Everything changes over time -- especially retirement. Yours will likely differ significantly from that of your parents. Know what to expect, plan accordingly, and your golden years will be much lovelier.

First and foremost, you probably won't have a pension. In 1985, about 89% of Fortune 100 employers offered a traditional "defined-benefit" plan, or pension. In 2011, only 17% do so for new hires. In that period, "defined-contribution" plans such as 401(k)s rose in prominence, with the percentage of employers offering them soaring from 10% to 58%. This is a big deal, because defined-benefit plans told you what to expect and typically offered substantial sums. With 401(k)s, many employees either don't take advantage of them, or do so insufficiently. Leaving a job after 30 years with, say, $100,000 in your 401(k) isn't going to support a comfy retirement.

No slacking off
While receiving a pension takes little effort, those who depend on income from 401(k)s and IRAs and other accounts will have to keep managing them well into retirement. You'll likely have significant taxes to pay, too, since withdrawals from traditional IRAs and 401(k)s will be taxed at your ordinary income tax rate. (Compare that with the current 15% maximum tax rate for most folks on capital gains and dividends.)

In the past, retirement meant no more working. Today, though, many retirees maintain part-time jobs. Many have to do so, since their retirement nest egg is insufficient to support them, and Social Security doesn't provide as much as they hoped it would. (Working can sometimes also provide valuable benefits such as health insurance.) Others work because they want to, finding that they're too bored or restless at home. As medical advances help people live longer, your retirement will also likely last much longer than those of previous generations.

Prepare, and be creative
Besides working longer, you have plenty of ways to make lemonade from life's retirement lemons. Socking away more money is a good start. So is investing it more effectively. CDs and money market funds may seem "safe," but they also won't grow your nest egg much.

You can also work a few more years than you planned to, before retiring. That not only lets you earn and save more money, but also postpones your need to tap that nest egg.

In addition, be sure to think outside the box. Many people have enhanced their retirements by moving to a smaller and less expensive home, or to a less expensive part of the country. Reverse mortgages, which offer you a regular income based on your home equity, are also worth considering. They have their drawbacks, but they're also a good choice for some.

Optimize your portfolio
Thinking ahead isn't your only good move when planning for a better retirement. Take time now to assess your portfolio, ensuring that you're invested in strong and productive investments. For retirees and pre-retirees alike, dividend-paying stocks are a compelling option. They offer a regular and fairly dependable income that can grow over time, matching or even surpassing inflation. In 2010, far more companies raised their dividends than in 2009, with further strong growth expected this year.

The following companies have increased their dividends significantly over the past year, signaling confidence in their future performance:


Recent Dividend Yield

Last Dividend Increase

Philip Morris International (NYSE: PM) 4.3% 10.3%
Pfizer (NYSE: PFE) 4.1% 11.1%
Intel (Nasdaq: INTC) 3.3% 14.6%
General Electric 2.7% 16.7%
CVS Caremark (NYSE: CVS) 1.5% 42%
Qualcomm (Nasdaq: QCOM) 1.4% 11.8%
Stryker (NYSE: SYK) 1.2% 20%
Visa (NYSE: V) 0.8% 20%

Data: Yahoo! Finance.

The golden age of pensions is over, and American retirements have changed dramatically. If you leave your retirement up to chance by merely saving money and hoping for the best, you'll likely face an ugly surprise. Take a little time to plan -- even without a generous pension, you may be able to make a great retirement a sure thing.