If you're confident that you'll have enough cash to retire in comfort, you're in a very small minority. Only 18% of America's workers are very confident that they are on track for a secure retirement. One reason this worry is justified -- Americans actually spend more time planning for their vacation than they do for their retirement. 

The good news is, you don't have to spend endless time worrying over your 401(k) balance and investments. You just need to do these three simple things to make sure your retirement savings suffice when your working years come to an end. 

401(k) money in envelope

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1. Determine projected retirement income based on your current savings rate

Many people planning for retirement focus on saving a certain percentage of their income. Unfortunately, most people are saving too little of their income for retirement, and they base their goals on the outdated idea that saving 10% is sufficient. The reality is that high healthcare costs, low interest rates, and longer life spans mean you'll likely run out of money if you just set aside 10% of your income during your career. 

To make sure your retirement savings is actually on track, estimate how much total you'll have saved by the time you are ready to retire and figure out how much income your nest egg is likely to produce. There are lots of online calculators that will help you to determine what your total savings balance will be when you hit retirement age. Use a calculator that allows you to estimate your retirement income based on your current savings rate. For example, if you start saving at 35, save $5,500 annually by maxing out an IRA, earn a 7% return, and plan to draw from your retirement funds for 20 years starting at age 65, you'll have a projected income from savings of $32,906.

Check your Social Security account online to find out how much your Social Security benefit will be and add this amount to your projected income from savings. This shows you how much cash you actually have to spend each year during retirement so you can get a clear idea of whether it's enough or not. If you're not able to replace at least 100% of your current income with your combined Social Security and savings, you should strongly consider bumping up your savings as the traditional belief you'll spend less during retirement is also probably wrong

2. Check out what fees you're being charged

Fees can make a huge impact on your investments. Consider how much money you'd end up with if you invested $5,500 annually in a 401(k) over 30-years, earned a 7% return on investments, and were charged different fee amounts:


Total Invested After Fees

0.00% $519,534.32
0.50% $475,061.75
1.00% $434,820.02
1.50% $398,395.13
2.00% $365,413.66
2.50% $335,538.88
3.00% $308,467.16

The difference between paying no fees and paying a 3% fee is more than $211,000.  Monitor your investment options carefully and be sure you understand total fees being assessed so you don't derail your retirement plans because of costly management fees, purchasing fees, or other expenses. 

3. Confirm you've got the correct asset allocation

Investments must be correctly allocated to produce a reasonable rate of return without exposing you to too much risk based on your age. If you need to make withdrawals soon, you don't have time to recover from market downturns and could be forced to sell low -- so invest less of your money in riskier stocks as you get older.

If you opt for low-risk investments throughout your career, your rate of return will be too low to build a big enough retirement nest egg, unless you dramatically increase retirement contributions. If you invested $5,500 over 30-years and earn only 3%, you'd end up with an income of only $14,865 annually from your savings, instead of the $32,906 we calculated earlier based on a 7% rate of return. This is less than half of the income you'd have available to you if you'd invested the same amount of money in investments that performed better. 

There are a number of ways to determine your asset allocation, including evaluating your personal risk tolerance. One simple formula: Subtract your current age from 110 and put that percentage of your money in stocks. If you're 50, for example, you'd put 60% of your money in stocks (110 minus 50 equals 60). This formula may not work for every situation, but the key is to make sure you have some plan for asset allocation and update your investments as you get older and your risk tolerance changes. 

By keeping fees low, investing an appropriate amount based on income you'll need in retirement, and taking a reasonable level of risk, you should end up with a substantial nest egg. Just keep an eye on these three key things, and you can be in that elite 18% of Americans who is confident that your retirement savings are 100% on track.