If the recent mood swings in the stock market and your declining 401k balance are making you feel like you’ll never be able to fully retire…you’re not alone. The market gyrations are giving me more gray hairs every day and I’m going to have to start buying Grecian Formula in bulk to keep my youthful looks.
Seriously though, this market volatility is causing a lot of angst but there are some things you can consider doing to make retirement a reality.

1. Control your emotions - take a deep breath. During this volatile period and every volatile period there is always a cycle of greed and fear. Greed and fear are the two things that move the market. We have periods where the markets get ahead of themselves and investors become too optimistic – and other periods where investors begin to panic, throw the baby out with the bath water, and become overly pessimistic. We are obviously in the throes, or very close to the latter scenario. This volatile period will pass like all the others have.

2. Consider increasing your annual savings and retirement contributions. This is one area you have direct control over. It may require that you reduce your current spending or earmark your raise for savings, but putting more away now will allow you to buy more shares at cheaper prices (since the market is lower). The younger you are and the earlier you start saving, the more years your money can grow tax deferred inside your 401k or IRA. This tax deferred compounding can mean thousands or tens of thousands of extra dollars for you to spend come retirement time. Also, every dollar you invest in your 401k/403b plan today is one less dollar included in your income this year so you can lower your tax bite. Employee’s elective contributions are limited to $15,500 per year in 2008 ($20,500 for those people age 50 and over). How much are you saving? Can you save more?