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by Terri Gruca
(WCCO) Financial planner Nicole Middendorf has agreed to tune-up Christine Brown's 401K, and you can use the tips Mittendorf gave Brown to tune-up your own retirement plans.

Brown has had a rough ride lately, between a divorce and credit card debt. Retirement hasn't exactly been a priority for her and since there is no guarantee Social Security will be around when Brown, 42, retires, she needs to do her own saving.

"You have no idea how happy I am to have somebody look at this mess," Brown said.

As a computer programmer, Brown has a great retirement plan at work. Her employer matches forty cents for every dollar she saves. Still, she's currently making one of the biggest 401K mistakes, by not contributing.

"The hardest part is just starting," explained Middendorf. "And so you can usually find some money somewhere. Plus too, when you put money in a 401K plan, you're paying less in taxes, so it's a double benefit to you."

After looking over Brown's paperwork, Middendorf found money alright. Brown has a variable life insurance policy that combined insurance and investments. It was eating up $3,000 a year.

"If you were maxing out your 401K and doing your Roth and you still had money," Middendorf told Brown. "Then this would be an option, but I think we can probably get rid of this."

That single move will free up enough money for Brown to pay down credit cards and start saving for retirement again.

Fortunately, Brown didn't make the second big 401K mistake, which is taking a loan on your 401K plan.

"That's a no-no," explained Middendorf. "It's usually one of the most expensive loans that you could ever take. You really, it's the ultimate last resort is taking a loan on your 401K."

The third mistake people make is not opening up and reading their statements.

"'What did your 401K perform last year? How did you do?'" Do you really know the answer to that question? If you don't, you really do want to know that answer," said Middendorf.

If you only made three or four percent last year, that's not good. Your 401K should be making more than that.

You shouldn't check your 401K every day or even every month. That's a problem in itself, paying too much attention to your plan. But at least once a year, look at your 401K, see how it's performing and make necessary changes.

The last big slip-up people make with their 401Ks? Bad allocation, with too much money in one stock or one type of investment. Remember Enron?

"What if you wake up tomorrow and the company's in bankruptcy or what if you wake up tomorrow morning and there's a horrible news report and the stock has dropped 20 percent?" asked Middendorf. "You just have way too much money in one company, and you're putting yourself at too much risk."

Brown is guilty, too.

"You're pretty heavy in international, you've got a lot of money that is based overseas," noted Middendorf. After looking at Brown's investments, Middendorf determined Brown has too much 401K money in international stocks, in bonds and in a low-interest money market account.

"You really cannot afford to have money in a money market account inside your 401K," she said.

Middendorf's advice? Make sure your money is spread out among small, medium and large company stocks, international and bonds. Aggressive investors may want to put less in bonds. Those nearing retirement who'll need their money soon should put more in bonds. Middendorf gave us an example of a good growth portfolio:

Large-company stocks: 62 percent -- value and growth stocks
International stocks: 10 percent
Mid-cap stocks: 5 percent
Small-company stocks: 8 percent
Bonds: 15 percent

Leaving Middendorf's office, Brown was encouraged.

"I feel really good about it," she said. "Having a plan was helpful, really helpful."

It didn't take long to get Brown back on track and for many investors, a 401K tune-up may do more than improve chances of a comfortable retirement. It can help you worry less about money now.

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