Retirement Planning: How Do You Measure Up?

Until you've pulled together a significant nest egg, the single most important thing is getting into the saving habit.

Don't wait. Lookin' at you, thirtysomethings. Retirement expert Wade Pfau's research makes it clear that if you wait too long to start, you may have to save heroic amounts to catch up -- or hope you have plenty of bull market years to help you along. Your other option: Delay retirement.

Related: How much will I need for retirement?

Some risk helps. You can save a bit less if you can handle some risk. But there's a cost to that as well.

Look beyond your 401(k) if you can. The highest-paid workers actually contribute a smaller share of income to 401(k)s because they run into caps on contributions. So if you are a high earner, save more than your 401(k) max.

If you also bump into income limits on IRAs, there's a backdoor: Contribute to a nondeductible IRA and then convert to a Roth IRA. (Caveat: If you hold other traditional IRAs, tax treatment can be tricky.)

As your portfolio builds and you have more money at stake, focus on how you invest, making sure to balance your ability to handle risk with your need for growth.

Don't overreach. Over the long term, a higher stock allocation will typically grow your nest egg faster. You'll also have to live with more uncertainty, though. So be realistic about what you can handle, using returns following the 2008 financial crisis as a rough guide.

Would you be able to hold on if you experienced that kind of loss again? "If you capitulate" -- that is, sell -- "at the wrong time, it's over," says Madison-based financial planner Mike Dubis.

Get the free lunch. There's one way to boost your investment returns without adding risk: Lower the fees you pay on your investments. A study by Towers Watson found that cutting investment fees from 1% to 0.2% -- the cost of many index funds -- could save enough to fund an extra nine years of retirement for someone making $75,000 and saving 8% a year.

Catching up gives your more choices. At 50 and up, you're allowed to make larger "catchup" contributions to your 401(k) and IRA. The extra savings makes the risk/reward tradeoff in your portfolio less fraught: It will be easier to hit your goal with safer, but lower-returning, assets. At the same time, losses in the stock market are less likely to knock you below the minimum you'll need to retire.

As you cross into the retirement zone, develop a plan that lets you adjust to surprises, such as poor markets or unforeseen medical costs.

Adjust to new conditions. Unless you've saved a lot, a 3% initial withdrawal rate could be tough to live on. Why do it?

Retirement researchers project that today's low yields mean much worse bond returns than investors experienced in past decades. That's not a given, but it's a real risk. Even if you can't get as low as 3%, the less you spend, the more flexibility you'll have to cope with tough market conditions when they hit.

Rethink your timing. The longer you can delay retirement, the easier the numbers get. Waiting means higher Social Security payments, so you'll have to withdraw less from your nest egg and make your money last for a shorter time.

Over a 25-year retirement, a 4% withdrawal rate, adjusted for inflation, would work about 67% of the time, vs. 50% of the time over 30 years. (That's assuming those lousy bond returns.)

Have a pension? Lucky you. If your plan plus Social Security can cover your important expenses, then you can be "more aggressive with your investment portfolio," says Robert Henderson, president of Lansdowne Wealth Management.