A few months ago, I wrote about our second-most-important decade, our 40s, when we have a fighting chance to build a sizable nest egg for our golden years. My colleague Chuck Saletta had previously written about our most important decade, our 30s, explaining that if we accumulated $300,000 by age 40, we'd be set by retirement.

In response to my article, Foolish reader Jeff made some particularly good points. Permit me to share them with you. He suggested that saving $300,000 by age 40 will be enough if:

  • You can average a 10% annual return. Jeff said that's "doable, except you forgot to mention the part about paying income taxes." Right he is. Taxes will likely take a big bite out of our nest eggs, but remember, whatever you accumulate in a Roth IRA (or Roth 401(k)) can be withdrawn tax-free. But aside from that, if you have $2 million in a regular brokerage account and your tax rate in retirement is 28%, your nest egg will be reduced to $1.44 million, significantly less.
  • There is no inflation. Jeff correctly points out, "[T]hese amounts won't go nearly as far in the future as they would today." If there were no inflation, having a nest egg of just $1 million might be enough -- with a 4% annual withdrawal rate, as described by Robert Brokamp in our Rule Your Retirement newsletter, you'd take out $40,000 annually, to which you'd probably add some Social Security income. Many of us could live well enough on that right now. But with inflation, who knows how far $40,000 will go in 20 or 30 years?
  • Nothing unexpected happens. You might, Jeff said, "have health problems, get divorced, get laid off ... which unfortunately is part of life." These events can wreck havoc on your net worth.

Don't be too conservative, Fools. Look at the stock market for most or all of your long-term dollars, rather than CDs or bonds. A combination of growth stocks like Yahoo! (Nasdaq: YHOO) and Baidu.com (Nasdaq: BIDU), along with value stocks such as Coca-Cola (NYSE: KO) and Deere (NYSE: DE), can boost your returns over more conservative fixed-income investments.

In short, it doesn't hurt to aim high when saving and investing for retirement. Just make sure you know your goals, and determine the appropriate level of risk you'll need to achieve them.

Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola, which is a Motley Fool Inside Value recommendation. Yahoo! is a Motley Fool Stock Advisor recommendation. Baidu.com is a Rule Breakers pick. Try our investing services free for 30 days. The Motley Fool is Fools writing for Fools.