For most young Americans, financial insecurity, compulsory work after normal retirement age and dependence on government safety nets in later life are very real possibilities.

Most young people do not think about their lives 40 years in the future, but proper habits and small incremental behavioral changes around money issues, especially when initiated at an early age, can more fully assure accumulation of sufficient wealth for a comfortable, financially independent retirement. Financial success requires sacrifice, discipline and adherence to three basic investment principles.

Sacrifice means different things to different people. What it does not mean is forfeiting all fun things and living like a cockroach.

Examples of reasonable sacrifices are giving up one or two discretionary-spending items and putting money in your company retirement plan. These 401(k) and 403(b) plans and their ilk are the best overall way for young people to save for retirement. They are convenient, painless and have outstanding tax advantages.

Relatively small amounts, saved regularly in investments that have a higher return potential, can result in massive long-term accumulations, but starting early is imperative. Assuming an 8 percent return, if people save $100 per month beginning at age 25, they could accumulate $351,000 by age 65. If they wait until age 30 to start, they would accumulate $231,000. That is a significant difference and should be a big motivator to start early.

Discipline means you are capable of making the sacrifice required to free up the money necessary to have a savings plan, implementing it and sticking with it for decades. What it says about you is that you are serious about your future and not blithely sailing along thinking that money will magically appear in your accounts. It won’t; it is up to you.

Discipline also means that you spend time thinking about saving, that you are conscientious about setting savings goals, that you pay yourself first by putting money away every paycheck and that you have a budget and know what you can spend and save each month. Spending as much time planning your future as you do planning a weekend getaway is discipline.

Once you are committed to making small incremental behavioral changes in a disciplined, organized and well-thought-out manner, the next step is to unfalteringly adhere to three basic investment principles.

The first principle is to remain diversified. In general, stocks, bonds, hard assets and cash represent everything you can put your money into. Your portfolio should have some money in each of these four groups.

Adjust your risk level to fit your tolerance by varying your allocation between the risky (stocks and hard assets) and the more stable (bonds and cash) asset classes. Although it may make you uncomfortable, taking some risk may be essential. Historically the trade-off for fluctuations in portfolio value due to the presence of risk has usually, but not always, been higher returns.

The next principle is rebalancing. Rebalancing prunes your portfolio back to your target allocation at regular intervals. This should happen at least annually. Rebalancing forces you to sell high and buy low, the basic axiom of successful investors. Without rebalancing, portfolio allocations become distorted over time and may no longer reflect the investor’s risk tolerance and return objectives.

The final principal is to avoid the temptation to time the markets. Although opinions vary, research does not support the contention that one can time entries and exits to improve investment results. More money is lost trying to avoid declines than in the declines themselves.

Small sacrifices and discipline at an early age, while you remain fully invested and diversified with regular rebalancing, may be the key to a financially independent retirement. Be sure to speak with a qualified financial adviser about any strategies you might be considering before investing and email this column to young people you care about.

As seen in the 7/29/2011 issue of Washington Business Journal