Last Updated Oct 13, 2011 3:09 PM EDT
Here five common retirement planning mistakes and a few tips for avoiding them. Be forewared: There aren't easy answers. It will take time to navigate an effective course of action. The end result, however, will be peace of mind that you're doing everything possible in a tough environment.
Given the market decline in the past three months, you might be tempted to make retirement planning mistake #1: running for shelter and moving all your stock investments into "safe" fixed investments. Even worse, you may decide to stop contributing to your 401(k), telling yourself "What's the use if my accounts just plummet?" Those would both be bad moves. A recent study showed the highest average account balances were earned by investors who stayed the course during the 2008 - 2009 downturn -- that is, investors who maintained their equity allocation and continued contributing to their 401(k)s. Another study showed that target date funds worked well at helping investors avoid making rash moves during the downturn.
Your best investing strategy right now? As advocated by fellow CBS MoneyWatch bloggers Allan Roth and Larry Swedroe, decide on an asset allocation between stocks and bonds that's appropriate for you, ignore the scary headlines, and stick to your strategies during the tough times. Find some way to overcome your fear when the market goes down. After all, you're not just investing for the next year or two -- you're investing for the next 20 to 30 years.