Aim High, Plan Low, Retire Early

Can you predict the future?

To invest for your retirement with 100% certainty, that's exactly what you need to do. After all, to retire successfully, you need to build a nest egg that's at least large enough to take you through the rest of your life -- no matter how long or expensive that life may be.

It's downright impossible to know for certain exactly what you'll need to retire and how fast you'll get there. You can estimate, project, back-test, hope, and pray, but you won't truly know exactly how much you'll need until it's too late to do anything about it. Don't let that uncertainty stop you from building a plan, though.

Instead, develop a strategy that lets you aim high, plan low, and quite possibly retire early.

Aim high
The simple truth is that the higher your rate of return, the faster your money will grow. So try to do the best you can investing.

Of course, projecting a high rate of return can be risky. As this chart shows, even the returns from globally dominant, well-known companies can have huge variance over long periods of time:

The risk in aiming high is that you may wind up missing your target altogether. And when it comes to your retirement planning that could add years to the amount of time you have to work.

Plan low
As a result, you shouldn't count on trouncing the market to come up with the cash for your retirement. If you've determined, for instance, that you'll need $2 million to retire comfortably, this chart shows how much you'll need to save every month to reach that milestone:

The big problem comes to play if you plan for 10% or 12% but only achieve 8%. In that case, you would have socked away far too little cash to allow you to retire when you wanted to.

As a result, your best chance of retiring comfortably is to plan from the beginning to get a lower return than you're actually hoping to achieve and save accordingly.

Retire early
On the flip side, if you plan to receive 8% and instead achieve a market-beating 12%, you'll amass your needed retirement balance early. As this chart shows, if you successfully aim high and plan low you just might cut several years off the time you need to work:

If you built a strategy based on 8% returns that would let you retire in 40 years, but managed to hit 12% returns, you could retire a full decade earlier.

Get calibrated
You only have one life to live and one shot at retiring young enough to enjoy it. For help on getting your best chance at retiring comfortably and on time -- or even early -- join us today with a 30-day free trial of Motley Fool Rule Your Retirement. You'll learn our best strategies for earning and keeping the wealth you'll need to successfully retire. There is no obligation to subscribe.

Fool contributor Chuck Saletta is aiming for 12% returns, planning on 8% returns, and currently on track to retire well before he's eligible for whatever may be left of Social Security. At the time of publication, he owned shares of General Electric. Coca-Cola is a Motley Fool Inside Value selection. Disney is a Stock Advisor pick. The Fool has a disclosure policy.