A recent Bank of America survey found that many wealthy Americans are changing their ways. Among other alterations, they're:

  • Giving less to charities.
  • Cutting back on personal luxuries.
  • Investing more in their 401(k) plans.
  • Delaying retirement.

Those changes make sense when you learn that 53% of them are worried about not having enough money for retirement. They fear running out of money before they run out of breath. That's a healthy concern -- provided it makes you assess your own situation, and find ways to get your glorious retirement back on track.

Going through withdrawal
Will you have enough money for your golden years? That depends on how much you retire with, and how much you withdraw each year in retirement. With these inputs, you can use a simple compounding calculator to figure out how much you can expect to end up with in retirement. If you save and invest $10,000 per year for 20 years at an average of 10% annual growth, you'll end up with $630,000. (To play it a little safer, you might want to assume slower growth, such as 8%.) Will that expected nest egg be enough for you?

According to my favorite retirement resource, our Rule Your Retirement newsletter, you should conservatively plan to withdraw about 4% of your retirement money per year. With that in mind, 4% of $630,000 is about $25,000, or $2,100 per month. Will that be enough for you?

This is where the importance of planning comes in. Imagine that you arrive at retirement with no plan, and you think you're being safe withdrawing 7% of your nest egg each year. Think again. Suppose your retirement lasts 30 years, and your portfolio is 75% stocks and 25% bonds. According to several studies, there's at least a 12% chance that you'll outlive your nest egg. Small, yes -- but would you want to risk it? And remember, many of our retirements could last far longer than three decades.

Unexpected consequences
The performance of your investments during your retirement can also have a big effect. Imagine planning to retire at the end of 2008; if your nest egg was largely in the S&P 500, you'd have lost nearly 40%! If your $800,000 nest egg suddenly becomes $480,000, your retirement outlook will change, big time. (Fortunately, working just a few more years can dramatically improve your situation.)

These kinds of fluctuations explain why experts these days agree on a 4% withdrawal rate, in order to be fairly sure your money will last. (You increase each year's withdrawal according to the inflation rate.)

Beef up
Run the numbers and see where your own retirement is headed. If the figures don't add up the way you'd like them to, these steps can help you recover:

  • Save and invest more. The sooner, the better, since early dollars have longer to grow.
  • Maximize your 401(k) plans and IRAs. Remember that Roth IRAs will let you withdraw your assets tax-free!
  • Work a little longer. A few more years can make a big difference.
  • Downsize your expenses. Whether now or in retirement, you can cut back by moving to a smaller home or a less expensive town.
  • Invest more effectively. Bonds can give you security, but they won't make you rich anytime soon. In contrast, powerful individual stocks and mutual funds can deliver growth rates topping 10% over long periods (though that's never guaranteed).

Here's a model portfolio allocation guide for Fools 10 or more years from retiring, courtesy of Rule Your Retirement. Feel free to tweak these numbers to meet your own needs and preferences:

Asset Category

Portion of Portfolio

Representative Fund

Representative Holdings

Large-cap Stocks


Vanguard 500 Index (VFINX)

IBM (NYSE: IBM), Goldman Sachs (NYSE: GS), Philip Morris International (NYSE: PM)

Mid-cap Stocks


Vanguard Mid Capitalization Index (VIMSX)

Micron Technology (NYSE: MU), Hartford Financial Services (NYSE: HIG)

Small-cap Stocks


Vanguard Small Cap Index (NAESX)

3Com, Tupperware



Vanguard Developed Markets Index Fund (VDMIX)

BHP Billiton (NYSE: BHP), GlaxoSmithKline (NYSE: GSK)



Vanguard Intermediate-Term Bond Index (VBIIX)

U.S. Treasury Notes

If you haven't spent any time figuring out how much you can expect to end up with in retirement, maybe you should freak out a little. But when you're done hyperventilating, take the time to assess your situation -- and then start a plan to improve it. The best defense against retirement freakouts, after all, is a big, fat nest egg.

Need more help? A free 30-day trial of Motley Fool Rule Your Retirement will give you full access to our archives, including several model portfolios and many more recommended funds. It offers stock recommendations, as well.

This article was originally published Feb. 2, 2010. It has been updated.

Longtime Fool contributor Selena Maranjian owns shares of no company mentioned in this article. Philip Morris International is a Motley Fool Global Gains recommendation. The Fool has created a covered strangle position on Tupperware Brands. The Fool owns shares of GlaxoSmithKline. The Motley Fool is Fools writing for Fools.