Catechesis, reading of the Word, and singing hymn are vital to a Lutheran religious education, and can not be handed over completely to a Christian school or Sunday School. The family prayer or devotions are the backbone of a family altar, and what we place on the altar should reflect what we are teaching.
So what are the necessary components of a family altar? A Bible, catechism, or hymnal, or a cross or crucifix. Beyond that, it's up to you. Some households hang icons of saints around their crucifix, to remind them of the Church Triumphant, that when we pray and worship, we are joining our prayer to the Prayers of the whole Church. Some include candles, bowls for alms, flowers, fine linens, seasonal decor.
Some other reading on the subject:
"The Family Altar"
"Why and How of Home Altars"
"Our Household Will Have its Family Altar"
And finally, here are some examples, just to give you ideas.
This is our altar, on top of our piano in our dining room. The purple tablecloth I got at Berger's for $4, and the white runner is an antique I inherited. The orchid was a Christmas gift (one of those grow-your-own you can buy at Target). We planted it around Epiphany and it bloomed the week of Ash Wednesday! We have our Bible, hymnal and Reading the Psalms with Luther stacked up there. The ceramic bowl is something I found downstairs, and the kids put any change they find in the house in there for alms (they call that bowl "the Baptism bowl," which was a connection I did not make. They say the blue looks like water.)
This lovely altar comes from reader Aubri's home. I love her homemade crown of thorns and beautiful crucifix. She says, "My oldest made a bank for alms, following Catholic Icing idea, I put it on our table, along with the crown of thorns. I'm thinking we'll remove a toothpick each day and either say a prayer for someone or give thanks to Jesus for one of the ways He suffered for us."
Send pictures and I'll add them to this post!