Cramer on Retirement: Catching Up

Jim Cramer and Wally Konrad
(Editor's note: This is the fifth in a series of columns on retirement by Jim Cramer, founder of , and Wally Konrad, former senior editor for magazine. To read the first installment, click here. The second article is here, the third here and the fourth here.)

NEW YORK (TheStreet) -- About 44% of Americans ages 38 to 65 haven't saved enough for retirement, according to the most recent survey from the Employment Benefits Research Institute.

Numbers aside, most people feel they could be and should be saving more. Even diligent savers may feel behind when they open recent account statements. The roller-coaster ride in the market in the past months has meant plenty of red ink for lots of employees.

And if you're someone who started saving late or had to ransack your retirement accounts because of unemployment or foreclosure concerns, catching up is top priority right now.

So how do you make up for losses and lost time?

Save more and spend less.

I know that sounds obvious and even slightly obnoxious, but bear with me. There are lots of sophisticated strategies that can help you do both of those things and feel more confident about your nest egg. Consider the following:

This is a painless way to give your retirement accounts a boost. The average American household pays nearly $155,000 in 401(k) fees over the course of a lifetime, according to a recent report from Demos, a nonpartisan public policy group. Wouldn't you rather have that money in your account?

The mutual fund industry disputes these numbers, saying the amount paid in fees is actually much lower. Whoever is right, the fact remains that most investors are a bit clueless about fees. A recent survey from AARP revealed that 62% of 401(k) investors didn't know how much they were paying in fees, and 71% didn't know they were paying any fees at all!

That may change now that new disclosure regulations from the Department of Labor went into effect July 1. The new rules require financial companies to disclose fees and administrative costs to employers. In turn, employers are required to pass that information on to workers no later than August 30. (Disclosures must be made once a year after that date.)

With more transparency, the thinking goes, employers, especially small firms, will be able to compare costs of competing plans more easily and employees will get a better sense of exactly what they are paying in fees.

"This new disclosure is a big deal," says Bill Harris, CEO of Personal Capital, an online financial adviser service. "Unfortunately, the information will still be confusing and hard to find."

Still, advises Harris, keep your eye out for notifications from your employer, and take the time to wade through the fine print so you can compare costs of the various options in your 401(k). Several news and financial advice organizations, including Harris' Web site ( plan to post calculators and other tools that will help individuals figure out how much they are paying in fees once the data is available.

Most people think if they max out their 401(k)s (and get their employers' matching contributions) and contribute to their IRAs on top of that, they've done enough. Doing both is great, but in most cases you'll need to save even more.

"We all get hung up on retirement money being only in tax-advantaged retirement accounts, but the reality is we need good old-fashioned savings too, even if it is in something that isn't called a retirement account," says Adam Leone, a certified financial planner at Modera Wealth Management.

Leone suggests the time honored strategy of paying yourself first. Just as you never lay a hand on the money that goes into your 401(k), set up a direct deposit into your taxable retirement account to make sure you actually put the money away. Stick with low-cost index funds and ETFs and stocks bought through discount brokerage firms to keep costs low, says Leone.

And keep in mind that taxable retirement savings accounts are a good way to diversify your investments into sectors such as real estate and energy that aren't routinely offered in most employer 401(k) options.

Master Limited Partnerships, for instance, can be a great high-yield retirement investment, but they are a lousy retirement account investment because of the tax treatment.

"You can use your after-tax retirement savings to truly diversify your nest egg," says Leone.

In case you haven't heard, 70 is the new 65. Working full or part time past the traditional retirement age can give your retirement stash a double boost.

You won't be dipping into your savings to live, and you'll be continuing to contribute to your savings.

You'll see even more of an advantage if you hold off on taking Social Security payments. Signing up at age 70 vs. age 62, (when you are allowed to take early payments) increases your monthly check by an estimated 76%! What's more, the annual cost-of-living adjustment is made on the larger dollar amount each year, giving late claimers another advantage. The bigger check can make a difference when it comes to making ends meet each month and preserving your nest egg.