We all know what happens: lots of us don’t think about saving for retirement until our 30s or 40s—when it’s almost too late to succeed. In a recent and already well-circulated blog, Forbes' contributing investment advisor Robert C. Lawton addresses this problem of “back-loaded” retirement savings with some simple advice: from the start, he argues, we all ought to put away at least 20% of our savings. When he suggests this to plan participants, he reports, they usually laugh and say, "No, really." To which he proudly repeats, "Really, at least 20%." When I read this advice, I didn’t laugh at all. I thought, “Tell that to people with three kids in college.” Then thinking back to my 20-something self, I added “and I guess that also means driving a beater car, eating a whole lot of Ramen Noodles, and holding off on buying a home until I’m 40.” First, do we really have to sacrifice so much for retirement income security? At Compass Investors, we don’t think so at all. Second, would putting away 20% every year even guarantee that security? According to our calculations, again, not at all. A brief example will make this latter point.

Imagine a young woman named Ellen who graduates this year and finally lands her dream job at age 24, with a starting salary of $60,000. Following Lawton’s advice, she saves 20% of her salary every year, expecting to retire at age 65. One can assume a historical inflation rate of 3%, and let’s be somewhat optimistic and assume an annual 3% raise. Putting aside 20% of her salary every year, she has sacrificed a lot to retire well, so we’ll assume she expects to enjoy her final annual income level through retirement—no more Ramen Noodles, as it were.

By our calculations (using the Compass Investors Retirement Outlook Calculator), Ellen could very easily retire at 65, but having amassed only just over $2 million dollars, she would run out of money at age 80. The reason for this is the number we have left out of the equation—Ellen’s investment return, both while she’s working and after she retires—and we haven’t low-balled it. The average annual return for those investing on their own is between -2% and 5%, so in fact, estimating her return at 5%, we’ve given her full benefit of the doubt. And look what happened.

Sacrificing even more to her retirement years, Ellen might decide to work an additional 5 years, retire at age 70 (let’s hope her knees are still good for that trip to the Grand Canyon) and stretch her savings until she’s 88. But, given recent increases in life expectancies—especially for those born in the 1990s—that still may not be enough. And again, this assumes that of her initial salary, $12,000 (20%) goes to savings, $15,000 or more goes to Uncle Sam, and how much to student loans? One starts to wonder not if, but how long she might have to live at home, or with a bunch of roommates.

Of course Lawton is absolutely correct to warn young investors about procrastination—and he’s certainly right to describe the excuses we use that force us to have to “back-load” or catch-up, sacrificing the power of compounding. But with only a little attention paid to the key to compounding—investment return—Ellen might actually live well while working, and perhaps be able to help her kids attend the colleges of their choice (not to mention take a great vacation or two in her 30s and 40s). Given the exact same assumptions as in the example above, but only changing her investment return while working to 11% (the current back-tested average of all plans supported by Compass Investors’ HORIZON), she could decrease her total contributions to 10% a year, provide for a retirement that could last to age 100 AND still be able leave her kids a nice inheritance. This is the power of INVESTMENT RETURN—and all too often we dismiss or ignore it. What should worry us most about Lawton’s 20% figure is that it is in fact not a sure formula for success. Without attending to investment return, we can eat poorly, scrimp and save, and still end up a burden to the next generation.