The Motley Fool : Are you saving enough? Better check again

According to the 2006 Retirement Confidence Survey, more than half of American workers have saved less than $50,000 for retirement.

Let’s say you’re a typical 40-year-old working American, with $20,000 socked away and about 25 to 30 years until you retire. How will that money grow for you? Well, here’s what happens when we assume that you earn the stock market’s average long-term return of 10 percent: By age 50, it has become $51,875. By age 60, $135,550. By age 70, $349,000.

According to our Rule Your Retirement newsletter (try it free at www.fool.com/shop/ newsletters), in order to make your nest egg last, you should conservatively plan to withdraw about 4 percent of it per year in retirement. Four percent of $349,000 is almost $14,000. That’s about $1,200 a month. Will that be enough? For many people, the answer is no.

Fortunately, it’s not too late for most of us. We can, and should, ramp up our savings and investing. Here are some other suggestions:

“Run the numbers and see how you’re doing. Retirement calculators online at www.fool.com/calcs/ calculators.htm can help. Make a plan to help you reach your goals.

“Make good use of retirement plans available at your workplace. Many employers offer free money to those who contribute. Take advantage of any contribution matching that’s offered.

“Wring some more dimes from your budget. Learn how to live well while you save and invest in “The Motley Fool Personal Finance Workbook” by David and Tom Gardner (Fireside, $15), “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” by Thomas J. Stanley and William D. Danko (Pocket Books, $15), and “The Complete Tightwad Gazette” by Amy Dacyczyn (Villard, $23).

“Don’t panic at market downturns. The market goes up and down — sometimes sharply one way or the other — in the short term. But over the long run, the trend has been up. So be patient, grasshopper. Now, go ask your HR department for the paperwork to increase your 401(k) contribution.

Ask the Fool

Q: What does it mean when a stock is “oversold”? — L.R., Newark, N.J.

A: The term suggests that too many people have been selling it, sending the share price lower than it perhaps should be.

My dumbest investment

Talk about dumb. I sold my shares of digital service provider Akamai Technologies for about a 500 percent profit. That doesn’t sound too bad, right? Well, I had 4,000 shares, bought for about $1.43 each, and the stock was recently trading around $50 per share. I missed out on more than a 3,000 percent gain. Poor me! — P.S.B., Fergus Falls, Minn.

The Fool Responds: It looks like you reaped a gain of more than $25,000 — that’s a pretty good dumbest investment! You’re right, though. Hanging on would have netted you more than $150,000 additional dollars. Still, when you sold, the future appreciation wasn’t guaranteed. In a situation like this, when deciding whether to sell, ask yourself whether the company is still performing well (growing at a good clip, maintaining competitive advantages) and whether it’s still priced attractively. If you’re not sure, consider selling at least some of your shares. That way, you lock in some profit, and you can still reap an additional future profit.