I hope I don't ruin your day with this news flash, but you know that comfy retirement you're dreaming of? The one where you wake up without an alarm clock every day, and tend to your vegetable garden, and take up kayaking? The one where you and your sweetie finally travel to Hungary and China and all the places you've longed to visit? Well, it might not happen. Sorry.

Here's the problem
You might not have enough money. That's because many of us are saving and investing and just hoping for the best in our golden years (warning: that's a retirement killer), without taking the time to determine how much we really need to accumulate. Many of us might end up with gruesome retirements.

In my favorite retirement resource, our Rule Your Retirement newsletter service, I learned that to make your nest egg last, you should plan conservatively and withdraw about 4% of your savings per year in retirement (adjusting the amount for inflation). Let's say you have an impressive $400,000 socked away by retirement. Take 4% of that and you'll have $16,000, or $1,333 per month. Not so much, is it? Sure, you may have Social Security on top of that, but that may well just add, say, $2,500 per month, bringing your total to $3,833, or $46,000 per year. It might be enough to scrape by on, but not enough to reach many of your dreams.

You'll need more
So odds are, you'll want to retire with a nest egg that's considerably larger than $400,000, if you can. For many people, a million dollars (or more) is a reasonable target. With that, your 4% will come to $40,000 in the first year, or $3,333 per month. With $2,500 in Social Security, that may total something like $70,000 per year.

Remember -- in retirement, you'll often be able to live on less than you do now because:

  • You won't have commuting costs, or workplace-wardrobe costs, or $10-lunch-from-the-deli-near-the-office costs.
  • If your income is lower, your taxes and tax rate will be lower.
  • Your home might be paid off by then.
  • You probably won't be supporting dependents in retirement.
  • You probably won't be socking away money for retirement, in retirement.
  • You may enjoy senior citizen breaks on property taxes and other expenses.

But you may also need more money to live off of, because:

  • Health-care costs have been skyrocketing and they may not be under control or reasonable when you retire.
  • You may want to buy a more expensive home.
  • Inflation may erode much of your purchasing power.
  • You may want to enjoy some costly activities, such as golf, flying lessons, or travel.

You can have more
Fortunately, it's not too late to salvage your retirement.

For one thing, you can start saving and investing more. If you've been putting aside $5,000 for retirement every year, try saving $8,000 or even $10,000 instead. You might double your results that way. You might also consider postponing your retirement date by a few years, too, because just two or three more years can add hundreds of thousands of dollars to your nest egg.

You can also improve your lot by allocating your dollars more effectively. If you've been a conservative investor, sticking mainly with bonds and CDs and mattresses, consider moving a bigger chunk of your assets into stocks. You don't have to throw caution to the wind and speculate -- you can instead opt for solid earners and growers, including some dividend payers.

As a springboard for further research, if you're interested, here are a few companies that came up when I screened for large-cap stocks with net margins of 10% or more, five-year revenue growth rates of 10% or more, and P/E ratios of 20 or less. Those metrics suggest (but don't guarantee) that the companies are strong, growing, and not wildly overvalued.


Net Margin

5-Year Revenue Growth Rate

P/E Ratio

Cisco Systems (NASDAQ:CSCO)








Corning (NYSE:GLW)




PotashCorp (NYSE:POT)




Source: Capital IQ, a division of Standard & Poor's. *Adjusted.

If you're looking for stock investments that generate income, you can invest in dividend payers. Here are a few large caps that were recently paying out 3% or more in dividends, with five-year dividend growth rates of 10% or more and net margins of 10% or more:


Dividend Yield

5-Year Dividend Growth Rate

Net Margin

Johnson & Johnson (NYSE:JNJ)








Automatic Data Processing (NYSE:ADP)




Source: DividendInvestor and Capital IQ, a division of Standard & Poor's.

Now here's some great news: A $15,000 investment in a CD that pays you, on average, 5% over 20 years will turn into $40,000. But invested in stocks that average 10% annual returns -- about the market's historical rate -- it will become $100,000 over 20 years! Make that a $150,000 investment, and you're looking at possibly ending up with $1 million.

What to do
Reaching a million dollars, or coming closer than you ever planned, is not out of the question. So spring into action and your retirement might end up vastly improved. Even if you only have 10 years left to do it, saving more, working one to three years longer, and investing in powerful growers can work wonders.

If you'd like some help getting started, feel free to use the features available to you in our Rule Your Retirement newsletter service. In its pages, you'll find not only recommendations of promising stocks and mutual funds, but also specific guidance on asset allocation, investing for income, minimizing taxes, retiring as early as possible, and much more. Click here for access to all current and past issues, free for the next 30 days.

Longtime Fool contributor Selena Maranjian owns shares of Johnson & Johnson. Johnson & Johnson is a Motley Fool Income Investor selection. Intel is an Inside Value pick. The Fool sold calls on Intel. The Motley Fool is Fools writing for Fools