retirement account. It’s cheaper, though, than what the big clients pay. Typical hedge funds cost 2% of assets managed and then 20% of any profits. You have to wonder whether Wall Street will end up cannibalizing its own business here.

A way around hedge funds

For retirement investors, though, the question remains open. How does one avoid the risk of falling into a market trap?

The fact is, you can get access to non-traditional investments easily and cheaply with a well-designed portfolio that uses very inexpensive exchange-traded funds.

An effective retirement portfolio does not rely solely on U.S. stocks and bonds to be “balanced.” In fact, it holds several asset classes, including foreign stocks, emerging market bonds, commodities and real estate.

Rather than paying a firm to trade those holdings actively — generating trading commissions along the way, plus substantial risk — the better strategy is to own them passively and to rebalance as market forces create temporary winners and losers.

It’s not rocket science, and it’s certainly not worth losing sleep over — or paying unusually hefty fees for yet another manager.

Retirement savers have a lot on their plate these days. A long, slow recovery is making it harder to believe in stocks even as they hit new highs. Meanwhile, bond yields are low, in some cases negative after inflation.

Tax laws are changing, government is deadlocked over the debt and there seems to be no safe place to turn, on or off Wall Street.

To top it all, there’s the growing discussion on the matter of adviser fees. When markets zoomed upward reliably in double-digits, few seemed to care what they paid money managers in adviser fees. Now, every penny counts.

One big-wheel wealth management firm is coming completely clean on adviser fees, detailing their strategy of telling the painful truth in a fascinating article in The New York Times. They say that their firm reveals the actual dollar cost of management on an annual basis.

“By expressing it in dollars, that makes a real impact on clients,” one manager at the firm told the newspaper. “Most advisers talk in percentages or, worse, basis points, and no one knows what a basis point is.”

He’s got the right idea: People saving for retirement, whether they have $40,000 or $4 million, really don’t understand how they are charged, why and when. So let’s break adviser fees down.

1. How you are charged. Most money managers talk in “basis points” because it’s the language of finance. A simple synonym for basis point, one which might make more sense to ordinary people, is “a tiny fraction of 1 percent.”

Take 1% and cut it into 100 pieces. Each of those tiny pieces is a basis point. So, 100 basis points is 1% while 50 basis points equals 0.5%. On a $100,000 investment then, a 50 basis point fee comes to $500 per year.

Easy, right? Except people often don’t understand the whole picture on adviser fees, which involves adding up charges from several directions. The manager might be charging you 1%, but the underlying funds he or she buys on your behalf could easily be charging another 2% for that portion of your money, obscuring a rock under which lives another nest of poorly explained fees.

Key questions to ask: Tell your manager to add up all the fees on your account. If you don’t have an account yet, ask for a breakdown and total on fees for a sample account. Get it in dollars per year for a given balance, say, $100,000 or $1 million, any number that helps you make an apples-to-apples comparison.

2. Why you are charged. Money managers have to eat, of course. But there’s no good reason to buy the most expensive fund on the market in order to achieve a simple outcome. If you have an actively managed fund in your portfolio whose purpose is to “beat the benchmark return” of some well-known index, does it? And does it beat the benchmark after subtracting the fund’s fees?

You might want to know why your manager owns this fund, if it can’t achieve its stated goal with any consistency. In comparison, index funds and exchange-traded funds won’t beat their benchmarks. But they won’t lag by much, either, given their tiny fees.

Key questions to ask: Why are the funds I own worth the adviser fees I clearly pay to own them? Do you benefit from buying them on my behalf? Are there efficient alternatives?

3. When you are charged. Finally, you have to consider the impact of trading commissions. Getting in and out of individual stocks can be pretty cheap in a tax-sheltered retirement account, but if your manager does it daily, well, that adds up. He doesn’t pay for the trading, you do.

Likewise, mutual funds cost a flat amount to trade, generally higher. If your manager is trading in and out of mutual funds as if they were stocks, that’s a serious cost burden for you.

Key questions to ask: Are you compensated when a commission is generated? What is the “turnover” (a measure of trading frequency) of your average portfolio under management?

