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If you hope to retire someday, the news has never seemed gloomier. Everywhere you look, you see examples of how many people have no realistic hope of being able to retire with any financial security.

Rather than looking at those warnings as a cue to give up, though, you should use them as a rallying cry to take action. With the right tools, you can improve your retirement prospects and put yourself in a position to feel more secure about your financial situation for the rest of your life.

Storm clouds brewing
With the lead edge of the baby boom generation having reached retirement age, media outlets and researchers are paying a lot more attention to trends and beliefs about retirement. Most of the conclusions that their reports come to aren't very optimistic. Consider the following:

  • Employers have turned over responsibility for saving for retirement almost entirely to workers. By replacing traditional pensions with 401(k) plans, employers no longer have to invest retirement-plan money for their workers -- and with mediocre returns for more than a decade, workers face an uphill battle trying to make their money work harder for them.
  • For their part, workers aren't taking up that burden. One report showed that nearly half of Americans weren't adding money to a retirement plan at all. A majority of workers say they lack the skills or desire to manage their retirement money on their own.
  • Ill-prepared workers are increasingly counting on being able to work indefinitely into their 60s and 70s. That stands in stark contrast to employment trends, in which many workers have had to take early retirement or suffered unexpected long-term layoffs.
  • Expenses in retirement look increasingly ominous. Fidelity's annual estimate of lifetime health expenses for retired couples rose to $240,000 this year.

Dealing with all those threats is tough. But the starting point is saving and making the most of your investment opportunities. How you should proceed depends on your individual situation, but some general rules apply to many of those planning for retirement.

Late to the game
If you're 50 or older and haven't started saving for retirement yet, you've got some catching up to do. Fortunately, the IRS gives you higher contribution limits on IRAs and 401(k) retirement plans that can help immensely.

But finding the right mix of investments is challenging. You can't afford the super-aggressive risk levels that younger workers can take on, but you also need solid returns.

One way to split the difference is to go after dividend stocks with substantial payout-growth prospects. Intel (Nasdaq: INTC  ) is a good example; with a yield of more than 3%, it rewards shareholders now. But with annual dividend growth of almost 15% over the past five years, those rewards grow every year -- and the company's prospects for expanding into the mobile realm give it a good chance at adding a growth kicker as well. Waste Management (NYSE: WM  ) is another good example, with a 4%-plus yield, 9% annual dividend growth, and the huge potential that could come if it expands its U.S.-centric business overseas.

When time's on your side
On the other hand, younger investors can afford to shoot for the moon with their investments. Multibagger returns on just a few of your stock picks can make up for complete losses on others.

Which direction you go to look for high-growth prospects depends on your approach. Some look to find up-and-coming growers early in their life cycles and then climb on for the ride. lululemon athletica (Nasdaq: LULU  ) is a good example, with its niche-defining yoga clothing business transforming the retail industry. Another is SolarWinds (NYSE: SWI  ) , a misleadingly named company that helps companies manage their information-technology infrastructure. Rather than trying to outsell much larger competitors directly, SolarWinds uses a bottom-up model to entice potential clients with free offerings, only later convincing them to start paying for more services.

Others prefer to look for growth plays whose future has been called into question. For instance, MAKO Surgical (Nasdaq: MAKO  ) has extended robotic surgery to popular joint replacement procedures, but its latest earnings sent the stock down 35% as the company cut guidance on sales. Some fear that the modest reduction in projected system sales is just the beginning of a longer-term trend. If you think the growth story is over at MAKO, then that haircut is completely warranted -- but if not, then now's a great time to look into the company.

Retire your way
It's easy to feel like you'll never be able to retire. But the longer you have until retirement, the easier it is to improve your finances and put yourself in a position to retire your way.

Want more investment ideas for retirement? Read the Motley Fool's special report on retirement and get the scoop on planning for retirement and beyond, with three smart stock names to consider adding to your portfolio. It's free, so just click here and get your copy right now.

Fool contributor Dan Caplinger always tries to sprint his last few steps of the race. You can follow him on Twitter here. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of MAKO Surgical, lululemon athletica, Intel, and Waste Management. Motley Fool newsletter services have recommended buying shares of lululemon athletica, Intel, MAKO Surgical, and Waste Management, as well as writing a covered strangle position on Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always does it your way.


Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 11, 2012, at 4:54 PM, Pat4Ra wrote:

    The problem is that every person is educated in different field and not necessarily has education in money matters and finance. Meaning most peoples' education does not make them financial/investment savvy although they may even have advanced degrees in other areas. In the complicated world of advance finance it has become increasingly difficult for people to manage their money. Most lose money while managing their own finances. So they feel the safest thing to do is not to get in the investment game. Do things they understand best. And these are easy traditional things like fixed deposits, money market accounts and so on. As we know, not much growth here although plenty of safety. In the long run it is indeed a losing proposition but you don't lose your shirt in case you had invested in things you did not understand well.

    May be schools/colleges should urgenty offer courses in investment/personal finance to educate everyone in the country.

    Pat.

  • Report this Comment On May 11, 2012, at 5:25 PM, bbcchic wrote:

    The Fool should be ashamed of yourselves. Your relentless pumping of MAKO has caused many people to buy a stock which is very speculative at best.

    To turn around on May 8 (after a huge drop) and suggest some might be better off in a portfolio of dividend producing stocks was "rich" to say the least.

    There have been many "class action" lawsuits since filed against MAKO.

    I believe a class action lawsuit should be filed against The Motley Fool.

    I think The Fool has lost their way and joined "the dark side".

  • Report this Comment On May 12, 2012, at 12:11 PM, rafarules wrote:

    Has lululemon paid motley fool and investor's business daily to tout lululemon nearly every week if not more often?!?

    Don't you guys ever use MATH or basic discounted cash flow analysis to evaluate a company?

    Growth. At what PRICE? Too many fools are FOOLISH in advocating overpaying for growth.

  • Report this Comment On May 14, 2012, at 8:17 AM, Borisbmx wrote:

    I would like to see MR GARDNER retract the buy on Mako Surgical. Time dispell the illusion this is surgical robot, more like a simply a pricey surgical tool with shrinking demand. I wonder how many people follow fool lost more then $10,000 on this candy coated crud????????

  • Report this Comment On May 15, 2012, at 4:57 PM, TMFSymington wrote:

    @Borisbmx, let's see what you say in a few years...I'm not a RuleBreakers sub but I've been told David Gardner recommended buying MAKO multiple times (starting at $10 and again on up to the mid-$20's).

    There's no reason, then, for him to retract the buy(s) on Mako Surgical because of some short-term volatility (the cause of which many folks believe doesn't threaten the long-term trajectory of MAKO).

    To the patient [investors] go the spoils, my friend.

  • Report this Comment On May 15, 2012, at 5:01 PM, TMFSymington wrote:

    ...and, FYI, I used this crazy drop to more than triple my position in MAKO. I, for one, was happy to see it pull back and (finally!) give me a chance to get in at a lower price.

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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9/2/2014 4:00 PM
INTC $34.57 Down -0.35 -1.00%
Intel CAPS Rating: ****
LULU $40.11 Up +0.18 +0.45%
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MAKO.DL $0.00 Down +0.00 +0.00%
MAKO Surgical CAPS Rating: ****
SWI $43.18 Up +0.39 +0.91%
SolarWinds CAPS Rating: ***
WM $47.26 Up +0.29 +0.62%
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