RETIREMENT PLANNING » IRA & ROTH ACCOUNTS

Realizing that your retirement nest egg has dwindled away is a common symptom of this current recession; the good news, however, is that there are ways to go about rebuilding your funds.

This realization, however, has not yet arrived for the 60 percent of baby boomer investors who, according to a recent study conducted by Bell Investment Advisors, have put off retirement for one to four years due to lost investments and inflated prices.

Congress reported in March 2009 that over $3.4 trillion had been wiped out of retirement accounts due to the market crash last year, which left many with little to no nest egg. And now everyone's trying to figure out how to get that money back in a few short years. It's not easy to think that after years of saving, the money you diligently set aside and invested responsibly could be taken from you in less than a month. But there's no sense in crying over spilled milk. Instead, it's time to take action and start rebuilding your nest egg. Here are some steps you can use to get started:

1. Continue Funding Your 401k. You may feel a little leery about continuing to fund your 401k after the market crash, but it's something you'll have to try to trust in again if you want to build retirement up quickly. If you can add more to the pot comfortably, then do so. The limit for investors 50 or older in 2009 is $22,000. Take advantage of it if you can.
2. Work a Few More Years. This may actually be mandatory in your eyes seeing that the savings you had is simply not there to fund your current bills. But there may be benefits to working a few more years. You have more time to save your income and set aside more for your 401k. Also, some companies are buying out their employees so they will retire early. By waiting a few more years, you may fall into this lucky group of people.
3. Diversify Your Investments. You may be accustomed to playing it safe or extremely risky when investing. But now's the time to dive into a little of both. Yes, the market is still shaky. But by diversifying your investments, you can improve your chances of quick income with some security as well.
4. Try a Guaranteed Annuity. If a large chunk of your savings is gone, you can choose an annuity that guarantees minimum payouts no matter how the market is performing. However, if you choose this route, be aware that these types of annuities can bring steep fees with them.
5. Cut Back on Some Expenses. Now's the time to consider cutting back on some major expenses to save money. Not just clipping coupons and stopping magazine subscriptions; you may also want to think about downgrading your car(s) and trying to sell your house to buy a smaller one (especially if the kids are gone). These actions may not be necessary, but are things you might consider to accumulate funds.
6. Don't Give Up. When it feels that you've been defeated, it's easy to want to give up. But rebuilding your nest egg requires your diligence, determination, and confidence. In other words, don't let those bad days get you down. Pick yourself back up and continue your fight to get your retirement back.

Rebuilding your nest egg is something that can be done if you're disciplined, willing to plan and save, and simply believe you can do it. So keep fighting the fight and know in the end you're doing what's best for you and your family.

It doesn't take a financially savvy person to know that taking advantage of an employer 401k plan is a must for building a future retirement portfolio. However, some would say it difficult to choose between Roth 401k plan and atraditional 401k plan.

In general, both accounts are similar to each other in behavior:

• They both have participant contribution caps issued by the IRS annually
• They both are a way to plan for retirement
• Borrowing against the assets and accessing the assets have about the same stipulations

The main and most important difference is that by choosing a Roth 401k, you are contributing to the plan after taxes, and upon accessing the money at the legal time limit, no more taxes will need to be paid on the distributions.

Traditionally, 401k earnings contributed are made pre-tax, meaning the money is deducted directly from your paycheck and put aside into your retirement account. This deferral of your money can lower your tax bracket for the participating year, however taxes will need to be paid upon withdrawal of the funds - which may be a disadvantage since the more income you gain over your life time the higher your tax bracket is and in the end you may have to pay more tax on your savings.

If you are a worker facing the decision of which 401k path to follow - some factors to consider are: what stage of life and earning potential are you in? What you really need to gauge to formulate your choice is the expectation of your future tax rate. As mentioned earlier, if you are fairly new in the career game and expect your earnings and tax bracket to increase over time, it may more fitting for you to opt into a Roth 401k so you are not levied with a higher tax penalty in the future.However, if you are at your peak earning potential and actually expect your tax bracket to be lower in the future for whatever reason, you may opt into a traditional 401k to keep more of your money in your pocket.

Like any investment strategy, it is up to you to weigh the pros and cons and crunch the numbers. If you are not sure what is your best strategy, contact your tax preparer for some professional advice and counseling.

Learn more information about retirement plans how you can go about saving for retirement on Go Banking Rates.

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