Your adviser fees cheat sheet

Here’s your cheat sheet. The correct answers to the above for long-term retirement investors should be:

1. Adviser fees of less than 1%, all in.

2. You own the least expensive, most passive funds.

3. We receive nothing for trading your account and do so only when absolutely necessary to rebalance.

You probably won’t be surprised to hear that early IRA withdrawal is a major trend in retirement investing.

A new study from the Employee Benefits Research Institute put a number on it this week: Among the lower-earning half of savers ages 61 to 70, nearly half (48%) were taking out money ahead of time.

Even among the top half of earners the early IRA withdrawal number was surprisingly high, at 42.7% for the third quartile and nearly 29% of the highest quartile group.

The amount of money varied. The lowest income group withdrew 17.4% of the savings, while the highest took out 11.5%.

Under IRS rules, all IRA savers have to start making required minimum distributions at age 70 and 1/2. That some start early is a symptom of having saved too little, leaving work too early, some combination of these factors or, potentially, a well-considered strategy.

Given how far off the mark Americans are on total savings for retirement, however, the latter seems unlikely.

Similarly, a large percentage of people take Social Security at age 62, historically as high as nearly 50%, (although the number has fallen in recent years), even though waiting until 66 or as late as 70 means getting a higher monthly benefit.

It’s easy to say that near-retirees should hold off on tapping retirement income sources. After all, they face the same financial pressures as everyone else — gas prices, rent or mortgage, the cost of food — and often get asked unexpectedly to cover the costs of their grown children.

Nevertheless, early IRA withdrawal risk is hard to understate. The reason why is the “time value” of money.

This can be a difficult concept to master, but if you have ever taken out a car loan you probably already get it: The longer the loan, the more you pay. The interest rate might be fixed at a seemingly low number, but if you stretch it out over more years the dollar number you pay gets bigger.

Let’s use the car example: If you buy a $20,000 car at 3% interest rate and finance it over 5 years, your total interest paid adds up to $1,562.

If you did the same loan over three years instead: $938. Yes, your payments each month would be higher, but the cost of your loan falls by nearly 40%.

If you had a chance to buy anything else at such a steep discount, you’d jump at it. Yet people fall for the same trick over and over, choosing the lower payment on longer terms as if  the lower monthly hit to the wallet means lower total cost.

It can make some sense if you manage to invest the difference in a way that earns you more in the meantime, but that rarely happens in real life. Mostly, we just pay too much to borrow and fail to realize the damage to our finances.

Unseen early IRA withdrawal risk

Back to retirement. If you take an early IRA withdrawal — or early Social Security for that matter — does it hurt you financially? You bet it does!

In the case of Social Security, the risk is lower. Since the government runs the retirement program as a pension fund, you are somewhat protected from “longevity risk,” that is, running out of money in your old age. You’re not protected from political risk, of course, and inflation risk is a concern, but those are different topics.

If you fail to do the “time value” calculation on your IRA, though, chances are high that your early IRA withdrawals will cost you big. See, the longer you take out money (time), the less you can take out safely (value). It’s a car loan in reverse.

Unlike Social Security, you can very easily spend down your IRA to zero and have no way to recover, should you live longer than you expect. Other than owning an annuity or other form of guaranteed income, you are on your own when it comes to figuring your real risk of outlasting your savings.

That’s why, in some cases, investing for growth in a retirement portfolio can be an important consideration, and why “pension manager thinking” is the key to retiring well on the assets you have.

You might have run into a story this week about retirement derailers, the unexpected life events that tend to put retirement savers off-track and leave them tens of thousands of dollars behind their goal.

Ameriprise Financial, the big financial planning firm, recently released a study of 1,000 employed and retired Americans between the ages of 50 and 70, each with at least $100,000 in investible assets.

The survey respondents were on average $117,000 behind their personal retirement goals, citing a number of unexpected financial impacts, retirement derailers such as stock losses, low interest rates and declining home equity.

They also brought up retirement derailers in the form of unexpected expenses, notably caring for grown children or grandchildren. Only one-third of the respondents said that they felt confident in their ability to manage a large expense in retirement, for instance a major home repair.

