401(k) fixes for all age groups

A 40% drop in your savings doesn't mean you'll have 40% less to spend in retirement, Jones says. Depending on your age, he says, it could shave as little as 10% from your retirement income — a deficit you can close by saving 1% more a year or working an extra year.

Investors who plan to work at least 15 more years should probably have about 75% of their portfolios in stock funds, Kohmann says. Older Gen Xers should gradually move toward a mix of 60% stocks and 40% bonds, he says. He suggests this allocation for the 60-40 portfolio: 35% large-company stocks, 10% small company-stocks, 15% international, 35% bond fund and 5% stable value or money market fund.

Todd Schoenberger, 39, who runs a money management firm in San Antonio, is taking an even more aggressive approach. He and his wife have all of their 401(k) in stock funds.

That aggressive approach cost them in 2008. Schoenberger's plan plummeted 40% in 2008. His wife's plan fell about 25%. With retirement many years away, Schoenberger believes they can afford to take risks. They have done "tremendously well" since the market turned around in March because they continued to invest during the downturn, Schoenberger says.

Boomers: Assess your risk tolerance, but don't shun stocks

Last year's losses were much more painful for this group, because they have less time to recover before retirement. Many boomers — those born from 1946 through 1964 — who sustained big losses will need to save more, work longer, or both.

But shunning the stock market entirely isn't a good idea, even if you're in your 50s and counting the days until you turn in your office bathroom key.

"You need to recognize that if you become more conservative, you have to be willing to save more to have the same probability of meeting your goal than someone willing" to invest more heavily in stocks, Jones says. "There's a price to being risk-averse. You have to give up more of your current income to save for the future."

He recommends that boomers invest 65% to 70% of their portfolios in stocks, with 35% to 40% in large-company funds, 25% to 30% in international funds, 15% to 20% in small or midcap stocks and 15% to 20% in bond funds.

Your other sources of income play a role in determining your investment mix, Kohmann says. An older worker who will receive a pension can afford to be more aggressive than one who will rely on her savings for most of her retirement income. The first worker may be able to invest up to 50% of her 401(k) in stocks, even if she's only 10 years from retirement, he says. For the worker without a pension, a portfolio of 40% stocks and 60% fixed-income investments may be more appropriate, he says. Here's his recommended breakdown for that investor: 25% large-company stocks, 5% small-company stocks, 10% international and 60% in a combination of bonds and money market or stable value funds.

The recession notwithstanding, many boomers are in their prime earning years, which means they should try to save as much as possible, says John Carl, president of the Retirement Learning Center, a retirement-plan consultant. Workers 50 and older are eligible to make catch-up contributions to their 401(k)s. In 2009, workers 50 and older can contribute an extra $5,500 to their 401(k)s, for a total of $22,000.

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