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road signpost pointing to work and retire with person walking down the road
Alamy
Saving for your retirement is a big deal. Barring the income you might get from pensions (not what they once were) and Social Security (not likely to stay what it once was) all you'll have is the money you save to last you the rest of your life. And it's no secret that if your accounts run dry, it's incredibly difficult for a retiree to rejoin the workforce a decade or more after leaving it.

Given all that, it's understandable if you're a bit worried about coming up with enough money that you'll be able to retire comfortably on your terms. While building and maintaining that nest egg is a long-term commitment, it's important to remember that you have the rest of your career to get there. With a solid plan and the flexibility to handle life's curve balls, you can greatly improve your chances of retiring with a portfolio that can last as long as you do.

3 Steps to Get From Here to Retired

The toughest part of investing for retirement is that you face so many unknowns. How long will you live? What will the market do? Will your Social Security benefits get cut? How tame (or wild) will inflation be? Will your mental and physical health hold out, or will you need the help of a caregiver?

Those are all wise questions to ask, but unfortunately, they can't be answered with any certainty until it's too late to do anything about it. The best any of us can really do is develop a reasonable plan based on decent assumptions, and then adjust as life happens. With that in mind, here is a three-step foundation for a solid plan:

1. Set a target. What sort of lifestyle do you want in your retirement? Are you the kind of person who'd be happy rocking away on the stoop, watching the world go by? Or do you picture a retirement filled with world travel, box seats at the symphony, and generous philanthropic gifts to your favorite charities?

Whatever your plans, start by estimating your anticipated monthly expenses. Subtract from that your anticipated net Social Security check and any monthly pension payments you may get, then multiply the remainder by 300. That's about how large your total portfolio will need to be to cover your costs. At that size, your portfolio should generate enough growth and income that you can take advantage of the 4 percent rule, a solid (if rough) estimate that will help reduce the odds that you'll outlive your money.

2. Take what help you can get, and ramp up when you can. While that 300-times-monthly-expenses estimate may seem daunting, there are a number programs available to help you build your nest egg faster. Qualified retirement accounts like IRAs, 401(k)s, 403(b)s, and the government's Thrift Savings Plan let your money grow tax-deferred, or potentially tax-free. Also, depending on the type of account, you may even get a tax break immediately for putting money into the account.

On top of the tax benefits, many employer-sponsored plans offer a company match for some portion of your contributions. The combination of the company match plus the tax deductibility of contributions make many of those plans about the best deal in the market. Indeed, depending on your tax situation and the level of the match you get, it may give you the opportunity to instantly double your money, which will go a long way.

Of course, if you haven't been saving, it's hard to go from $0 to $1,000 a month in savings overnight. Still, the more you put away each month and the longer you have until you retire, the easier it is to reach your goal. While getting started, instead of an all-or-nothing approach, focus on what you can start with right now, and then ramp up as you can if you're able to reduce your spending or increase your income over time.

When it comes to planning for your retirement, the act of investing matters at least as much as the returns you get on your investments. Still, as the table below -- which looks at the monthly contribution needed to reach $1 million by retirement depending on different returns and time frames -- shows, it's important to get started as quickly as you can, even if you can't spare the total right away:
Years to Go 10% Annual Returns 8% Annual Returns 6% Annual Returns 4% Annual Returns
40 $158 $286 $502 $846
35 $263 $436 $702 $1,094
30 $442 $671 $996 $1,441
25 $754 $1,051 $1,443 $1,945
20 $1,317 $1,698 $2,164 $2,726
15 $2,413 $2,890 $3,439 $4,064
10 $4,882 $5,466 $6,102 $6,791
5 $12,914 $13,610 $14,333 $15,083
Data from author's calculations.

3. Know what you can adjust -- and be willing to change it. Finally, remember that life happens, and nobody can perfectly predict either their own future or what the market will do. If you've got a solid foundation in place from following the first two steps, it's a lot easier to make the course corrections as needed to reach your goals.

For instance, if you wind up at your expected retirement age about 10 percent below your goal, working for another year or two will give your money more time to grow and may increase your Social Security benefit, too. Conversely, you may decide that you're more willing to downsize your home and otherwise lower your costs in order to retire a few years earlier.

Get Started Now

Regardless of what the future brings, the stronger your savings foundation, the better your chances of enjoying a financially secure retirement. The more time you have to plan, the bigger an ally it is for you. The three steps outlined above can help you along the way, but it's up to you to make the first move. So stop worrying about retirement, and start working toward the golden years you're looking forward to enjoying.

Motley Fool contributor Chuck Saletta welcomes your comments. Try any of our Foolish newsletter services free for 30 days.

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