More than one-third (35%) said that the losses they had experienced meant that they were less likely to be able afford the basics in retirement. Nevertheless (and perhaps unrealistically), 64% felt that their road to retirement remained “smooth.“

The solution to the problem, naturally, is: “Have more money.“ But the reasons why that isn’t working out for retirees vary considerably.

In a very real sense, when middle-aged or older parents take on the responsibility of financing their children, particularly paying for education, they assume a huge personal risk. A young person can work or borrow to pay those costs. That’s admittedly hard to do under current circumstances but within the realm of the possible.

What’s impossible is retiring with little money in your retirement savings accounts. Work is less desirable as you age and possibly a swiftly foreclosed option if health fails. Borrowing is out of the question. All lending presumes a collateral in the form of either future earnings or some asset, such as home equity.

The bottom line on retirement derailers is this: Your kids have time and choices, but you do not. You love them, but you can’t sacrifice your financial life to them. If you do, the inevitable result will be dependence on them to survive later on.

But what about retirement derailers in the form of market forces? This is where the concept of “risk-adjusted return” is crucial.

Money management is not about “beating the market,“ however long and hard the financial media touts outperformance and hedge fund gurus. It’s not a sport where first place is all that matters. Finishing is what matters.

True retirement derailers

So what is risk-adjusted return? There’s a lot of fancy math in the background here, but the concept is disarmingly simple. If you target a return of 7%, how much do you increase your risk by stretching to 8% in a given year?

The answer should be “little to none.“ If you have to take a lot of extra risk to push for that extra 1%, what happens is that you quickly get hooked on the better return. It works one year, then the next, then in year three or four — disaster.

The disaster year then resets your long-term average return much lower, even more so if you panic and sell. It’s very hard to recover from that kind of outcome, as the Ameriprise survey on retirement derailers results sadly illustrate.

You can, with some deft family politicking, avoid becoming the bank of last resort for your children in tough times. It’s hard, but within your abilities.

As for the market forces out there, the best answer is to seek a return matched to your time horizon and risk tolerance. If necessary, raise your savings rate to meet your goals, rather than amplifying risk in hopes of making up the gap.

It’s the single biggest question facing working Americans of all ages: Can I retire on time, and what will happen once I finally quit working?

Financial planners can sit you down and do a real work-through of every variable in your life — housing, health, kids, your lifestyle, to help you retire on time. But it helps to do the “back of the envelope” calculation as soon as possible. You can’t meet a goal you haven’t set, and this is a big one.

One simple way to think about it is in terms of the classic “4% rule.” While the applicability of the rule is in question thanks to low bond yields, the math is still useful for figuring out how much money you need to retire on time at a targeted income level.

Simplified, you take your portfolio’s total value and multiply by 4%. That’s how much you can expect to live on, leaving aside for the moment Social Security and any pension you might have.

In number terms, that means you need $1 million to generate $40,000 in income. A $3 million portfolio creates an income stream of $120,000 a year.

How does it work? It’s deceptively easy math: 1% of 1 million $10,000. Times four is $40,000. If you assume a market return of 7% minus 3% inflation, you end up with $40,000 for every $1 million you control as a maximum withdrawal rate.

If the market does better, you reinvest. If it does worse, that reinvestment should protect you through the “down” years.

Scary numbers, I know, but it’s crucial to think about your money in terms of the eventual income it will produce if you plan to retire on time.

So crucial that the U.S. Labor Department is considering changing retirement law to require defined contribution plans, more commonly known as 401(k)s, to explain workers’ savings in terms of lifetime income after retirement.

Many state pension systems already do this. If you have a state plan, it likely clearly illustrates on each statement how far your money will go in retirement as a monthly income.

That’s a huge help if you expect to combine your 401(k) savings with Social Security income later. Similarly, if you log on to the Social Security Administration web site these days, they also will project your retirement income through the government retirement system, tailored to you.

By combining these two numbers, it should be relatively easy for people to arrive at a sense of how far off the mark they are as they near retirement.

It’s harder, of course, when you’re younger and need to estimate so many future costs. Nevertheless, back-of-the-envelope math can at least help to set a goal to retire on time.

