What's worse, a new Nationwide Financial study suggests most people don't even appear as concerned about their personal finances and retirement as perhaps they should be.

So what can you do if you want to take full advantage of your employer-sponsored retirement plan -- provided, of course, that you have one? Here's what several experts say:
 

1. Enroll now: Many people haven't even taken this logical first step. One in three eligible workers doesn't participate in an employer-sponsored retirement plan, says Steve Deschenes, executive vice president of Fidelity Institutional Retirement Services Company. For some, inertia plays a role. Deschenes notes the gap between when a worker becomes eligible to start saving in a 401(k), typically six months after becoming employed, and the time they start investing in one is often up to three years. "Waiting means that you lose the power of compounding," he says.

        To be fair, many U.S. workers are pinched today, unable to save for retirement and make ends meet at the same time. But if they don't save now, they surely won't be able to make ends meet later in life. Increasingly, companies are automatically enrolling newly hired employees in the 401(k) plan. A new Hewitt study found almost half of companies offering a 401(k) say they are likely to automate certain features of their plan, including enrollment, to increase the percent of their work force participating.

2. Contribute the maximum allowed: Workers deferred on average just 7 percent of their compensation, or $4,700 (excluding their employer match) in 2003 -- the same rate as in 2002, according to a Fidelity Investment analysis of 10,000 401(k) plans, representing 8.2 million workers. Only a fraction of those workers set aside the maximum allowed. Indeed, a tad more than one in 10 reached the maximum contribution limit in 2003, says Fidelity's Deschenes. Theresa Cruz Myers, a marketing vice president for Nationwide Financial Retirement Plans, notes that the maximum rises to $14,000 in 2005, and employees age 50 or older can make additional catch-up contributions of $4,000.
 

3. Sign up for automatic contribution increases: If you can't contribute the maximum, it's worth trying to make small increases to your deferral rate, says Lori Lucas, director of participant research at Hewitt Associates.
 
        "A two-percentage-point annual increase in 401(k) savings may make a significant difference in workers' balances by the time they reach retirement age," Lucas says. For example, a worker age 30 earning $40,000 a year who contributes 6 percent of salary to a 401(k) plan will have about $770,000 by retirement (assuming a 7 percent annual rate of return and a company match of 3 percent). If that same worker increases the contribution to 8 percent, there will be about $940,000 -- or $170,000 more -- by retirement age.

        As with 401(k) enrollment, many firms now offer workers the chance to sign up for automatic contribution increases. If you are among the millions who don't increase your contribution each year, consider signing up for this option if available. If it's not available, consider asking your employer to introduce this option. It's one way to beat the inertia that seems to come with saving for retirement.

 
        At a minimum, Deschenes suggests contributing at least enough to take advantage of an employer's matching contribution, if one is offered, and to consider setting aside any raises.

        Of note, a recent Employee Benefits Research Institute study reinforces the need to increase your contribution each year. It shows that it takes 13 or more years of saving in a 401(k) to build a nest egg that would last, in combination with Social Security, well into retirement.

        At present, EBRI says just one in five participants have reached that threshold. For his part, Deschenes says workers should strive to save more than the 10 percent pretax that people often recommend. He says that percentage reflects perfect-world saving, instead of the real world where jobs are lost and months can go before you start saving again. "It's important to save as much as you possibly can," he says.

4. Diversify: Despite having 14 to 18 investment options, many 401(k) investors have all their eggs in one basket. Indeed, the Fidelity study found one in four 401(k) participants are invested in a single conservative option, typically a money market or stable-value fund. Putting your 401(k) eggs in different baskets won't guarantee profits or prevent losses. But it could help limit losses and increase upside potential. For her part, Lucas says workers should take advantage of online education, tools and even third-party advice that many employers now offer, which can help them choose an investment mix that's well diversified and matches their tolerance for volatility.

5. Rebalance: Many 401(k) investors let the markets rebalance their portfolios. That means the percent they invest in stocks and bonds reflects more what's happening on Wall Street rather than their own needs and circumstances.

        Says Lucas: "It's important for employees to re-review their mix of investments at least once a year and whenever their circumstances materially change." If available, consider signing up for options that will automatically rebalance your portfolio.

6. Simplify: 401(k) investors who have neither the time nor desire to actively manage their 401(k), diversifying and rebalancing and the like, do have options that take the pain out of investing. If available, investors can invest in so-called life-cycle funds, target-retirement funds or a managed account.

        Life-cycle or target-retirement accounts invest in a pre-set mix of stock and bond funds that match up with the investor's planned year of retirement -- 2025, for instance. These funds automatically rebalance and adjust their holdings to become more conservative as the target retirement date approaches. If you use a life-cycle fund, be sure to jettison, with the exception of your company stock, all other funds in your 401(k) since this is a one-size-fits-all type of fund.

        With a managed account, you in essence hire an investment firm -- usually it's the same firm that provides the plan -- to manage your money for a fee, typically around 1 percent of assets under management. This option works best for those who want simplicity but prefer something other than the cookie-cutter approach used by life-cycle funds.

7. Analyze the big picture: Saving more and investing more wisely in a 401(k) is only part of the challenge. Cruz Myers says you need to evaluate your 401(k) in the context of the bigger financial picture.

        "The 401(k) is but just one component. You have to determine how it fits in with other components" she says, referring to Social Security, other savings vehicles and any traditional pension plans.

        Knowing how the 401(k) fits in can help you determine what if any gaps in retirement savings and retirement income you may have. And once you know those gaps, Cruz Myers says you do something about it -- like save and invest more wisely.