By John Wasik CHICAGO, Dec 28 (Reuters) - You may be waiting to optimize your retirement portfolio, thinking that you should know what's going on in Washington and Europe before you act. However, there are some changes you can set in motion right now that could make a big difference down the road regardless of what happens with the fiscal cliff, tax changes and Wall Street: 1. Boost your contribution rate The longer you wait to contribute, the greater return you will need to achieve your goals. Thanks to the compounding effect, the more your contribute, the more you can accumulate when dividends and appreciation are added. Raise it as much as you can because even incremental changes make a huge difference over time. Let's say you're 35, make $75,000 annually and contribute 6 percent with a 100-percent employer match. You start with $50,000 in your account now. If you just bump your contribution rate to 7 percent, your balance in 30 years would rise from $1.6 million to nearly $1.8 million, according to 401kcalculator.org. In any case, you always want to take advantage of the employer match, because it's free money. 2. Align your allocation to your age Generally, the older you are, the more fixed-income you need -- roughly matching your bond or guaranteed investment contract portion to your age. Let's say you're 30 and you can afford to take market risk. You'd want 30 percent in bonds and 70 percent in stocks. A 60-year-old, conversely, would consider a 40 percent stocks, 60 percent fixed-income mix. Target-date or "lifestyle" funds can do this for you, but you have to check their allocations the closer you get to retirement to see if you're comfortable with the stock mix. They are all slightly different. 3. Don't worry too much about taxes now, but have a tax plan in mind. While it's hard to tell what Congress will do with the fiscal cliff dilemma, no one has talked about eliminating the tax break for 401(k)-type plan contributions, which are not subject to federal taxes. You can contribute up to $17,500 in 2013; another $5,500 for those over 50 or for individual retirement accounts. Concerned about taxes down the road? That's reasonable. Consider a contribution to a Roth IRA or Roth 401(k). The contributions are taxable, although the withdrawals are not if you hold money in these accounts for at least five years past age 59 ½. 4. Lower expenses to boost return Surprisingly, low-cost index funds accounted for only 30 percent of the assets in top-rated 401(k) plans surveyed by Brightscope for 2012. Every retirement plan should have index funds to cover U.S. and international stocks, bonds and real estate. Here's what you can do if you don't already have that setup: You probably received a notice earlier this year detailing how much each investment option is costing you. If any of your individual funds cost more than 0.75 percent annually, you should pick a different one. If you don't have enough options in your company plan, you can ask your employer to find cheaper index funds, which are available for as low as 0.06 percent annually. If you do this, you will easily boost your plan's performance without changing the risk profile or allocation, and it will also pay you back every year in the form of a higher net return. 5. Buy constantly and hold Most people time the market badly. The best time to buy stocks is during the dips. Most investors can't stomach this idea, though. At the end of 2008, when stocks were really cheap, 401(k) investors only had 37 percent allocated to stocks, and at the end of the dot-com bubble in 2002, investors had 40 percent in stocks, according to the Employee Benefit Research Institute (EBRI). What you should do is invest during good times and bad. You have no idea when bull and bear markets are going to start or stop. So if you can afford to take the risk, take advantage of the compounding over time. 6. Cut back on your employer's stock This could be the most dangerous holding in your portfolio, concentrating a great deal of risk in one company. While you may feel a need to be loyal to your employer, it's not in your best interests. You'd be better off diversifying. Look at what you sectors you don't have represented in your portfolio. Asset classes that are typically under-represented include real estate investment trusts, inflation-protected bonds and global stocks/bonds. Fortunately, only 8 percent of those surveyed by EBRI hold company stock. If this is still a major holding in your portfolio, make some changes. This also applies to holding single stocks.