The 2009 Retirement Confidence Survey is out, and it's probably not surprising that only 54% of Americans surveyed are somewhat or very confident that they'll have enough money on which to live comfortably in retirement, down from 61% just a year ago and 70% two years ago.

What I did find surprising was that while 75% say they have saved for retirement, only 12% have saved more than $250,000 (and among those ages 55 or older, only 26%). Here's what shocked me, though: When asked how much money they'll need for retirement, the sum that got the most support was "less than $250,000." In fact, 70% think that they'll need less than $1 million. Let's think about that a little, shall we?

Running numbers
Let's be generous and assume that you retire with a nest egg of $600,000. That would give you only a $24,000 annual payout, if you withdraw the 4% recommended in our Rule Your Retirement newsletter (adjusting it for inflation each year). You'd better be expecting considerable income from other sources, such as Social Security or a pension, because even today, it's hard to live on $24,000. (Fidelity Investments has estimated that the average retiring couple today will need around $240,000 just for health-care expenses.)

Using that 4% figure, if you want $50,000 in annual income in retirement, you should aim for a nest egg of around $1.25 million. (Just multiply your desired income by 25 to get the needed nest-egg size.) You may be able to get there by working a few more years, or just cranking up your savings. Once you approach retirement, you might spend some of your nest egg to buy yourself a pension.

Instead of or in addition to that, you might generate income for yourself via dividend-paying stocks -- ideally, ones you expect to grow in value, giving you a one-two punch. Check out this possible income scenario, for example, if you had $100,000 divided among eight stocks:

Company

Dividend Yield

Annual Payout

BP (NYSE:BP)

6.7%

$838

Coca-Cola (NYSE:KO)

3.3%

$413

Windstream (NYSE:WIN)

11.9%

$1,488

Eli Lilly (NYSE:LLY)

5.6%

$700

BHP Billiton

2.7%

$338

Total SA (NYSE:TOT)

4.5%

$563

Abbott Labs (NYSE:ABT)

3.6%

$450

Brookfield Asset Management (NYSE:BAM)

2.9%

$363

Grand Total

 

$5,153

Data: Yahoo! Finance.

Not bad, eh? To see what you'd get if your invested nest egg were $400,000, just multiply the total above by four, and you'll be looking at an annual payout of more than $20,600.

Good news
Fortunately, not all of us will need $1.25 million with which to retire. We may have pensions coming to us, or other expected income. And who knows -- by the time we retire, health-care costs might have been brought under control. But I hope it's clear to you that for most of us, $250,000 isn't going to go very far in retirement.

To give you an idea of what $250,000 will get you in a lifetime income annuity, I ran the numbers on an online calculator for a 65-year-old woman and got monthly income estimates around $1,500, which would come to $18,000 per year. (You can collect more or less, depending on some options you choose, such as only taking the income for a set number of years, or leaving some money to heirs.)

So don't be a victim of retirement killers in this brutal environment, and don't think it's too late to salvage your retirement. Be smart about your retirement planning and investing.

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Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola. Coca-Cola is a Motley Fool Inside Value pick. Coca-Cola, Total SA, and Windstream are Income Investor recommendations. Brookfield Asset Management is a Global Gains pick. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.