It sounds like you have been making wise decisions already if you are debt free and own your home. That is a wonderful position to be in!

Now, I would recommend researching where you want to start putting your money. Determine a budget that you can live on now and how much you think you might need to retire comfortably. Determine what the numbers are for you based on how much you are making now, if you have a pension or 401k, and what your benefits will look like after you retire. You may want to consult a financial planner to get their input on actual amounts of what you need.

A good suggestion I have been using, according to the Dave Ramsey plan, is to determine the amount of money you should save at a 12% interest rate in order for you to retire at age 65. of course, this was his plan a couple of years ago and I am sure the 12% interest rate has gone down significantly.

So, to do this, figure out the annual income you want when you are retired and divide by .08. This will be the total lump sum of what you should save for your retirement. Depending upon your age, you can determine how much you should be saving each month before you retire. For example, if you are 35 years old, you have 30 years to save. If you want to earn $50,000 each year on retirement, your total retirement fund should be $625,000. To figure out how much to save each month before you retire, take $625,000 and multiply it by .000671, which equals about $420 a month.

The multiplier number of .000671 is a result of having the book written by Dave Ramsey. I am not sure how he comes up with that number. Depending upon your age and how many years you have to save, he has managed to come up with a factor for which you multiply your retirement fund in order to figure out how much to save each month now.

However, there are many other methods to use and I would recommend consulting with a financial planner to figure out what is best for you. I would suggest an IRA or money market account, assuming the market gets better. Either way, you are in a really great position and saving for retirement will set you up for success in the future!

Might as well make use of the downturn in real estate to buy another property for rental income.
If you are knowledgeable about commercial real estate, you can invest in those.
If not, buy another house, and rent it out.
By the time you have finished servicing the mortgage for the second house, the rental will be your retirement income.