Are You Failing at Retirement Planning?

Source: Flickr user Joi Ito.

To most people, the idea of planning for retirement is like a trip to the dentist – a necessary evil they'd rather put off until the last possible moment. That's probably why less than half of U.S. workers have calculated a retirement savings goal and 26% of Americans between the ages of 50 and 64 have nothing saved for retirement.

If you want to avoid a retirement in which ramen noodles are considered a delicacy and WebMD is your healthcare plan, then you need to know your goals and have a plan to achieve them. But how can you know where to start?

While it's not an all-inclusive list, below you'll find a good overview of the key components of a comprehensive retirement strategy. If you can't check the box on each of the following statements, then your plans are at risk of receiving a failing grade:

• I've identified my financial goals – in writing – for both retirement and life along the way. Whether I want to buy a beachfront condo, start a business, or help send my grandkids to college, I've committed to my goals on paper, established how long I have to work toward each goal, and figured out how much money I'll need to achieve it.
• I've calculated a retirement savings goal that includes healthcare expenses. I understand that without a proper estimate of future healthcare costs, the odds are slim that I'll accumulate a nest egg large enough to last through retirement.
• I know my investment personality. I understand my feelings about investment risk and reevaluate my risk tolerance at least annually or whenever my financial circumstances change (e.g., a marriage, divorce, birth of a child, job loss, etc.).
• I know why I selected each investment in my portfolio. I researched every fund's performance history, expenses, management team, style consistency, and more. I also considered how the fund fits into my overall investing strategy. If I work with a professional investment advisor, he or she makes recommendations to me based on unbiased research and analysis.
• I carefully examine my quarterly account statements to review my current contribution amount, asset allocation and performance. I also rebalance my portfolio at least once or twice a year to maintain an appropriate level of risk and to bring my portfolio back in line with its target allocation.
• I have a plan in place to maximize my Social Security benefits, including a claiming strategy based on how Social Security fits in with my other sources of retirement income. I have a free "my Social Security" online account to get estimates of my future benefits and to make sure the Social Security Administration has accurate records of my annual income.
• Prior to retirement, I'll develop a strategy for taking distributions from my nest egg to help ensure I don't outlive my assets. In addition, I will remember to take required minimum distributions from applicable accounts on time so as to avoid IRS penalties.

Developing a retirement strategy isn't a one-time task. Your plan may need adjustments over time depending on the changing markets and economic landscape, as well as changes to your personal situation or goals. Whether or not you're able to check off each box confidently, you have to ask yourself: Do I have the time and interest to devote to researching the best funds for my portfolio – and am I willing to bet my financial future on it?

If the answer's yes, that's great. If not, consider bringing in a professional investment advisor to help you achieve your goals. Someone with training, credentials and retirement-planning experience can help you design and execute a strategy that best meets your needs.