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Feeling pinched? It's no time to crack the nest egg.

Resist the urge to panic, say pros, and keep on investing for retirement.

By Margaret PriceCorrespondent of The Christian Science Monitor / August 18, 2008

Scott Wallace - staff

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New York

If the deflated Dow – only now showing some sporadic signs of life – has drubbed your retirement assets, you might be eyeing the safety of your mattress with new interest. After all, why pour more money into now-shaky investments?

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But do it anyway, experts say.

With the costs of everything from food to healthcare on the rise, there's an ever more urgent need to boost retirement contributions.

According to a new projection by consultant Hewitt Associates, today's workers on average will need fully 126 percent of their final pay every year after retirement to maintain their living standard.

Clearly, such news could hardly come at a worse time. Still, there's some promise. A recent report by the Charles Schwab Corp. indicated that many firms are strengthening 401(k) plans – easing enrollment, broadening investing options, even increasing matching contributions.

Retirement experts offer some dos and don'ts for handling retirement assets:

Three Dos…

•If your company offers a 401(k) plan, contribute a percentage that at least equals your employer's matching contribution rate. In fact, to help achieve an adequate retirement income, workers "should be contributing a double-digit percentage of pay," says Alison Borland, Hewitt Associates' defined-contribution consulting practice leader.

(IRS limits on contributions this year: $15,500, unless you're age 50 or older, in which case you can put in an extra $5,000.)

If participants in their 30s boost 401(k) contributions by 2 percent, they'll average 7 percent more assets at retirement than without this increase.

Workers who start putting money in a 401(k) plan – going from 0 to 2 percent of pay as contributions – will gain 25 percent more retirement assets than they'd have had without these savings, Ms. Borland reports.

•Rebalance your portfolio. Some of the markets' swings may have distorted your target allocation to stocks, bonds, cash, and maybe other asset classes.

Check your retirement account's current percentage holdings in each asset class. If you find any percentages exceed or fall below your targeted allotment, rebalance to intended levels.

According to David Wray, president of the Profit Sharing/401k Council of America, rebalancing a portfolio, which should be done at least annually, boosts returns by about 10 percent.

Thus, "if your investment goal is an 8 percent annual return, you'd be getting 8.8 percent. And over 20 years, the amount of money that represents is significant," he says.

•"Take advantage of today's stock market weakness – especially if you're at least 10 years away from retirement and have less than a 20 percent exposure to equities.

"And if you haven't put a portion of your stocks – at least 25 percent – in foreign markets, now could be an excellent time to boost those holdings," says financial planner Charles Failla, president of Sovereign Financial Group in New York.

•Seek investment advice. Many corporate 401(k) plan sponsors provide ways for employees to obtain guidance on handling their 401(k) accounts.

According to Hewitt Associates' research, 43 percent of companies offered online third-party advisory investment services last year, and among those that didn't, 47 percent planned to offer them this year.

Tapping such wisdom can pay off handsomely. Consider the results of Charles Schwab Corp.'s three-year study on the results of advice provided to participants in 401(k) plans it administered: Over the 2005-07 period, those seeking – and taking – Schwab's advice about 401(k) savings and investments averaged a 10.2 percent annualized return on investments.

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