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updated 8/10/2008 4:10:19 PM ET 2008-08-10T20:10:19

If you think you can count on Social Security for anything resembling a comfortable retirement, think again.

Don't just take my word for it. Here's what the Social Security Administration itself claims:

  • As of June 2008, the average monthly benefit paid to a retired worker was $1,084.47.
  • In 2041, Social Security will only be able to pay 78 percent of scheduled benefits.

Put those two points together, and it means that in 2041, the average retiree can expect to receive the inflation-adjusted equivalent of $845.89 per month. That may be enough to squeak by on the most meager of lifestyles, but it's also well below what a full-time minimum-wage job pays.

You deserve better!
By the time you reach retirement, you'll have worked your whole adult life to get there. It'd be a shame to retire only to have to choose between taking your medicine or turning on your heater in the middle of winter.

But if you're depending solely on Social Security to see you through your golden years, that's precisely the type of choice you'll have to make.

Unless you're one of the vanishing few who can depend on a guaranteed pension for the rest of your life, you're left with just one other source for your retirement income: You.

What you save over the remainder of your career will make the difference between a comfortable retirement and one filled with exceptionally tough choices.

Every little bit helps
As long as you draw a paycheck, you have the opportunity to set some of it aside for your future needs. The more time you have, the more your money can grow for you.

The chart below looks at the potential growth of $1,000 over time. Even if you're a late starter, investing what you can as long as you can will make a significant difference.


When it comes time to spend your savings in retirement, the rule of thumb is that you can spend 4 percent of the starting value of your nest egg annually, adjusted for inflation, without running out of money. That same $1,000 saved and compounded over time turns into this much in monthly retirement spending:


A little bit saved over a long period of time can add substantially to the amount you can spend in your retirement. That's a welcome supplement to (or replacement for) the ever-shakier payouts from Social Security.

You can do it!
Of course, to turn your one-time, $1,000 investment into $150 worth of monthly income, you need to invest it well for quite a long time. That may seem like an impossible challenge in the current market, but history suggests it's quite doable. In fact, it's average.

Since its inception in 1926, for instance, the S&P 500 index has delivered long-run returns in the 10 percent range. And that period of time included such economic disasters as the Great Depression!

While past performance doesn't guarantee future results, an index investment still gets you an ownership stake of these great companies (along with 493 others):


The Foolish bottom line

Investing for your retirement is only the first step in protecting your future self from the pending cutbacks in Social Security.

If you're ready to start down the path toward the comfortable retirement you deserve, join us today at Motley Fool Rule Your Retirement. It provides strategies for saving money, model portfolios, asset-allocation advice, and other tools you need to plan for the retirement you want — including retirement calculators.

At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric and Intel. Intel is a Motley Fool Inside Value selection. Disney is a Stock Advisor recommendation. Google is a Rule Breakers choice. The Fool has a disclosure policy.

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