Your False Sense of Financial Security

Imagine for a moment that you found out that your primary retirement plan:

• Probably won't have enough money to meet its current benefit level 27 years from now
• Provides a benefit that's already below what you'd get in a minimum-wage job
• Mandates a contribution of more than 10% of your salary to it, even though your benefits will likely be slashed
• Lets you pass on virtually nothing from that plan to your children

What would you think about that particular plan? Does it sound like it provides a secure foundation for your future?

You're stuck with it
Unfortunately, if you work in the United States, you're already enrolled in such a plan. It's commonly known as Social Security, and for far too many people, it provides a false sense of financial security that lulls them into not investing enough for their own retirement. The results of putting too much trust in that system can be devastating.

For instance, according to the Employee Benefits Research Institute, about 30% of Americans ages 55 and over have less than $10,000 saved for retirement. These are folks near the tail end of their peak earnings years, with only around a decade or so left before a standard retirement for compounding to work its magic on their investments.

To get that far along in your career and forget to save for your retirement is a tragedy. When all is said and done, $10,000 in total savings is a very low hurdle to clear over the course of a career. You could even surpass it by stuffing $1 a day under a mattress over the course of your working life. Yet nearly a third of Americans age 55 and over can't lay claim to even $10,000 for retirement.

Avoid the roughest waters
With Social Security providing little financial security, those with no savings are in for a world of hurt when their retirement day arrives. If you would rather not join them, you have two options:

• Plan to work until you are physically unable to do so, or
• Start investing now.

If you haven't invested before, but would like to, one of the easiest and least expensive ways to get started is through programs known as Drips, or dividend reinvestment plans. To encourage investing in their stocks, many companies offer these programs as low- or no-fee ways to both buy their shares and compound your investment through reinvesting their dividends.

Best of all, if you're just getting started and only have a little bit to invest, many Drips allow you to participate with very small contributions. In most situations, a small investment would be eaten alive by fees or commissions; in a Drip, you can put far more of your money to work for you.

While you might need to buy a full share or make a larger initial contribution to get started, many plans will let you invest $50 or less for any subsequent investments. That's a tremendous opportunity to put not much more than $1 a day to work for you in a spot where it has a legitimate shot of giving you much better returns than your mattress.

Here are just a few companies with low-cost Drips that enable you to start small:

Begin with the end in mind
If you make a habit of investing even a little bit every month, you'll soon be surprised at how quickly your nest egg can compound. Keep it up for the rest of your career, and you can turn the false sense of financial security you may have had from Social Security into a real sense of financial security enabled by your nest egg.

At Motley Fool Rule Your Retirement, we know that getting started is often the toughest part of executing a successful long-term financial plan. That's why we're thrilled right now to give you the opportunity to join us for a free 30-day trial to learn how we can help you. Simply click here to get started and get access to all the tools and techniques that can help you get from where you are to a more financially secure retirement.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. Fortune Brands is a Motley Fool Stock Advisor selection. 3M is a Motley Fool Inside Value pick. The Fool has a disclosure policy.