It can be vexing to try to imagine how much money we can expect to accumulate for retirement. It sometimes seems kind of arbitrary, or largely out of our control. But if you stop to think about it, you'll realize that it all really boils down to just three factors:

  • The amount you save and invest each year
  • The length of time your money grows
  • The growth rate

Once you get that, you might proceed in your thinking to trying to figure out which is the most important factor. Because, after all, you might be able to save and invest more, or let your money grow longer, or aim for a higher growth rate.

Which of the three ...
So which is the most powerful factor? Well, one blog I read recently tackled that question and concluded that adding just a few years to a long time horizon can have a much bigger impact than alternatives like earning a slightly better return or boosting the amount you invest. In the particular example the blog used, pushing up your annual savings from $5,000 to $6,000 increased your eventual nest egg by 20%, and hiking your annual return from 8% to 9% created a 20% jump as well. But tacking on an extra five years of growth made that nest egg grow almost 47% bigger -- even without adding any further contributions.

That's good news for many of us, because adding time can be one of the easiest things for us to do. It's harder to achieve a higher return (and impossible to do with complete certainty), and it sure isn't easy to find thousands of extra dollars to invest.

What to do
Of course, if you can do all three, you'll get the best results. In the blog's example, doing so resulted in a nest egg that was 129% higher. So here's what you might aim to do:

1. Save and invest as much as you can. Remember that you can double the ultimate size of your nest egg (and this is guaranteed!) by doubling the money you sock away. If you're managing to save and invest $4,000 per year, you'll end up with $369,300 after 25 years (if it grows at 9%). Up that to $8,000 per year, and presto -- $738,600!

2. Aim for generous, reasonable returns. There are three ways you can go here. First, you can meet the market's returns easily with a simple broad-market index fund invested in big U.S. companies such as Boeing and Johnson & Johnson.

Alternatively, you can add some promising managed mutual funds to your mix. The Fairholme (FAIRX) fund, for example, has beaten the market handily over the past three and five years, and recently included Sears Holdings (NASDAQ:SHLD), American Express (NYSE:AXP), and General Dynamics (NYSE:GD) among its top holdings.

Last, you can try to outpace the market indexes with individual stocks. Here are some with strong returns over a difficult decade:


10-Year Avg. Return

Noble (NYSE:NE)


Forest Labs (NYSE:FRX)


Schlumberger (NYSE:SLB)


Colgate-Palmolive (NYSE:CL)


S&P 500


Data: Yahoo! Finance.

3. Let your money grow for as long as you can. You can revolutionize your future simply by working a few more years. Working a little longer than you originally planned has some extra benefits that you might not have thought of. For example, during the years you work, you not only make more money, you're also putting off tapping into your nest egg. If your employer offers health insurance, you'll remain covered without having to pay more for it. If you were thinking of tapping into Social Security at age 62, you might be able to put it off until age 65 or 67 and collect more per month as a result. See? Benefits galore.

The bottom line
To build the biggest nest egg you can, make sure you have all three of the factors discussed above working for you. That way, you'll be sure to save as much as you need to live comfortably in retirement.

Don't leave your retirement to chance. See if you can boost your nest egg by 129% or so -- it might be easier than you think. Get valuable tips in our Rule Your Retirement newsletter, which you can try for free.

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Longtime Fool contributor Selena Maranjian owns shares of American Express, Johnson & Johnson, and the Fairholme Fund. Fairholme is a Motley Fool Champion Funds recommendation. American Express, General Dynamics, and Sears Holdings are Motley Fool Inside Value picks. Johnson & Johnson is a Motley Fool Income Investor selection. The Fool owns shares of Fairholme and American Express. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.