There are only three simple steps standing between you and the retirement of your dreams.

Surprisingly, they don't involve overpriced financial planners or equations with Greek letters -- they won't even cause you to break a sweat!

Skeptical? Incredulous? Well, read along and see if I can't change your mind.

Not me! Not now! Not with you!
If I had a dollar for every time I've heard those words, I'd be wealthy enough to retire already. But seriously, look at the results from a recent Fidelity Investments report and tell me if you still don't need a tip or two:

  • Only 63% of workers like free money -- that is, are signed up for their company's 401(k) plan.
  • 13% prefer the single-digit returns of cash and bond accounts to the market's average 10% and therefore own no stocks. 19% live on the reckless side and have their entire portfolio in just one equity.
  • 60% advocate laissez-faire retirement planning and haven't balanced their retirement account in more than five years.

From the likes of these figures, a vast majority of the workforce isn't adequately preparing for retirement -- so let's look at three measures you can take now to become Foolishly ready for your work-free days.

1. Sign up for free money
If you haven't already done so, sign up for your employer's 401(k) plan. Allocate a percentage to come out of each paycheck -- before you're able to even contemplate spending it on something else.

Most companies match amounts that you contribute to your 401(k). These incentives to save, when coupled with your own, will make a dramatic difference over time.

If we assume that you have a continuous annual salary of $65,000, and your employer matches 50% of the amount you save up to 10% of your salary, here are some possible results:

Saving 3% Annually

Saving 6% Annually

Saving 10% Annually

After 10 years




After 20 years




After 30 years




* Estimates assume the market's average annual return of 10%.

Look at how significantly maxing out your company's match affects your portfolio. Setting aside the full 10% over 30 years (which brings you an additional 5% from your employer) turns into more than three times as much money as if you save only 3% annually.

2. Get your assets in gear
After your 401(k) is set up, it's time to decide what you'll invest in.

As Robert Brokamp, advisor of Motley Fool Rule Your Retirement, relayed in a recent newsletter, "for every rolling five-year investing period since 1802 (i.e., 1802-1807, 1803-1808, etc.), stocks outperformed bonds 80% of the time. Stocks beat bonds in 90% of the rolling 10-year periods, and essentially 100% of the rolling 30-year periods. For holding periods of 17 years or more, stocks have always beaten inflation, a claim bonds can't make."

With historical returns like this, the vast majority of your pre-retirement portfolio needs to reside in stocks and stock funds.

Make sure you divvy up your money among asset classes so that when one segment isn't doing so hot, the returns on the others balance it out. Robert offers these suggestions for portfolio allocation in a recent newsletter:

Asset Class




Large-cap stocks




Small-cap stocks




Foreign stocks












But remember, these are only suggestions and can vary based upon your risk tolerance, saving timeline, and individual preferences.

3. Rebalance regularly
Retirement planning isn't a one-time deal. Your portfolio, like your garden, is an entity you regularly have to prune. It's inevitable that one asset class will outperform the others over a given period of time. In order that one does not become the dominant force that your portfolio relies upon, periodic rebalancing is necessary.

Robert and I recently tested to see how often rebalancing is necessary. We discovered that "rebalancing every three years (as opposed to annually) seems to 'let the winners run' without allowing the portfolio to grow completely out of whack."

So don't fret over it every year alongside your taxes, but remember that it does make a significant difference if you take the time to rebalance to your ideal allocation triennially.

And as you get closer to the glorious days of retirement, start transferring a significant portion of your portfolio into bonds and dividend-paying stocks like Automatic Data Processing (NYSE:ADP), Bank of America (NYSE:BAC), Johnson & Johnson (NYSE:JNJ), Lowe's (NYSE:LOW), Paychex (NASDAQ:PAYX), and United Technologies (NYSE:UTX), which will provide steady income and still continue to let your wealth grow.

Now get going!
It's true. Retirement planning isn't the most thrilling way to spend your weeknights. But honestly, you owe it to yourself to take the time to do it.

So find a few minutes this evening to ensure you're taking advantage of your company's 401(k) and allocating money across various asset classes -- and while you're at it, figure out a way to remind yourself to rebalance your portfolio a few years down the road. A good way to be regularly reminded of these obligations, coupled with a more in-depth look at retirement planning, is to start with a free trial of our Rule Your Retirement newsletter service. Click here to join our community and save your retirement today!

Fool analyst Adam J. Wiederman hopes his retirement will be really, truly, and substantially stress-free. Adam does not own shares of any company mentioned. Bank of America and Johnson & Johnson are Income Investor recommendations. The Fool's disclosure policy will never be able to retire.