Now for the final piece of the puzzle. How do you get to that target? Here’s where another rule of thumb can help, one known as the “Rule of 72.”

Financial planners use this often. It has limits, of course, but the basic math answers a lot of questions about how your money grows over time.

The Rule of 72 gives you the number of years required to double your money in an investment. The other number you need to know is your rate of return, the “speed” at which your investment increases in value.

How to retire on time

If you believe your investments will increase at an annualized rate of 7%, for instance, you take 72 and divide by 7. The result is 10.3. It will take a little more than a decade to double your money.

As you can see, a lower rate of return means it will take longer. Getting 3% means waiting 24 years to double. Likewise, earning 12% means your money doubles in just six years.

The really important lesson here is compounding. As you save, your money grows into more money all by itself.

If you put away $100,000 and it doubles in 10 years, that’s great. But over the next 10 years, it doubles again — $200,000 turns into $400,000 and then into $800,000 at the end of just 10 more years.

So, there’s your homework assignment. Whether the Labor Department gets this rule change approved or not, sit down soon and figure out if you’re on track and, if not, what it would take to retire on time.

A new report casts considerable doubt on how well many Americans will fare in retirement: Those born between 1966 and 1975, the so-called Gen-Xers, will be the worst off regarding their retirement plan, able to replace only half their working income. Older savers will do better, but only just.

What happened? One way to look at the problem is through a policy lens. As companies abandoned pension plans during the 1970s and onward, Americans were slowly pushed to fend for themselves in retirement. We replaced that system with the largely voluntary 401(k) and IRA-based retirement plan.

Experts often speak of retirement plans as “defined benefit” or “defined contribution.” The difference can seem subtle, but it’s quite stark. Pension plans promise an outcome (the benefit) and then work to provide it. Private, individual savings plans promise an opportunity (contributions today with tax breaks and company matches) while not guaranteeing the result.

One can easily debate the relative merits of either retirement plan path, but the point is largely moot. It’s extremely unlikely that corporations will voluntarily resume the long-term financial risk of running pension plans. They dumped pensions for a reason.

What’s left for working Americans who expect to retire is a real retirement plan puzzler. How can an individual replicate the predictability and solidity of a pension-style plan sized down to one? Is it even possible?

The retirement plan fix

The answer is yes, but it takes a fundamental reimagining of the purpose of saving and retirement. Here are the five basic retirement plan steps:

1. Pay yourself first. If you don’t save money, you won’t have money. Budget experts suggest doing a breakdown of where you spend every dime, but the simplest budget method by far is to remove a significant percentage of your pay in advance (double digits, at least) and deposit it into an account you cannot easily access. You can’t spend money you don’t have. Safely deducting savings ahead of your check is exactly what a 401(k) does quite well.

2. Take every tax break you can. The ancillary benefit of a 401(k) is that someone else — your employer working with the IRS — automates the pre-tax deduction process for you and keeps all the records intact. That’s a major load of paperwork that you as an employee almost certainly wouldn’t take on. Your taxes are lower today, and the benefit is easily portable as you change jobs, which of course you will.

3. Estimate your real retirement plan needs. This can be the tricky part. Caught between generations that depended on private pensions and government retirement plans, most people seem to believe that “someone else” will take care of the problem of paying their bills once they cease working. Yes, you probably will get something out of Social Security, but the idea that it will be enough to support your lifestyle is plainly an illusion. You have to have enough money set aside to finance, at minimum, 70% of your highest paycheck. Most young people won’t make it, Pew found.

4.  Stop hoping the market will save the day. Once savers begin to accept that they are not on track, that’s when interest in the markets and investing tends to take root. The problem is, real pension planners never hope to “make a killing” on a stock. They have a legal responsibility to assume the worst and plan conservatively. That doesn’t mean holding cash or being 100% bonds for decades (which brings its own risk). It does mean seeking a reasonable return for the risk assumed and dialing down that risk as you near retirement.

