• 72°

Plan for retirement – This week and every week

You might not see it on your calendar, but Oct. 18-24 is National Save for Retirement Week.

This event, endorsed by Congress, is designed to promote the benefits of saving for retirement and to encourage workers to take full advantage of their employer-sponsored retirement plans—so you may want to use this week as a starting point to do just that.

For many of us, the need to boost our retirement savings is critical. In fact, some 53 percent of Americans report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000, according to the 2009 Retirement Confidence Survey, sponsored by the Employee Benefit Research Institute.

Also, the decline in popularity of defined benefit plans—the traditional pension plans that make payments based primarily on years of service—is one reason saving for retirement has become such a major issue.

From 1986 to 2008, participation in defined benefit plans among full-time workers in private industry declined from 76 percent to 24 percent, according to the Bureau of Labor Statistics.

In many cases, defined benefit plans have been replaced by defined contribution plans, such as 401(k) plans, which means that much of the responsibility for adequately funding retirement has shifted from the employer to the individual.

Given these factors, it’s clear that you must be proactive in building resources to achieve the retirement lifestyle you’ve envisioned.

So consider taking the following steps:

Contribute to your 401(k) or other employer-sponsored plan. If possible, try to put as much as you can afford into your 401(k) or other tax-advantaged, employer-sponsored plan, such as a 403(b) or 457(b). It’s a good idea to spread your 401(k) dollars among the available investments in a way that reflects your risk tolerance and time horizon. And as your income increases, try to increase your 401(k) contributions. Due to the prolonged economic slump, some employers have cut back or eliminated their 401(k) matching contributions, but if one is offered, put in enough to earn it.

Open an IRA. Even if you contribute to a 401(k), you are probably still eligible to open an IRA. A traditional IRA can grow on a tax-deferred basis, and a Roth IRA grows tax free, provided you’ve had your account for at least five years and don’t begin taking withdrawals until you’re age 59 1⁄2. Plus, an IRA provides more investment options that a 401(k) plan.

Rebalance your investment portfolio regularly. During the long bear market, many new retirees faced difficulties when they were forced to tap into investment portfolios whose value had dropped significantly. You can help avoid this problem by periodically reviewing and rebalancing your investments. For example, if you know you’re going to retire within the next five years, you may want to consider shifting some assets into shorter-term investments that may not be as susceptible to market volatility.

A financial adviser can help you review your specific situation. By making the right moves, you can turn every week into a “Save for Retirement” week. And you’ll probably be glad you did once your actual retirement week arrives.