3-Step Retirement Checklist for the End of 2017

In just two weeks, millions of Americans will make financial resolutions for the New Year, but there's no reason to wait for the calendar to flip to make smart decisions with your retirement accounts.

With just a few minutes of work, you can get on the path toward better investment returns, and higher account balances at retirement. Here are three smart retirement moves to make right now, before the champagne bottles pop to ring in 2018.

1. Rebalance your portfolio

Have you rebalanced your portfolio lately? If not, you might be surprised to find that you're taking more risk with your retirement accounts than you initially planned, which could cost you in the next market downturn.

Image source: Getty Images.

Stocks have had a banner year, crushing the returns of safer securities like bonds in markets all around the world. Major market stock market indexes, domestic and foreign, are up more than 20% this year, while most bond indexes have posted low-single-digit returns.

Returns are based on index fund returns for each asset class.

A portfolio that started the year with 60% stocks and 40% bonds would have ended the year at roughly 64% stocks and 36% bonds, assuming no additional contributions. It may seem like a small difference, but left unchecked, your portfolio will slowly drift toward riskier assets as you age, the exact opposite of what most experts recommend.

The rapid rise in stock prices isn't reason to be greedy. High stock market returns in 2017 are more of an anomaly than representative of an average year, which is why it's prudent to stick to an asset allocation plan that favors a mix of stocks and bonds. One recommended strategy: Use your age for the percentage of your retirement account to invest in bonds (e.g., a 35-year old would invest 35% of his or her portfolio in bonds). The remainder can be invested in higher-risk investments, like stocks. 

You can also set your stock and bond allocation based on your risk tolerance, or how much of your account you're willing to lose when markets don't go your way. These asset allocation tables are a helpful guide for picking the right mix of stocks and bonds for a risk profile that you can stomach through the ups and downs.

2. Increase your savings rate

Some 401(K) plans build in automatic increases in your savings rate, but many plans don't. For this reason, it's imperative that savers take action to increase their contributions with their incomes.

The 401(K) and IRA are one of the greatest gifts to savers, allowing individuals to sock away cash that grows with tax advantages you don't get with a standard brokerage account. Best of all, savers who use both types of accounts can put away a lot of money every single year. 

Data source: IRS.

Don't take this to mean that you have to max out your retirement accounts to make real progress toward your retirement goals. Even modest increases make a difference. A 30-year old who saves just $20 more per paycheck would have about $66,300 more at 65 years old, assuming an average return of just 7% per year. Of that, roughly $45,500 would be due to investment gains -- money that you don't have to work for.

Some savers can even get a tax credit for making a contribution. Individuals who earn less than $31,500 per year, and married couples earning less than $63,000 per year, qualify for the Saver's Credit, which rewards people for making retirement contributions.

3. Review your funds for better choices

If you haven't looked at your retirement choices lately, you should. Fund choices change all the time, and there may be better options for you now than the last time you looked. 

Take my friend as an anecdote. Having never toyed with her retirement account, her contributions were automatically directed into a target-date fund that carried an expense ratio of 0.8% per year. With a few clicks, she replicated the high-cost fund's mix of stocks and bonds with lower-cost index funds that carried fees of less than 0.1% per year.

It was worth the work. Assuming pre-fee returns of 7% annually, she'll earn 6.9% after fees with the lower-cost index funds, versus 6.2% with the higher-cost target-date fund. Over a full career, the difference is substantial. She'll have roughly $114,000 more at retirement after a 35-year career in which she contributes just $6,000 per year, solely because of the difference in fees.

Most people won't make $100,000 in a year. Swapping high-cost funds for low-cost funds is a way to make a six-figure difference in 10 minutes.