5. Think like a pension manager. Do you know if you’re on track to retire on time and with ample income to sustain your lifestyle over decades in retirement? A pension manager knows exactly how well or how poorly his or her retirement plan is working. You should have enough information to feel the same level of confidence, information the government is working to require of 401(k) plan providers.

It’s possible to save enough and retire on time with a reasonably safe income — mathematically. What’s missing is the will to take charge of one’s own financial future, a lesson the Gen-Xers will unfortunately have learned very late in the game, if the current retirement plan data holds true.

There’s a battle brewing for your retirement savings, and it’s shaping up to be a doozy. Billions of dollars each year roll out of company-run 401(k) plans and into personal IRAs, increasingly directed by retirees themselves. Do it yourself investing is the new “normal.”

Who wants a piece of that money? Well, your old 401(k) plan would like to keep it, of course.

That’s what led to a recent federal study, put out by the Government Accountability Office, warning the public that the plans often attempt to steer workers directly into IRAs they run, thus maintaining their hold on fees charged.

The problem isn’t so much that their own IRAs are bad, but that workers don’t realize that they have choices, the GAO explained: Keep it in the 401(k), put it into a new employer’s plan, roll over into an IRA run by the same firm or a competitor, or (by far the worst choice) cash out.

Rollovers are a fast-growing part of the market, estimated to hit $450 billion by 2017, up from $315 billion last year, reports The Wall Street Journal. As a result of this wave toward IRAs, the Journal writes, more people are attempting do it yourself investing, rather than hire a financial adviser.

Most money is still managed by advisers and 401(k) plans, according to Cerulli Associates, $18.2 trillion in 2011 compared to $4.2 trillion through online brokers. But the do it yourselfers are on a bit of a rampage, stung by high fees and a feeling of mistrust.

Do It Yourself Investing Quiz

Considering being your own adviser? Worried about messing things up? Here are some fundamental questions to ask before trying do it yourself investing:

1) Do you care enough to learn about investing? This is a major stumbling block for many retirees. After decades of allowing a mutual fund or 401(k) plan manage their money, they are forced in retirement to take a crash course in do it yourself investing. Some are ready and willing to take on this learning curve, and some clearly are not. Decide who you are.

2) Are you doing this alone or as a couple? It’s crucial for couples to share the burden and the responsibility of knowing how their shared savings will work as a long-term income source in retirement. If only one person in the relationship is involved, then do it yourself investing risk to the other person is quite high if a spouse dies or becomes incapacitated.

3) Are you confident in your emotional ability to manage money? Early on, investors can afford to ignore “volatility,” the tendency for investments to rise and fall in value. If you have decades to go until retirement, the day-to-day value can seem irrelevant. Generally, too, good long-term investments can be volatile in the short run. Once retired, however, volatility can lead to poor decision-making, emotional trading and panicked choices. Understand where you are emotionally before you take on do it yourself investing.

4) Do you understand what fees you should pay? The reason all the brokerages and advisers want your retirement accounts so badly is, very simply, they will collect ongoing fees for managing your money. Very high fees are sometimes sold as evidence of exclusivity or skill. Nothing could be more backward. If you don’t know what fees you pay and nobody at the firm will explicitly say the number to you, that’s big trouble.

5) Do you have complex tax and estate situations to consider? Financial advisers do have an important role to play and they can add value. For instance, properly choosing from the different types of IRAs (taxable, tax-deferred, Roth or a combination), managing income for survivors and investing for heirs. You can buy that advice à la carte from most good advisers, what is known as “fee only” service.

Being confident in your money management skills is important all through life but especially as retirement nears. So is knowing when to seek help with do it yourself investing, and knowing the appropriate price to pay for any service you choose to engage.

Americans have long known that medical care is much, much cheaper abroad. What they didn’t know until recently is that the same procedure at one hospital can cost a fraction even across town.

Treating a heart attack, for instance, costs $89,000 in one Miami hospital and more than $166,000 a few miles away, reports The Washington Post, using new federal government data. A joint replacement in Washington, D.C. ran $30,000 in one place and nearly $69,000 nearby.

There are a lot of complex reasons why healthcare prices vary so widely. A big one is industry secrecy; hospitals don’t want their competitors to undercut them, so everyone keeps quiet.

