You try to sock away money for retirement. You haven't bought a McMansion. Your car is five years old. But you've just witnessed the stock market drop 45%. You've seen friends lamenting their endangered retirements. Maybe you're even starting to panic a little yourself. Do you stand a chance of a decent retirement?

Maybe not.

Let's outline some reasons why you might be in trouble -- then follow up with ways to salvage your situation.

Do you have a plan?
According to the 2008 Retirement Confidence Survey (RCS), only 47% of American workers have taken the time to calculate how much they'll need in retirement. Bad move.

According to the Fool's Rule Your Retirement newsletter service, in order to make your nest egg last, you should plan to withdraw about 4% of it per year in retirement. If you begin retirement pleased with your $500,000 nest egg, will you be able to live well by taking out just $20,000 in your first year? Will that $1,667 per month be enough?

If you don't see yourself ending up with enough, start devising strategies to better your future. (Here's a good place to begin.)

Does your asset allocation make sense?
If you have all your money in bonds because you're near retirement, think twice. Bonds certainly have their place, and retirees or near-retirees should have hefty exposure to them. But even if you're 65 and in retirement, you'll very possibly live another 25 to 30 years, and you won't be tapping much of your nest egg for 10 to 20 years.

Wouldn't some or all of that money grow faster for you in stocks? Academic research has shown that of all the investment classes, stocks sport the most promising returns over multiple decades. For retirement, dividend-paying stocks make particularly good sense -- you can either reinvest your dividends and purchase more shares, or take the quarterly payout to help pay your bills.

Below, I've put together a few dividend-friendly candidates. They're not formal recommendations per se, but they're good ideas for further research:


Current Dividend Yield

5-Year Dividend Growth

Coca-Cola (NYSE:KO)






ConocoPhillips (NYSE:COP)



United Parcel Service (NYSE:UPS)



McDonald's (NYSE:MCD)



PepsiCo (NYSE:PEP)



Texas Instruments (NYSE:TXN)



Data: Capital IQ, a division of Standard & Poor's, and MSN Money.

Do you respect your 401(k)?
According to Hewitt Associates, approximately 45% of workers cash out their retirement accounts when they change jobs, instead of leaving the money to grow.

You might think that a mere $40,000 balance won't change your life. But if you leave that $40,000 right where it is, and it grows at the market's historical average 10% rate of return each year, it will top $430,000 in 25 years. Under the 4% withdrawal rate outlined above, that $430,000 could deliver more than $17,000 per year in retirement.

Even if they're not cashing out, too many people are borrowing from their 401(k) accounts. Unless you're in desperate need of liquidity, borrowing against your retirement is an excellent way to sabotage your future.

Do you trust Social Security?
Take a close look at the annual accounting that the Social Security Administration mails you. I just got mine this week; if I retire on schedule, I can look forward to less than $30,000 per year. That's assuming the program can even deliver tomorrow what it promises today. My colleague Dan Caplinger has his doubts.

There's still time to change
Each problem above has a solution. Make a retirement plan. Ensure your money's allocated wisely. Stop depending on Social Security. Keep that 401(k) money invested and working for you.

If that all sounds easier said than done, we'd love to help you set yourself up for a much more comfortable retirement. Check out Robert Brokamp's Rule Your Retirement newsletter service free for 30 days, with no obligation. A free trial gives you access to all past issues, including recommendations of promising stocks, mutual funds, and fixed-income investments.

Longtime Fool contributor Selena Maranjian owns shares of McDonald's and PepsiCo. United Parcel Service and PepsiCo are Motley Fool Income Investor picks. Coca-Cola is a Motley Fool Inside Value recommendation. The Motley Fool is Fools writing for Fools.