First Person: Investing Again After a 401(k) Wipeout

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According to my latest 401(k) statement, I'll receive $3 a month in retirement money due to the money I've saved in the account so far. At age 40, I am essentially starting over after a combination of factors led to the wipeout of my former 401(k). According to a recent article by U.S. News & World Report, a new study shows the retirement shortfall may top $14 trillion. According to a study, "The Retirement Savings Crisis: Is It Worse Than We Think?" a lot of Americans have virtually no retirement savings. In my case, my retirement may come up short in another 25 years, but not for a lack of saving for the future.

Rolling over at the wrong time

Even though I consistently contributed money to my 401(k), my account took a huge hit when the stock market tanked during the recession. When the company I worked for sold to another company, I sold all my positions in my 401(k) as part of the rollover process. My major mistake was locking in my losses instead of keeping the same mutual funds in my new Rollover IRA. I waited about a year before purchasing any individual stocks, but unfortunately the stock market was at a historic high. Just after making my selections, the stock market began its "correction," which means the value of my Rollover IRA is even less than the value of my former 401(k) after the Great Recession.

Meeting retirement savings targets

With the fresh 401(k) account with my new employer, I have the option to invest in target-date funds. Instead of trying to pick the right stocks at the right time, I'm taking a different approach with my new 401(k) at age 40. I simply pick a target-date fund that matches the year I want to stop working and access my retirement savings. According to the recent study, the median retirement account balance is $3,000 for all working-age households and $12,000 for households made up of people nearing retirement. My goal is to save 10 percent of my income for the next 30 years.

Anticipating the next wipeout

According to some experts, I shouldn't feel too safe about putting some of my retirement savings into bonds. A recent article by MSN Money suggests we could be in the middle of a bond bubble. I wouldn't be surprised if the 30-year bull market in bonds came to a screeching halt in the next few years. At the same time, I'm tired of trying to outsmart the financial markets. By simply saving my money into a target-date fund, I'm admitting that there is financial uncertainty out there. I feel a sense of relief knowing that I have time for a second shot at saving for retirement.

Evidently, 32 percent of the working households between the ages of 55 and 64 have no retirement savings. In the next 15 years, I should be able to save more than the median balance of $100,000 for those people nearing retirement. Hearing about the different financial regrets of baby boomers has spooked me into getting serious about saving for retirement. I don't want to be living on Social Security alone because that $3 from my 401(k) won't buy me a cup of coffee.

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More from this contributor:

I'm Raiding my Retirement Accounts

I'm Not Retiring to a College Town

Playing Catch-up with my Retirement

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