If you think you're headed for a happy retirement, let's hope that none of these striking statistics apply to you:

  • According to a study by the Trust for America's Health, one in five Americans does not engage in any physical activity, and one in five adult Americans smokes.
  • According to the 2007 American Retirement Study by Scottrade, one out of five Americans is not sure how much they should have saved by the time they retire.
  • According to Opinion Research Corp., one out of five Americans says winning the lottery is the most practical way for them to accumulate $200,000.

While I can't speak to the health issues (seriously, no physical activity?), if you're in that 20% -- or even if you aren't -- you could probably use a refresher course on retirement planning.

How much do you need?
Even those who do save and invest often do so blindly. Instead of figuring out how much they'll need by retirement, they basically cross their fingers and hope that things will work out.

How much is enough? Well, experts usually recommend that we aim for a retirement annual income that is 70% to 80% of our pre-retirement income. So if you bring home $100,000, aim for an income of $70,000 to $80,000.

But that money has to come from somewhere -- and while you'll probably get Social Security, it's best to plan as if you're won't. Experts recommend that you don't withdraw more than 4% a year from your retirement savings, in order to ensure that it lasts as long as you do.

The easiest way to do the math? Simply multiply your desired yearly income by 25 to arrive at your target nest egg. If you need $75,000 a year, that's a nest egg of $1.9 million.

How do I get to $1.9 million?
Let me tell you how you don't get to $1.9 million -- or any other nest-egg figure: Play the lottery.

Sure, it's harmless enough to buy a ticket now and then, in the spirit of chance and entertainment, but it's not a retirement strategy.

In fact, your odds of winning the MegaMillions or Powerball lottery -- the ones that could conceivably replace retirement planning -- are somewhere in the neighborhood of 1 in 200 million. Sure, someone will win that money, but it almost certainly won't be you.

How you really get to $1.9 million
It's not news, but if you want to amass that nest egg, you need to save and invest. It's that simple.

And it really is simple. In fact, you may already be saving and investing -- just not as diligently as you need to. There are lots of ways to build your nest egg, even if you have to overcome your portfolio's recent meltdown. You can save more, you can invest more effectively, and you can save and invest longer. A few extra years can make a world of difference.

There are lots of other strategies, too: Downsizing into a less expensive home, cutting back on some luxuries (such as cable TV, manicures, or golf), or delaying some big purchases (such as a new -- or better yet, slightly used -- car).

To make your savings grow, you can earn the market's average return just by investing in a simple index fund. An S&P 500 index fund will automatically park you in hundreds of America's biggest companies, such as Philip Morris (NYSE:PM), Oracle (NASDAQ:ORCL), and Verizon (NYSE:VZ).

You can -- and should -- aim to beat that return by adding a few individual stocks to your portfolio. You want to find stocks that are undervalued but have good growth prospects. I screen for such things by looking for companies with price-to-earnings (P/E) ratios of no more than 18, three-year revenue growth rates of at least 10%, and five out of five stars in our CAPS stock-rating system. Here are a few I've found recently.


Recent P/E ratio

3-yr. revenue growth rate

MEMC Electronic Materials  (NYSE:WFR)



UnitedHealth Group



Transocean  (NYSE:RIG)



Mosaic (NYSE:MOS)






Source: Motley Fool CAPS.

While these are not formal recommendations, they definitely merit further investigation. But you shouldn't stop here -- plenty of stocks can serve you equally well.

Don't leave your future happiness to a one-in-a-million chance
You're probably already in the four of five Americans who have a retirement clue. Make sure you stay there by paying attention to your retirement goals and your nest egg's growth. Tending to your retirement isn't as hard as you think.

If you'd like further suggestions for good retirement investments, asset allocations, or other strategies, check out our Rule Your Retirement service, which offers monthly advice to make your retirement planning easier and more secure. Just click here to get started -- there's no obligation to subscribe.

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Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. UnitedHealth is a Motley Fool Stock Advisor and Inside Value pick. Philip Morris is a Global Gains choice. The Motley Fool owns shares of UnitedHealth. The Motley Fool is Fools writing for Fools.