The First Step to Rebuilding Your Retirement

The Great Panic of 2008 blew a big hole in millions of Americans' retirement portfolios. Millions more didn't have significant retirement savings to begin with, and recent events haven't exactly enticed them into the investment markets.

Either way, those folks are off-course, and that's a problem. A secure, comfortable retirement may be moving out of their reach. If that describes you -- or if you just think it's possible that it might -- the good news is that there are simple actions you can take right now to get yourself back on track.

And for nearly everyone, these actions start in one well-defined place.

Start with the centerpiece
For most people, their workplace savings plan -- the 401(k) or 403(b) or 457 plan offered by their employer -- is the centerpiece of their retirement savings strategy. Even if you've rolled past balances into an IRA, and even if your IRA balance is a lot bigger than what's in your 401(k), I still say that your 401(k) is the centerpiece. Why? Because that's where your new contributions are going. It's where the action is.

For many, though, their retirement plan balances have had a rough year. Even great mutual funds got clobbered. Just look at these retirement plan stalwarts:

When even the "good" funds lose a third or more of their value, it's disheartening. It's tempting to rush in and do something to your portfolio. But if you're happy with your asset allocation and your current investments, you may not need to do anything more than wait for the market to recover.

For the rest of us, the first step to rebuilding your retirement is to get your 401(k) in order. Follow these steps to get it done.

Step 1: You're enrolled, aren't you?
If you're already enrolled in and contributing to your employer's workplace savings plan, congratulations! You can move on to Step 2. If not … what are you thinking?! According to data from the Employee Benefit Research Institute, about one out of five workers who are eligible don't participate in an employer-sponsored retirement plan.

That number will come down over time as more employers adopt auto-enrollment provisions, but … c'mon. If you're not enrolled, get on the phone to your benefits office and get it done right now.

Step 2: Get the match!
One sad consequence of the difficult economy has been the decision by many employers to reduce or eliminate their 401(k) match. If that has happened at your workplace, that completely stinks, and you have my total sympathy. But most plans are still offering a match of some kind. Make sure you're contributing enough to collect all of whatever your employer is offering right now. That's free money -- don't leave it on the table.

Step 3: Get a plan.
So, you're in the plan and you've got some money to invest. Now you need an asset-allocation plan to figure out where to put it.

An asset-allocation plan is essentially a roadmap to wealth -- it shows you how to invest to maximize your chances of return while staying consistent with your time horizon and your tolerance for volatility. Odds are, your employer or your plan's provider have a web-based tool that will give you a decent asset allocation plan built around the options in your plan.

Those can vary in quality -- generally speaking, they err on the side of being too conservative, thanks to the legal department -- so I suggest you sanity-check the recommendations you get with an independent source. For example, The Fool's Rule Your Retirement service maintains some great model portfolios for exactly this purpose. (If you're a subscriber, you can log in and look under the "Resources" tab.)

Step 4: Don't mistake your plan for an ATM.
401(k) loans are easier to get than ever, but they're still bad news: They take your money out of the market, and they can increase your tax burden. Save them for genuine emergencies.

Step 5: Get help if you need it.
This stuff isn't easy. If your plan has a lot of options, or if you're trying to make your 401(k) work with your IRAs as parts of a single asset-allocation strategy (a very good idea, by the way), getting expert help might be just what you need.

But expert advice can be expensive, and in this economy, that might not be a sensible option for you. As a middle ground, consider giving the Fool's Rule Your Retirement service a try. They've got an extensive library of articles, fund recommendations, asset allocation help, and -- yes -- a professionally staffed discussion board where you can get your questions answered quickly. Click here to access those resources absolutely free for 30 days.

Fool contributor John Rosevear has no position in the companies mentioned. Novartis is a Motley Fool Global Gains pick. Berkshire Hathaway is an Inside Value and a Stock Advisor recommendation. The Motley Fool owns shares of Berkshire and has a disclosure policy.