As shocking as the gaps in hospital charges are — and a 300% variance in the same zip code does make you scratch your head — it’s nothing compared to the impact of retirement fund fees.

This is especially true for retirement savers. How do funds charge you? Through a seemingly small fee that pays the managers who make the underlying investments, reported as part of the total “expense ratio.”

Active managers argue that their retirement fund fees are reasonable because they offer the potential for a higher return, by which they mean “higher than the market itself.”

A couple of problems present themselves immediately. The biggest is that very few of them actually achieve their stated goal in any given year, especially after you subtract their own fees. Maybe one in five, on a statistically significant basis.

Could you manage to pick those few winning managers, year after year? Vanguard Group looked at this question in depth, and your chances are about the same as flipping a coin.

Okay, you might say, I’ll buy an S&P 500 index fund and go to sleep for a few years. Well, careful now, the “hospital charges” trap is in your path.

Turns out, there are a lot of funds with S&P 500 in their name and which appear to own the index. Yet their retirement fund fees are nowhere near the same.

To look at two extremes, we ran a Lipper screen on funds that own the popular, broad U.S. stock index. We found the Rydex Series Trust S&P 500 Fund Class C (RYSYX) at an expense ratio of 2.26% and the Vanguard S&P 500 ETF (VOO) at an expense ratio of 0.05%.

To be fair, these are very different products. The Rydex fund is managed. At this writing, for instance, it holds nearly 25% cash, according to Morningstar. It’s no index fund, even if S&P 500 is part of the name.

There’s no pretense of talent or even activity over at Vanguard’s VOO fund. Look under the hood there and you’ll find nearly 99% stock and tiny bit of cash, essentially a snapshot of incoming dividend flows soon to be redistributed back into shares.

Comparing retirement fund fees

We ran both funds through the fund analyzer at FINRA, an industry-run regulator. Imagine $100,000 earning a market return of 7% over two decades. All things being equal, what happens?

The managed fund ends up at a balance of $246,256 while the passive fund ends at $383,118. Shockingly, total fees at the active Rydex fund come to $73,357 vs. $2,108 at the passive Vanguard fund. That’s almost 35 times more expensive!

Arguably, a retirement investor would never own this fund. Likewise, there must be  at least one active S&P 500 fund manager out there who can say he or she beats the market in a way that matters to retirement-oriented investors, consistently and cheaply.

It’s just that your chance of owning the right fund during the right year is exactly that — chance.

A few recent articles tackled the issue of increasing numbers of recent grads living at home, a.k.a., the “boomerang kid.”

The ratio of 25- to 34-year-olds cohabiting with Mom and Dad is one in three now, up from 11% in 1980, reports the Pew Charitable Trusts. (Surveys vary but generally agree that it’s up overall.)

Meanwhile, unemployment is higher for those under 30, at 11.7%, and many face paying down their part of more than $1 trillion in student loan debt. Some are having a hard time covering very high rents near the jobs they do land.

On the other hand, nearly half of boomerang kids told Pew that they pay their parents rent and even more of them help out financially in other ways, so it’s a bargain of sorts.

As a result, young Americans are finding out how young people in the rest of the world “grow up.”

For instance, many people in their 20s and 30s or even older in developing Asia and Latin America live at home well after finishing college. Extended families under a single roof are normal nearly everywhere else.

That’s not to make a value judgement either way. Being independent early can bring some advantages, though it’s  a costly lesson for those in the high-rent areas, such as Manhattan.

Likewise, a boomerang kid is not necessarily a slacker. Some set short-term financial goals only achievable by getting another year or two of living under a parent’s roof. Saving for more schooling, for instance, or a down payment on a house.

Simultaneously, the current generation of young workers and savers has some interesting characteristics on their own. An Accenture survey found that they think of themselves as “conservative” investors.

Yet conservative doesn’t mean “non-investor,” since so many of them are being automatically enrolled in 401(k) plans through work. They probably shouldn’t be quite so gun-shy about investing in stocks, for instance, since their time horizons are the longest of us all.

