Taking Care of Your 401(k)

"I become a mid-level client with them, and I get can extra financial planning assistance," he says.

But many 401(k) plans offer a menu of about 15 funds in their plans, while an IRA opens thousands of options. "There's much greater investment flexibility in an IRA," Meigs says.

Because you can't borrow money from your IRA, it's less attractive for parents of children near-college age, or prospective homebuyers. Older employees taking early retirement can also opt for equal annual payments without penalties.

Catch Up, Plan Ahead

If this refresher course is causing you to despair, don't worry. Tax legislation in 2003 increased the so-called catch-up allowance for participants over 50. You can contribute another $3,000 annually, for a maximum of $16,000 this year, with an additional $1,000 each subsequent year. Do it.

You won't be alone. According to Hewitt, older workers with retirement looming make larger average contributions. By Schwanbeck's estimate, the difference between pretax and net income in a 50-year-old's paycheck means that $3,000 contribution only reduces take-home pay by $2,000.

On the other hand, Schwanbeck also advises being prepared to use your 401(k) money sooner rather than later, and if you do, consider adjusting your asset allocation to reflect that.

Since your savings are available without penalty, starting at 59 1/2 on, but full social security benefits aren't paid out until age 67, you can use your 401(k) withdrawals to help bridge the gap.

But, rather applying the classic 30% stock and 70% bond allocation for that stage in life, keep 40% to 50% in stocks for bigger gains during those years you are drawing down funds.

"The IRS actuarial tables used to stop at 92 -- now they go to over age 100," Schwanbeck says. "You're going to live longer, and you'll have 20 years to figure out what to do when you're totally on your own financially."