Advice on preparing to retire

Let's assume you are somewhere in your 40s or 50s and you woke up this morning and realized you haven't been saving enough for retirement. Is the situation hopeless?
Well, of course not -- who knows what might happen in the next 10 or 15 years?
But unless you hit the lottery or the stock market goes into another '90s-style boom, the chilling realization that you may fall short is a call to action.
You might start with a useful online publication called "Guidebook to Help Late Savers Prepare for Retirement," recently produced by the nonprofit National Endowment for Financial Education.
Don't expect any magic solutions. If you haven't put enough aside, you've got to start saving more, get a better investment return, postpone retirement, work part time after you retire or cut your living expenses in retirement.
Most likely, you'll want to combine those strategies. But how?
The guide walks readers through all the tricky questions, from figuring how much money you'll need in retirement to deciding what types of saving and investment accounts can best help you reach your goal.
Where to find it
The guide is at http://www.nefe.org/pages/multimedia.html. If you don't have a computer with Internet access, you'll find one at any decent library.
How long will it take your money to double?
Longer than it would have a few years ago, no doubt. But just how long?
For a quick, rough answer, use the Rule of 72. Simply divide the number 72 by the annual rate of return on your investment to find the number of years it will take your money to double.
If your return is 10 percent, it will take about seven years for your money to double. Make 5 percent and it will be about 14 years.
It works the other way, too. Divide 72 by the number of years you have for your money to double, and you'll get the rate of return you need. Got 10 years until retirement and want your current savings to double? You'll need an average annual return of 7.2 percent. That assumes, of course, that you won't be adding any additional savings.
Earned wages?
Lots of readers sent messages agreeing with the criticism of high pay for corporate executives. I didn't hear from anyone arguing that high pay is justified.
One of the problems is that the corporate directors who set executive pay don't seem to care about holding the line.
Why is that? Partly because directors don't want to risk losing these lucrative part-time positions by crossing management.
A new study of 187 large companies finds that the median cash compensation is $35,000 a year. In addition, directors who chair committees typically get $7,500 for that chore.
Also, 73 percent of those companies give directors stock options, which are the right to buy company shares at a set price anytime over a number of years. And 65 percent gave directors shares of stock. Hewitt did not put a value on these parts of compensation.
Remember, directors do have a big responsibility. But it is, after all, part-time work, and many corporate directors serve more than one company. Lots of them, by the way, are well-paid executives at other companies.
Hewitt said it expects director compensation to rise by 15 percent to 20 percent "during the next couple of years." You can bet not many employees at those companies will get that.
Track market performance
While the Dow Jones industrial average is the most oft-cited gauge of stock market performance, professional investors prefer the Standard & amp; Poor's 500, which has 500 stocks vs. the Dow's 30.
But there are thousands upon thousands of stocks -- about 2,800 on the New York Stock Exchange and more than 3,400 on the Nasdaq. How well does the S & amp;P 500 reflect the market overall?
Pretty well, according to The Leuthold Group, a market research firm in Minneapolis.
Leuthold found the shares of various market sectors in the S & amp;P 500 was virtually the same as that of the 3,000 stocks in the much broader Leuthold 3000 index, composed of all the companies with market values of at least $140 million. Market value is stock price times shares in circulation.
Stocks of utility companies, for example, make up about 3 percent of the market value of each index. Financial-services companies make up a little over 20 percent and technology companies about 15 percent.
This is yet another reason for investing in mutual funds that simply buy and hold the stocks in the S & amp;P 500. Since the index reflects the health of the entire market, the people who manage the economy will consider it a big problem if the S & amp;P 500 goes down the tubes. Put your money into a offbeat fund that owns a handful of obscure stocks and the movers and shakers won't care if you lose your shirt.
An S & amp;P 500 index fund guarantees you returns matching the market overall. And because the fund doesn't have to pay a squad of stock pickers, it can charge very low management fees.
XJeff Brown is a business columnist for The Philadelphia Inquirer. E-mail him at brownj@phillynews.com.