A lot of people are hoping that their retirement account will be huge by the time they reach 65. Unfortunately, hoping for good results in the stock market will not get the job done. We must know for certain that we are making good progress. It will take ten to twenty years to build up an adequate retirement. Individual needs will vary as to the total amount required.

The best place to start is to have a goal that you intend to reach each year for increasing your savings. For example, I have shown a table below for an individual who is 50 years old and wants to retire at 65. In theory, he believes he can gain 14% each year through the combination of adding 401K contributions each year to his account and making stock market profits. He is starting with $50,000 that he accumulated in his younger years. His goal is to amass $350,000 by the time he is 65.

To be certain in achieving his goal, he will need to pick stocks that gain at least 12% each year if we assume he is providing the other 2% through 401K contributions. A diversified portfolio will be necessary since disaster could strike individual companies. As of May 2012, several real estate investment trust companies can provide the 12% minimum that he must make in the stock market each year.

Therefore, 50% of his portfolio should be invested in REITs. I suggest four companies for 12.5% each in his portfolio. American Capital (AGNC) pays a 16% dividend. Armour Residential (ARR) pays 17%. Anworth (ANH) pays 12%. Annaly Capital (NLY) pays 13%. These stocks should pay the dividends whether the stock market is up or down as long as no extreme conditions exist.

The other 50% of his portfolio should be invested four to six months out of the year in the S&P 500 leveraged ETF with the ticker symbol SSO. The stock market usually has a bull run every year between November and April. It will be safe to own SSO during this time as long as the chart line of SSO is above the line of IEF, the 7-10 year bonds ETF. Whenever an investor has made 12 to 15% on SSO during the year, he should sell the stock and keep the money on the sidelines until the next bull cycle. You cannot go broke making a profit.

Mistakes must be avoided in order to preserve capital at all times with this plan. Do not listen to others when they want you to speculate on different stocks. If you do decide to gamble, do not use the money in your 401K. Keep most of your money in a concrete plan like this one. You cannot guess at outcomes. You must "know" for sure that you are making progress on your golden timeline of constantly accumulating wealth.