The stock market has recovered a bit this year, but the news remains pretty grim. Retirement accounts got savaged in the recent meltdown, leaving only 13% of Americans "very confident" about their ability to retire comfortably.
Unfortunately, throwing temper tantrums and swearing at all the people you hold responsible -- from greedy Wall Street executives to the experts who picked the mutual funds that populate your company's 401k plan -- will not get your money back.
"You cannot think about what you had," said Adam Bold, the founder of The Mutual Fund Store in Overland Park, Kan. "What you need to focus on is what you can do from this point forward."
Here are five steps to getting your 401k and your retirement back on track.
Step 1: Stop the guesswork
As worried as Americans are about our retirement prospects, the way most of us have decided we're in bad shape is just as scary, says Catherine Collinson, the president of the Transamerica Center for Retirement Studies.We guessed.
When Transamerica recently asked Americans how they determined how much money they needed to retire, less than 40% used a reasonable strategy -- such as consulting an adviser, estimating future needs by evaluating current expenses or even filling out a worksheet. Most "had heard" that they needed more or just plain guessed.
We do know 401k's and individual retirement accounts have shrunk in this market. But it's hard to get back when you didn't have a clear goal to begin with.
There's no set amount that every person will need. The right amount of savings for any retiree is going to depend on how much he or she spends, what other resources -- such as Social Security and pensions -- are available to fund retirement and how long the person plans to work (and, yes, life expectancy). One individual could need millions; another might get by comfortably with a fraction of that.
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Admittedly, it's tough to project pivotal details such as these when you're decades away, but there are plenty of tools available to help you do more than pick a number out of the air.
MSN Money, for example offers a retirement income planner that will give you a graphic illustration of how far your current savings program will take you, including the age you'll be when you run out of money. AARP and CNN offer similar online worksheets.
The catch: When you plug in the exact same information into each of these worksheets, you get different answers. That's because all these interactive worksheets embed different assumptions about investment returns, inflation, Social Security and taxes. The younger you are, the more the impact of those sometimes invisible assumptions affect the result.
Collinson suggests that you either look closely at each worksheet to see whether you agree with the assumptions or use several worksheets and figure that your answer should be an average of their results. Because retirement planning is an inexact science, what you're looking for is a good ballpark estimate, not a down-to-the-dollar figure anyway, she said.
Fidelity Investments, a big mutual fund company based in Boston, has a different approach. The company, which operates 17,000 plans for corporate employers, has one worksheet -- the Quick Check -- for people under 40 and a far more detailed one -- the Retirement Income Planner -- for people who are closer to retirement.
"At a younger age, it's not a precision decision," said Michael Doshier, a Fidelity vice president of tax-exempt services. "It's much more about the big questions, like whether you participate in a 401k when you can. When you're closer to retirement, you need a far more detailed process."
Both the Quick Check and the Retirement Income Planner are available free, whether you're a Fidelity customer or not. But you may need to register on Fidelity's site to use them.
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Can I retire?With many 401k accounts down by 30% to 40%, consumers are looking for a new way to save for retirement.
Step 2: Save more
If the calculators leave you convinced that your present savings patterns will make your retirement a train wreck, you need to save more. The recession has already got millions of consumers finding imaginative ways to save money and cut costs, from making their own cleaning supplies to packing lunches and eating out less.Cutting costs does three good things: It boosts your savings, teaches you to live on less and gives you more to tuck away in your retirement accounts.
Think you can't cut enough to make a difference? Go back to the calculators and plug in what you think you can change.
Consider a 40-year-old earning $50,000 who has $100,000 saved and is setting aside $500 a month. The AARP calculator estimates that he'll fall 25% short of needed savings, assuming that he lives to age 95 and spends $35,000 annually. But, if this same individual were to save an extra $250 per month -- and could subtract the $250 per month, or $3,000 per year, from his future retirement spending -- he'd be just 12.4% short by their calculations.
Continued: Check your investment options
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