5 Steps to Maximize Retirement Savings

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First, the reality: There are no magic bullets that can restore your retirement account to where it was before the current economic crisis.

"What it's worth now is what it's worth," says Harold Evensky, a certified financial planner and president of Evensky & Katz, a financial advisory firm in Coral Gables, Fla. "There's no guarantee you're going to bounce back."

Evensky recommends investors start by revisiting and perhaps adjusting their retirement goals. "Maybe you don't need to bounce back. Perhaps you just need to invest more intelligently and diversify," he says.

In addition, Evensky suggests that investors proceed cautiously in the current economic environment. "If anyone is discovering the holy grail now, be suspicious. Be careful of some of the new things coming out. Try not to chase the next great thing."

That said, there are some actions investors can take to maximize their retirement accounts, including the following.

1. Manage expenses: Many individuals or couples, especially those who work for different companies or have changed jobs over the past few years, have multiple retirement accounts, and are paying fees on each of those accounts. Now is the time to consolidate your retirement savings into just one or two accounts to reduce fees and costs. Be sure to compare the costs of your current plans and any new ones you may be considering, and keep an eye out for hard-to-spot administrative fees that can siphon off funds from your account. Also, having fewer accounts can also make them easier to manage when it's time to start making withdrawals.

2. Diversify your savings: If you employer has stopped matching your 401(k) contributions, this might be a good time to consider diversifying some of your retirement savings to a low-cost IRA -- say, one offered by a mutual fund company such as Vanguard. These accounts offer similar tax advantages to 401(k)s, and will give you an opportunity to set up and manage a retirement account separate from your employer, which might prove beneficial if your current plan is costly.

3. Consider a Roth IRA: Younger investors might want to consider moving part of their retirement savings to a Roth IRA. The contributions will come out of after-tax income, but that might prove beneficial in the long run, since the eventual withdrawals will be tax-free, and will likely be taken when an investor's tax rate is significantly higher.

4. Write off losses: A strategy called "tax loss harvesting" allows you to write off any investment losses you have, but this applies only to taxable investments, and not to traditional retirement investments accounts such as IRAs. However, it can apply to a Roth IRA. Generally, the strategy calls for selling off your investments, taking the loss, and claiming a tax deduction up to $3,000 for the calendar year. If your net loss is more than $3,000, you can carry it forward into the next year. Also, after 30 days, you can repurchase the investment without a penalty.

5. Seek expert advice: Finally, don't panic. This isn't the time to stop contributing to your retirement accounts. Remember, any investments you make now are being bought when the market is down, so you actually have more purchasing power than you realize. Many stocks can be had at bargain-basement prices. Seek the help of an expert by visiting a financial planner or CPA, and set realistic goals, build a well-diversified portfolio and hold tight until the market improves.

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