Three Tips to Prevent Your Retirement From Becoming a Nightmare

Horror flicks, haunted houses, sticky-fingered goblins, and fake spiders in the office fridge -- it's all standard fare this time of year.

But if you want to see something really scary, check out the nightmare today's retirees face every single day of the year.

Nightmare on Golden Pond

If you envision spending your retirement lolling lakeside and sipping lemonade without a money care in the world, consider first the financial realities of already-retired Americans.

The average yearly "salary" of today's median-income retirees is just $34,000 -- with 89% of that income coming from Social Security (41%), defined-benefit pension plans (24%), and part-time work (24%), according to the Employee Benefits Research Institute. And what of all those years of scrimping and saving? Unfortunately, it doesn't amount to much: Just 11% of basic living needs are covered with money from the average retiree's personal savings.

Confident that you'll be better off than today's retirees when it's your turn to leave the 9-to-5 grind? Don't get smug just yet.

You've been warned

According to the Employee Benefits Research Institute, more than two-thirds of today's workers have less than $50,000 set aside for their leisure years, and more than half have less than $25,000.

And what if Social Security lowers its payout or pension plans continue to cut back? A $34,000 annual paycheck will seem rich when it's finally time for those of us decades from retirement to exit the working world. In fact, if the low savings rates continue, many of today's pre-retirees will be forced to postpone their retirement party by as much as a decade.

So, do you want to work until age 75? Yeah, that sends a shiver up my spine, too.

Three ways to secure a happily ever after ending

If you want your retirement to play out better than the ending of the last Halloween flick,  it's time to get serious about saving more. You don't have to switch to a steady diet of ramen noodles and rent out your basement to turn your future around. Here are three ways to instantly improve your future prospects.

1. Increase your 401(k) contribution by just 3%. Contributing to an employer-sponsored 401(k) or 403(b) with a matching plan offers you an instant savings boost. A 25% match (the equivalent of two-year market-beating returns just for showing up) turns your $5,000 contribution into $6,250. If you're 50 or older, take advantage of yet another break -- a tax break -- via the catch-up contingency, which lets you sock away as much as $20,500 in pre-tax dollars per year.

If you think you can't stand the pinch of saving more, consider this: Every dollar you contribute to an employer-sponsored retirement plan reduces your taxes. So if you're in the 25% tax bracket, for example, a dollar deposited in your retirement plan cuts your tax bill by $0.25. Put another way, you have to reduce your spending by only $0.75 to save a buck.

Get it done: Get your 401(k) contribution paperwork from your human resources department (you can modify your contributions at any time of the year) and bump up the amount you're contributing by just 3%. If you stash away an additional $1,500 (3% of a $50,000 salary) this year and earn an 8% average annual return over five years, you'll add $735 to your earnings. Not bad. If you commit to the 3% goal for five years (for a total of an additional $7,500 invested), your retirement nest egg will blossom to $11,087.

2. Open an IRA right now. Yes, right now. Delaying just one single year can rob you of tens of thousands of dollars down the road. Consider a 40-year-old man who begins contributing $3,000 annually to a Roth IRA (not even the full $4,000 that may be allowed each year!) and continues to do so until he retires at 65. Assuming 9% annual growth in this instance, he'll have $254,102.

What happens if he puts off his initial investment until age 41? When it comes time to collect his gold watch and enter the life of leisure, he'll have $230,369 -- a $23,733 difference thanks to his late start.

Get it done: To max out an IRA before next April's tax deadline (the contribution limit in '07 is $4,000), you'll have to set aside $571 a month for the next seven months. Even if you can't max out that amount, set aside something -- anything. And stay on course month after month by automating transfers from your checking account into your IRA.

3. Save another $100 a month for retirement: What will an extra $100 in savings a month add to your retirement paycheck? Let's do the math: Investing an extra Benjamin a month for 20 years and earning 8% interest annually will add about $60,000 to your retirement kitty.

In real-world, spendable future dollars, that comes to an extra $168 a month -- adjusted for inflation.

Get it done: In this monthly "Things To Do" column you've hopefully picked up a handful of tips for effortlessly freeing up an extra $100 in your monthly budget. If you need a little more convincing, use Yahoo!'s savings calculators (like this one that illustrates the value of reducing expenses) to crunch the numbers on how much cash per month today's penny pinching will enhance your golden years.

Major bonus points to those who tackle all three of these savings triage moves this month. Even if you can't max out your 401(k), fully fund an IRA, or scrape together the full $100 to invest every month, every little bit helps.

Motley Fool columnist Dayana Yochim was no child savings prodigy, but she's made a valiant effort to overcome her youthful discretionary overspending. At GreenLight.Fool.com she digs up $450 in money-making, money-savings ideas every month.