According 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.
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.
Understanding Stock Market Indexes
What does it mean when people say "the market is up 2%"?View Course »