Three must-dos to maximize retirement goals

There was a day when retirement was guaranteed by a company pension and a gold watch. Employees would even spend decades with the same company. Unfortunately, that day is long gone. In fact, retirement is no longer a guarantee by any stretch of the imagination, as the majority of individuals are now responsible for their own retirement planning.

Americans have plenty to worry about when it comes to retirement. With pension plans becoming extinct, running out of money to live comfortably is the most common concern. According to a recent survey from Merrill Lynch, nearly 40 percent of adults age 50 and older fear they will run out of money in retirement. Making matters worse, only a third of older adults feel prepared for retirement if everything goes as expected, and less than a quarter feel prepared if one spouse dies or is forced to retire early for health issues.

While a comfortable retirement may feel out of reach in today's economy, there are three vital ways to improve your chances and decrease the likelihood of financial woes.

1. Make goals

Considering the long-term status of Social Security, individuals have more responsibility than ever to create their own financial goals for retirement. "As the government is moving more and more retirement income onto the private sector and individuals, you need to look at having a million dollars in your retirement plan at the time you're going to start drawing down on it," Anton Bayer, founder of Up Capital Management, said in a phone interview. "That sounds like a big number, but it's a real number. If you can do better than that, terrific."

Mr. Bayer, who has been a Certified Financial Planner since 1985, reminds clients that accumulating the first $100,000 is a brutal up-hill battle that takes years. However, retirement savings build much faster after the initial $100,000 as the power of compound return takes effect on a portfolio. Writing down your goals and financial plan also make the process easier.

2. Perform quarterly check-ups

Individuals shouldn't worry about every headline they come across on a daily basis, but they should take some time to review their portfolios throughout the year. "I recommend people take their quarterly statement and make a 30 minute appointment with yourself or spouse," explains Mr. Bayer. "Go to a coffee shop, or somewhere outside of the house, and sit down to review the statement. This is hopefully going to be a million-dollar account so take it seriously. This applies to even a $600 account. It's the process that you want to instill."

There are six questions to consider when performing a quarterly check-up:

• Did you make any progress with the account balance?

• What is your rate of return?

• Are your current allocations working for you?

• What is your current balance and future contribution amounts?

• How is your performance given your fund options?

• How does your portfolio stack up against the broad market?

Mr. Bayer adds that, "It's very important to look at what's not working. The irony of human behavior is that when things are really bad, people like to ignore their statements. That's absolutely the wrong thing to do."

3. Take advantage

When it comes to saving for retirement, every dollar counts. Individuals should remember to take advantage of 401k plans when available. "The 401k plan is by far the most efficient savings account available to Americans. In fact, there's almost no history of something like this available to the average American willing to contribute a small amount of their paycheck," explains Mr. Bayer. "For many participants, their employer is providing some type of a matching contribution. It's a paycheck by paycheck, year by year benefit that if they're offering, you want that. Any free money that can be put into your account, you need to take advantage of it."

If you're young, you can take advantage of Father Time by starting to save for retirement as soon as possible. Individuals age 50 or older can take advantage in their 401k plan by contributing an extra $5,500 on top of the normal $17,500 contribution limit.

Follow McWhinnie on Twitter: @Mr_Eric_WSCS.

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