The markets may be improving for some, but for many Americans, a retirement crisis still looms: According to the National Institute on Retirement Security, about 45 percent -- or 38 million working-age households -- have not started a retirement fund of any kind. With the future of Social Security uncertain and an increasing number of workers approaching retirement, having access to intuitive, low-cost retirement plans along with a sound strategy to work toward retirement goals is more important than ever.
If you are one of the millions of working Americans who feel unprepared for retirement, here are a few thoughts that could help you make up for lost time.
1. Start saving now
Prioritizing retirement may be one of the most important things you can do, yet the most common mistake people make when it comes to retirement planning is procrastination (and we all know the longer you wait, the tougher it will be to build a nest egg.) It all begins by committing to saving for retirement.
Whether you are saving with an IRA or a 401(k) account, think about how to start putting in about 10 percent of your income towards retirement investments. You may need to save more or less to attain your goals, but in general, this is an amount that may help you build an account for retirement.
Understanding the impact of starting now versus a year or five years from now can be a big enough motivator to start saving sooner rather than later. At a fixed rate of return per year, $20,000 may grow to $21,000 in one year, and after 10 years, it could be worth more than $32,000. If you continue to add another $20,000 each year over the course of a decade, you could wind up with over $320,000. Of course, there are no guarantees that your investments will achieve this rate of return (and you could actually lose money), but watching your assets accumulate is a reward in itself (and a motivator to keep saving!).
2. Make the most of your retirement plan
As of 2015, Americans are able to contribute up to $18,000 into 401(k) plans -- a $500 increase from the maximum contribution allowed by law in 2014. You may be thinking that $500 a year doesn't seem like a significant amount of money, but amortized across 40 years, that extra $500 per year can add up to more than $100,000.
Even if you've waited to start saving for retirement, there are some tax-advantaged options to help those 50 years of age or more to invest more into retirement accounts. This year, the IRS allows workers to make $18,000 in pre-tax personal contributions to their 401(k). But, if you're 50 or more, you can contribute up to $24,000.
If you are using an IRA, you can contribute $5,500 in pre-tax contributions, but those at least 50 years of age can contribute $6,500. Remember, these are tax-deferred savings so you won't pay taxes on these monies now, but taxes will apply when withdrawn in retirement.
3. Build a plan that fits you
Once you've set up your retirement account, understanding your risk tolerance and retirement timeline are essential. If you have a family, be sure to include them in any discussions around your investing strategy as well. According to a Capital One ShareBuilder survey, 27 percent of Americans never discuss planning for retirement with their spouse or partner. Talk about your longterm goals and ways you can work together to reach them -- either by investing or saving more, cutting costs, or working longer.
First, consider risk tolerance, or how much volatility you can stomach before selling off your holdings and how much downside you're willing to withstand in exchange for potential upside. If a drop of 10 percent or more keeps you up at night, you may want to be more conservative with your investments, but you will also likely forgo some upside, too. Typically, the longer your time horizon -- or amount of time until you retire -- the higher your risk tolerance may be, as markets tend to have a more stable curve over longer periods of time. You can help manage or mitigate risk in your portfolio using diversification.
4. Be sure to diversify your portfolio
Diversification is a process of investing in a variety of security types and asset classes in order to manage risk. Basically, how much do you want to invest in stock funds versus fixed or bond funds. Stocks tend to be more volatile than bonds and typically, by having asset classes and securities of many types in your portfolio, investments that perform well will help balance those that don't -- helping to limit volatility in your portfolio. Keep in mind though that diversification won't guarantee a profit or protect against market losses, but it helps to reduce the risk of negative impacts from one single investment.
Finally, review your asset allocation to ensure you have the right balance of high and low risk assets (or stocks, bonds and cash/cash equivalents) in your investment mix. In general, investors with a longer time horizon may want to be more heavily weighted in stocks, while investors nearing retirement may want more fixed income, bonds and cash. Having the right asset allocation for you is a crucial component of your long-term investing plan.
5. Know what you're paying
Most people spend more time reading the menu at a restaurant than they do reading the fine print on their investments -- which can be a very costly mistake. Take a closer look at monthly or quarterly statements to know how much you're paying in fees for each fund in your portfolio. These are typically labeled as "expense ratios," but there may also be administrative expenses, custodial expenses, asset management expenses or wrap fees.
The difference of just 1 percent can significantly impact how much is ultimately saved for retirement, and over the course of a 40-year career, the difference between 1 or 2 percent in fees can translate into hundreds of thousands of dollars in lost retirement savings.
Low-cost investment options like index ETFs (baskets of stocks tracking a specific index) and index mutual funds tend to have lower fees. If your 401(k) plan doesn't offer these lower-cost options, you may want to speak to your human resources department or benefits administrator about accessing low-cost investments in your plan.
6. Stay positive and stick to your plan
By now, you've likely realized just how important establishing sound financial habits are when it comes to planning your retirement. If you are starting later in life, you may need to delay retirement somewhat or reassess how you envisioned your later years; however, you may still have a lot more security and flexibility by starting to save now. As mentioned above, taking advantage of catch-up contributions for those over 50 years of age can be a real help.
While planning for your future, it is important to leave emotions out of your investment decisions and understand that investing for your retirement will always involve some level of risk. By mapping out a long-term strategic view of your portfolio and retirement goals and regularly reviewing your investments you will be able to plan for your future and make adjustments to your investments as is appropriate to your current circumstances and risk tolerance.
Even at the age of 55, you still have at least a decade to fund a nest egg. If you are able to make the maximum contributions to a 401(k) for the next 10 years that's close to $350,000 to improve the quality of your retirement. So, what are you waiting for?
 This is based on a fixed 5 percent return across the 10 year period. The results include the reinvestment of all interest and assume no distributions or other tax considerations. It is not intended to represent any specific type of investment and is not a guarantee of future returns; actual experience will vary.
 This hypothetical illustration shows the impacting of investing $500 more per year (investment of $17,500 per year vs. $18,000 per year - the new 401(k) IRS limit as of 2015) over a period of 40 years based on a fixed 7% rate of return in a Tax-Deferred 401(k) Account. The results include the reinvestment of all interest and assume no distributions or other tax considerations. This is a hypothetical example only. It is not intended to represent any specific type of investment and is not a guarantee of future returns; actual experience will vary. It is possible to lose part or the entire amount invested. Withdrawals from your 401k plan are subject to ordinary income tax and, if made before age 59 1/2, may be subject to a 10% IRS penalty.
 This hypothetical example shows the potential return of an investment of $2,000 per month over the course of 10 years based on a fixed 7% rate of return in a Tax-Deferred 401(k) Account. The results include the reinvestment of all interest and assume no distributions or other tax considerations. This is a hypothetical example only. It is not intended to represent any specific type of investment and is not a guarantee of future returns; actual experience will vary. It is possible to lose part or the entire amount invested. Withdrawals from your 401k plan are subject to ordinary income tax and, if made before age 59 1/2, may be subject to a 10% IRS penalty.