I've often written about how too many of us have not saved enough for retirement so far. When I do so, I often cite some info from my favorite retirement resource, our Rule Your Retirement newsletter. In it, Robert Brokamp has explained that to make your nest egg last, you should conservatively plan to withdraw about 4% of it per year in retirement for living expenses. So if you end up with a $1 million nest egg upon retirement, you'd withdraw $40,000 in the first year to live on.

That might sound not so bad, but many of us can't count on that $1 million yet. If you've got only $150,000 socked away, and you're eight years from retirement, you'll have to earn an annual average of 27% on your money to hit a million in time. That's nowhere near a reasonable amount to expect. As the recent bear market has shown, the market's historic average annual gain of around 10% is far from a sure thing.

A modest proposal
Are you stuck, then? Not necessarily -- there are always things you can do to improve your position. For starters, note that my example above begins with a static $150,000 and adds nothing. Over your coming eight years, you can always keep adding to your nest egg.

Better still, consider this suggestion: Work a little longer. Not a decade longer (unless you really love your work and can't think of anything else to do), but just a few more years. Remember how, with my initial example, you'd need to earn an annual average of 27%? Well, if you stretch your retirement to 10 years in the future, instead of eight, you'd need to grow your nest egg by just 21% annually. Make it 12 years away, and you'd need to earn around 17.5%. That's still too much to expect automatically, but it's a lot more reasonable.

Here are some reasons why working just a couple extra years can be beneficial:

  • You delay cracking open your retirement nest egg that much longer.
  • You can stick more money in a 401(k) and receive your employer match.
  • You won't have to tap Social Security early, or can defer payments until after your retirement age.
  • You'll have fewer years of retirement to finance.
  • You can remain on an employer's insurance plan instead of having to pay a large out-of-pocket expense until Medicare kicks in.
  • You have more time to tackle your financial challenges, such as excess debt.

See? It's win-win -- unless your job makes you want to poke needles in your eyes.

Running the numbers
A look at some scenarios might help you appreciate this strategy more. The table below shows the effects of 10% annual growth on different amounts of money during different spans of time:

Nest Egg





$1.1 million



$1.3 million



$1.3 million



$1.6 million



$1.0 million



$1.3 million



$1.7 million

See the power of just two or three more years? By waiting an additional seven years, you can nearly double your nest egg's size, simply by earning the market's historical 10% average annual return.

Does 10% seem completely undoable right now? Sure, you won't necessarily earn it year in and year out. But throughout the ups and downs, it's not an unreasonable expectation. Some stocks will do better, and others not as well. Consider how some well-known companies have grown, on an average annual basis, over the past 20 years.

  • Boeing (NYSE:BA), 7.5%
  • Disney (NYSE:DIS), 7.7%
  • Hershey (NYSE:HSY), 11.2%
  • Apple (NASDAQ:AAPL), 12.2%
  • Procter & Gamble (NYSE:PG), 15.9%
  • Intel (NASDAQ:INTC), 16.2%
  • Microsoft (NASDAQ:MSFT), 23.8%

Get cracking!
So think about this strategy to boost your retirement's riches, and make sure you're tending to the whole big picture of retirement. Here's to a wonderful retirement!

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