Market Meltdown Advice: Save More

Investors who have watched their retirement funds melt like a snowman in the hot sun may be wary of putting money into their retirement accounts, but many financial experts are touting this strategy as a wise move. Even if the market recovers, they counsel, the days when investors could count on double-digit annual gains may be over, which means that much of the growth you’ll get in your 401(k) or IRA will come from putting more money into it.

Given the state of the stock market, beefing up your retirement account contributions may seem like putting good money after bad. A recent AARP survey of people over age 45 shows that more than a third agree. Not only have they not stepped up retirement account contributions, they’ve stopped putting in cash entirely. But the extra money doesn’t need to be exposed to the stock market’s wild swings; you can put it into a less volatile bond fund or a money-market fund.

Saving more may not seem easy, but there are ways to make it slightly less painful. One is to put your savings on auto-pilot. If you sign up for a 401(k) account, your contributions are taken out of every paycheck. If you’re putting money into a traditional or Roth IRA, you usually can sign up for the fund company’s direct investment plan, which lets the company transfer cash automatically from your checking account to your retirement funds.