How to Get Your 401k Back on Track

The economy has hit retirement accounts particularly hard. While there's plenty of 401k advice out there, it's difficult to know where to turn for help with your 401k. Currently, only 13% of people consider themselves extremely confident with their ability to retire, meaning the vast majority of people in this country have serious doubts about their money and how to get their 401k back on track. Here's a guide to 401k planning, with advice to help you focus on how to fix your 401k from here on out.

The first step that should done--and the one most people skip--is getting a good idea about the amount of money you'll need for retirement. This isn't a time for guess work. According to MSN Money, not even 40% of people use a reliable strategy to determine how much money they'll eed to retire. Setting a goal for your 401k is one of the most important parts of 401k planning. Since there's no set amount of money that will work for everyone, start by analyze all your future sources of income, including pensions and Social Security. Next, try using a retirement income planner online to help you figure out how much you'll need. You can find a number of these online worksheets in the Resources section below. Consider your age when using these worksheets. Some are designed for younger people while others take into account an older, near-retirement age. Fidelity Investments, in particular, gives each age group their own worksheet to use.

Now that you have a goal in mind, start saving to reach it. This is the next step in 401k planning and will help you achieve enough savings to retire comfortably. If one of these online calculators shows that your current savings rate won't be enough, ramp it up. There are thousands of ways to save money, including eating out less often. Do whatever you can to cut your spending and put away more for your retirement. Use the calculators to show you how even a small difference in savings each money will have a huge impact when it comes time to retire.

Another one of the great 401k tips is to take a look at your current investment options. Most people use company 401k plans, putting them "at the mercy of whatever [their] employer has plugged [them] into (Kristof)." A way around this problem is to try investing more money outside your 401k. Always contribute enough to match your employers contribution to your 401k, but set aside extra to invest how you choose.

Remember, the stock market rarely does as badly as it has recently. Don't panic and sell all of your stocks at the low point; instead, try allocating your assets better. Here's a simple calculation to help you decide how to do that. Subtract your age from 110. Invest the result in stocks, the rest in bonds. For example, if you're 30 years old, invest 80% in stocks. If you want to play it on the safe side, subtract from 100. You can also take a look at target-risk funds, which allocate your assets based on when you're planning to retire.

If nothing here helps you, try waiting to retire for a year or so. This is plenty of time to give you better Social Security income, as well as more money in your savings and a longer amount of time to invest your money. You'd be surprised how even two years can dramatically improve your ability to retire in comfort. Remember, there's plenty of 401k advice out there; the key is to use what will help your particular circumstances. Take into account your age and when you plan to retire when listening to any 401k help.

• MSN Money Retirement Calculator
• AARP Retirement Calculator
• CNN Retirement Calculator

Kristof, Kathy. "Resuscitate your 401k in 5 steps." MSN Money. 2 June 2009. 14 June 2009. http://articles.moneycentral.msn.com/Investing/Extra/resuscitate-your-401k-in-5-steps.aspx