Considering these trends, younger savers living at home could do three things to really make a difference in their long-term outlook and the retirement prospects of their medium-term hosts, good old Mom and Pop.

Being a good boomerang kid

Here’s some financial advice for them, or for you to pass along if you’re the hosting parent:

1) Consider how your living at home will impact your parents’ ability to retire on time. They’ll never bring it up, but the cost of keeping you afloat might be punching a big hole in their plan. If you have a job or other income, find a way to make your presence “cost neutral” while you’re there.

That might be buying your own food and paying part of the utilities, or simply renting back your old room at market rates.

2) Figure out how to have something to show for the short-term advantage of a lower cost of living. Up your 401(k) contributions, build an emergency cash fund and set aside money for your eventual escape to a place of your own.

3) Do not outstay your welcome. Much like you would sign a lease with a landlord, come to an agreement with your parents about how and when you’ll exit their home.

That’s also a good time to explain how your saving and good behavior will benefit them down the line in terms of your ability to fend for yourself and be financially stable as an adult, a time when they might need to turn back to you for support in old age.

Warren Buffett, the jocular Midwestern billionaire best known for his appearances in business magazines and on CNBC, has joined Twitter.

Yes, that’s right, the online bastion of starlets and rappers and millions of ordinary teenagers is now an outlet for probably the most anti-technology curmudgeon of modern times. His first tweet? “Warren is in the house.”

If you don’t know Twitter, it’s microblogging, a service that allows you to release thoughts freely to the world so long as they are short and to the point.

Which is, when you think about it, a pretty good fit for Buffett. He’s known for his short, meaningful quotes on how markets work. He’s also a fan of passive investing, once saying that most people should buy and hold index funds and not try to recreate his success as an investor and businessman.

Here are some oldies but goodies from the master, along with a bit of decoding for the novice investor:

1. Someone’s sitting in the shade today because someone planted a tree a long time ago. Classic Buffett. He’s talking about the compounding effect of money. The math can get heavy but the simple fact is that money well-invested doubles every seven to 10 years or so. Then that money doubles again.

Think about it: $100,000 in an IRA at a reasonable rate of return turns into $200,000 in about a decade. Then that $200,000 turns into $400,000 and the $400,000 into $800,000. All without adding a cent of new money. It’s how Buffett got so rich. So, go plant a tree today by putting money into your IRA or 401(k).

2. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. Active traders love this quote, which is funny because they leak money like a broken bucket. They pay too much in commissions and take losses for no good reason. What Buffett is really talking about here is avoiding having to sell your investments because of your emotions.

Stocks rise and fall in value over the years. If you get a chance to increase a position that has gone down, do it. For the passive investor, that means rebalancing, automatically selling high to buy low in a programmatic fashion.

3. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. Buffett often talks about Mr. Market, a fictitious business partner of every investor. Mr. Market has a severe personality disorder. Some days he thinks business is great and would never sell his shares to you. Other days he’s catastrophically depressed and wants out at any price.

It can seem a bit cold, but your job as a serious long-term investor is to recognize those days when Mr. Market comes in ready to sell and to use that moment to buy however much you can. You needn’t time the market to achieve this; it can be done in small steps through smart rebalancing.

4. In the business world, the rearview mirror is always clearer than the windshield. The perfect illustration of this is the moment when a CEO is on a cable TV finance show and the anchor asks him or her to predict the next quarter’s results. It’s a natural question. After all, millions of viewers who own the stock would like to know.

The CEO has no idea. They are forced to give “guidance” to Wall Street in advance, but that’s a guess nearly anybody who reads the company’s books could make. Likewise, pundits who try to estimate the near-term direction of any investment are just stabbing in the dark. It’s ridiculous, and it’s about 90% of what happens in the financial media.

5. You only have to do a very few things right in your life so long as you don’t do too many things wrong. This really sums Buffett up in one sentence. You don’t have to pick the right stock today, tomorrow or ever. You really just have to save enough and invest it prudently with a reasonable expectation of return.

Once you have that down, leave things alone. The mistake you’re itching to make is the single biggest danger you face as an investor. Engage your money life, but don’t believe for a minute that you call the shots in the markets.