10 Forces Conspiring Against Your Savings

Nevertheless, Congress is considering proposals to change the tax preferences for employment-based 401(k) retirement plans. According to the Employee Benefit Research Institute, changes to allowed tax deferrals could result in an average reduction in 401(k) account balances of 6% to 22% at Social Security retirement age for workers now ages 26 to 35.

Europe

It isn't just our domestic debt problems that can hurt your retirement portfolio.

The ongoing debt crisis faced by European and Mediterranean nations will likely remain a drag on our stock market here at home, creating volatility, uncertainty, market drops and even, potentially, the threat of recession.

The antidote is to reduce risk and head for "safe investments" such as bonds and cash. That strategy, however, offers a Catch-22: You reduce risk at the cost of forgoing upward returns, mired instead with the low rewards of inadequate yields. Cash will offer safety, but leave you with dead money.

Time

One of the great benefits of retirement savings is having a long time horizon that, combined with the power of compounding interest, can multiply your nest egg powerfully.

Unfortunately, time giveth, time taketh away. Look no further than those poor folks who were nearing retirement when the Great Recession hit in 2007-08. As many mutual funds floundered, so did those 401(k) plans and IRAs that were heavily invested in them, with many taking a 50% hit to their savings just as their home values also plummeted.

Like so many things in life, investing included, time heals all wounds. But that's assuming you have the luxury of time. When calamity strikes as you draw close to retirement, your game plan can unravel.

Unemployment

There is an obvious downside to unemployment. No job means no regular, automated 401(k) deferrals and employer match. Lacking workplace incentives, and the ease of participation, savings plans can get derailed.