Late to Retirement Planning? 4 Strategies to Help You Catch Up to Your Peers

If you know you haven't yet done enough to fund the retirement you dream of, don't beat yourself up. Most people haven't. Getting started is hard, and consistently taking the next necessary stops isn't much easier.

Well, good news! It's probably not too late to catch up with your peers and change your future financial fortune. It's just going to require a few simple steps to get the ball rolling as quickly as it needs to at this point.

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To this end, here's a rundown of four retirement savings tactics you'll want to put into action sooner than later.

1. Accept that stocks are (probably) your best option

It's not a strategy as much as it is an important truth, but it needs to be said all the same -- investing in stocks is your most plausible path to building real retirement wealth. No other kind of investment (like bonds, commodities, or real estate) can maintain the inflation-beating average annual gains that the stock market delivers in the long run.

There's a small handful of exceptions, of course. For instance, someone just two years away from retirement can't rightfully afford to take on the risk that that the market might underperform for a couple of years. Even though stocks will eventually shake off such weakness and make their way higher again, bear markets can linger. You don't want to have to retire in the middle of one with an all-stock portfolio.

There's also always a slim chance you get an opportunity to invest in something that could turn out to be smashing success, like a film, or a small business, or a speculative piece of property.

For most ordinary people, though, stocks are the most feasible way to invest a little bit of money at a time and outpace inflation. They can then sell those investments in relatively small batches as needed. In other words, stocks are flexible while also being reliable long-term growth engines.

2. Remember that simpler is better

The second tip is more strategic. As you're picking and buying stocks, don't get clever or make things needlessly complicated; these are often the enemies of performance. Your best bet is to own something simple, like an index fund, and just leave it alone. And there's some mathematical data to support the claim.

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Research outfit Standard & Poor's, a part of S&P Global, keeps track of the performance of all the large-cap funds available to U.S. investors. In its most recent update of this data, it found that over the course of the past five years, 77% of large-cap mutual funds lagged the performance of the S&P 500 benchmark. For the past 10 years, nearly 85% of these funds underperformed the overall market. This subpar performance isn't new, either, nor is it unique to large-cap funds.

What gives? The chief explanation, ironically, is that efforts taken to beat the market more often than not cause a portfolio to lag it. This underscores the argument that picking individual stocks is just plain difficult. The higher-odds, higher-payoff approach is actually buying and holding simple index funds whenever and wherever possible.

3. Pay attention to the little things...all of them

On that note, know that not all index funds are built the same. Oh, they're certainly meant to be. Sometimes, however, one index fund charges a considerably higher management fee than another that seems similar.

Take the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) as a pair of examples. The SPDR fund's annual expense ratio is a little over 0.09% of the total value of the ETF's assets, while the Vanguard fund's annual expense ratio is one-third of that amount.

That might not make a big difference in performance for a single year. But, given that this management expense ultimately reduces the fund's net gains, holding one rather than the other for the long haul will eventually matter.

Perhaps the biggest little detail that's costing investors money, however, is what they're doing with their idle cash. Although nearly all bank, brokerage, and individual retirement accounts (IRAs) will automatically sweep cash into a basic low-yielding money market account, there are almost always higher-yielding options.

For perspective, several money market funds are paying out nearly 4% (annualized) right now. You just need to know that while sweeps into lower-yielding money markets are almost always automatic, putting your cash into higher-yielding money market funds will require explicit instructions. Ditto for selling it when you're ready to spend it.

These two little details alone won't make or break anyone. But the nickels and dimes add up, and you'll need every one of them if you're behind on saving for retirement.

4. Start with the big goal first, then work your way backward

Finally, if you're like most people, your chief challenge isn't a lack of willingness to save for retirement. It's the inability to do so. There often just isn't money left over at the end of the month to tuck away for later in life.

This mode of thinking, however, is inherently flawed. It's based on the often-erroneous premise that at some point in time there will be money that isn't spent once it makes its way into your hands (or into your bank account). Unfortunately, most people are impulse spenders to at least some degree, so without a specific plan of action, this retirement savings money will likely never actually materialize.

Here's an alternative approach that just might do the trick. Rather than depositing your paycheck, paying your bills as they arrive, and simply hoping for a little extra left over, why not set a monthly target-savings goal and make that the very first payment out of every paycheck? You can cover the rest of life's regular expenses with whatever's left.

This could admittedly be tough to do. It may require a rethinking of your current monthly expenses, ultimately forcing some uncomfortable budget cuts to avoid going into debt. Cable television, posh vacations, and regular visits to higher-end restaurants are all fair game if you need to put something on the chopping block, although whatever works for you is what you should do. Just prioritize saving for retirement first, and then make everything else work around that goal.

The good news is, this often ends up being easier to do than most people expect.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends S&P Global and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.