Stocks next 50 yearsAccording to the 2011 Retirement Confidence Survey, 76% of Americans have saved less than $100,000 for retirement. More than half have saved less than $25,000.

Even finding a decent return on the savings you do have is tough. Savings accounts struggle to yield 1%. Higher-yielding CDs don't offer much more.

What to do? Socking away more is an option, but it's not a very realistic one for many whose paychecks are already stretched thin and in a tough job market with stagnating wages.

It's clear we have to do more with the little savings we have. And the way to do that is by tapping into the stock market -- the most effective vehicle for long-term wealth creation ever designed.

Stocks? Really?

Some will react viscerally to the idea of putting their nest eggs anywhere within spitting distance of the stock market after the meltdowns in 2001 and 2008. Each crisis destroyed hundreds of billions of dollars in paper wealth, hurting untold numbers of Americans.

And yet it didn't have to be this way. Had you invested in the S&P 500 SPDR (SPY) -- an exchange-traded fund that roughly mirrors the return of the S&P 500 -- in January 2000 and reinvested dividends all the way through the next 12 years, you'd still have earned about 1.5% annually on your investment -- better than most bank accounts offer nowadays.



Surprised? For money that you won't need for at least five years, investing in an index fund is good strategy. Investing in well-paying dividend stocks and then reinvesting the proceeds is even better. You might even call it a relatively safe, stable way to boost retirement savings during periods of market madness.

Actually, it's better than that. Because reinvesting is optional, retired investors can choose to start taking their dividend payouts as cash at any time, turning what had been a good vehicle for producing market-beating returns into a healthy source of income.

Of Course, There Is a Caveat

Stocks are not the same as bank accounts, and an even a good dividend payer can suffer financial trouble and elect to stop writing checks to shareholders. Or worse, companies can go out of business entirely.

Yet, there are ways to reduce risks. The best strategy is to only invest in stocks money that you will not need to access for the next five, 10, 20 years or more. And if you're really a nervous nelly, then only money you can afford to lose should be earmarked for stocks.

Another strategy is to use long-term history as your guide to ferret out stocks that are most likely to pay you back over the long term.

Gallery: 10 Stocks to Buy, Hold and Prosper



Still want more? For nine dividend stocks hand-picked by Motley Fool analysts, see this free report -- Secure Your Future with 9 Rock-Solid Dividend Stocks. And chime in below to share other strategies you use to boost retirement savings.

Motley Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. The Motley Fool has sold shares of SPDR S&P 500 short. Motley Fool newsletter services have recommended buying shares of Procter & Gamble, Emerson Electric, and 3M. Motley Fool newsletter services have recommended creating a diagonal call position in 3M.

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ITATI Stocks

Good point about ETFs. And SPY is optionable. So if the investor had learned how to write covered calls on SPY, they would have made a greater profit than just "buy and hold."
Aneshia Y. Smith
ITATIStocks@aol.com

July 18 2012 at 11:45 PM Report abuse rate up rate down Reply
klloyd6172

Use Investor's Business Daily, The Motley Fool and Morningstar.

April 28 2012 at 4:50 PM Report abuse rate up rate down Reply
Reb

There is the possibility that someone had $100,000 invested back during the Clinton administration only to find it is now worth less than $25,000 now. After listening to various stock brokers, my $125,000 got down to close to $95,000. All I heard from the stock brokers is "Leave it alone...we're in it for the long haul" Well, at $85,000 I decided it was time to bite the bullet before it was all gone and pulled most of it out and bought some land. Now real estate values have tanked. The way things are going in this day and age, the only thing I would consider investing in now is ammunition.

April 26 2012 at 9:56 PM Report abuse rate up rate down Reply
alfredschrader

Best investment I ever made was building a laboratory in my garage same as Steve Jobs did.
The technology I developed in it has made me the wealthiest person on Earth....Al-

April 26 2012 at 6:44 PM Report abuse rate up rate down Reply
grandma

During the Reagan 8 yrs... I bought stock, started out with Penny stocks.. did good on it.. re-invested the starter money of the prior stock which I cashed in... Made enough money in 4 yrs.. to start up a business I had and ran for 13 yrs... Free and Clear all the way thru.. Debt free when I closed the business a few yrs after my husband passed. but???? because of the Overpriced CEO's become greeding..and the Republicans who seem to kiss their feet.. I quit the investing.. I don't want any money going to the grubworms.

April 26 2012 at 6:05 PM Report abuse rate up rate down Reply
babby201

And the bank just offered me a .05 interest savings rate, so I'm putting my money in snails

April 26 2012 at 4:06 PM Report abuse rate up rate down Reply
Don

1.5 on your investment over 12 years? You must be joking. What a load of crap when if you tried to borrowed any resonable sum your interest rate would be in double digets. Investment brookers, bankers are being paid millions while the average Joe isnt even being kissed first. Then you have Politicians who have been stealing from the only program that would provide funds for almost fore ever, Social Security and are using it to build bridges to no where. Some day there might be an American spring.

April 26 2012 at 3:54 PM Report abuse rate up rate down Reply
amavel

Go to Vegas, the dealers are cheaper and more honest.

April 26 2012 at 2:15 PM Report abuse rate up rate down Reply
Jetncat

The only retirement plan I have left is Lotto. I contribute a dollar and a dream 2x a week.

April 26 2012 at 1:12 PM Report abuse rate up rate down Reply
crazy ray

Most of us will be dead in 50 years. What is this, a retirement plan for children?

April 26 2012 at 12:11 PM Report abuse +4 rate up rate down Reply