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To single mothers who need to salvage their 401K's...

Four Easy Ways
To Salvage Your 401K

Dear Single Mother,

It's not easy working long hours and raising kids on your own. You worry about making ends meet and putting food on the table. Things were going fine until the market collapsed. One month your 401K was doing fine and the next up to 60% of it was gone.

Not only are you concerned about college money for your kids, but there's your own retirement. Dealing with a sunken 401K is like trying to raise an old ship. Both are fragile, but if you follow a few simple steps it can be done. But first, let's take a look at why you may not have started the salvage process.

Four Reasons We
Don't "Salvage" Our 401K's

As a hard working single mother you're attached to every dollar you make. When you opened that envelope and saw your 401K statement, it hurt. This is because the first reason we don't salvage a 401K quickly is emotion. Think of all the hard work and hours you put into building it. You've dealt with overtime, rude customers and aching muscles. Finding out most of it was wiped out makes you angry.

Second, you realize it's lost too much value. The loss is so steep you feel like you can't make it up again. It's like finding a ship at the bottom of the abyss. The damage is so extensive, why bother to put it all back together?

The third reason is understandable. When something is difficult and we don't want to do it, it's easy to procrastinate. With a 401K you realize too much time has passed. Why go through the trouble of building it back up again?

And the fourth reason may surprise you. Maybe you decided to take other money and invest it elsewhere. You're so ticked off it's easier to focus investing in something else. I can't blame you there. But remember something about your 401K. You can grow it at any time. Don't leave it at the bottom of your personal finance ocean. It can be salvaged and even rebuilt to sail toward retirement.

Here are four easy ways to pull it off!

Four Easy 401K
Salvage Methods

Salvage Method #1: Slowly Add Value

Long before salvage experts bring up a ship, they attach lines or straps. But they do this slowly. It took weeks for divers to attach lines to one sunken ship. They had to make sure they were in the right spots. This is no different with salvaging your 401K. When you first started building it, maybe you added money at a steady clip. But in these tough economic times, moving slow is wise. Start by contributing 3-5%. You need all the money you can get from your paycheck. But putting in even 3%, let's you know you're still saving for the future. In time you'll be able to contribute 5-10%.

Salvage Method #2: Earn Side Money

When I was fourteen I needed to make some extra money. What did I do? During the summer I mowed lawns. I invested an extra 2-4 hours a week and it literally paid off. What can you do to add a few extra dollars to your income? Here's what the money will do. First, it'll allow you and your kids to have a little fun. Catch a movie or go to a special lunch. But here's something else it'll do. You won't have to invest more of your paycheck into your 401K. Let's say you can make an extra $1,200 per month writing resumes. Feel free to keep $800 for yourself and invest $400 into your 401K. You pick what side job you can do to earn some side money. I assure you it'll help you to salvage your 401K.

Salvage Method #3: Move Slowly

Expert Salvagers have a surprising method for moving a sunken ship. It's one I never thought could work. Once the straps or lines are in place, they'll begin to raise it. But they don't always bring it to the top. Instead the ship or submarine is moved underwater. They won't fully raise it until it's near the dock. Once the value of your 401K starts to rise, keep adding money slowly. Don't be tempted to invest 7, 8, 9 or 10% to your 401K, right now. If you move like the expert salvagers do, you'll be docking in your retirement sooner than you think!

Salvage Method #4: Restoration

Restoring an old boat or ship takes time. The work done is comprised of skill, patience and care. The same ingredients are needed to restore your 401K. The goal isn't just to start putting more money into it. You want to make sure it's strong and beautiful. For your 401k that means making it diversified with steady growth. Ask a Financial Planner to help you pick the right mix of mutual funds. They'll know what's bringing in a good return and ones to avoid.

As a single mother its tough out there. Personal Finance can be a "taboo" term to deal with. But if you start by using these simple steps, you'll get back on course for a much deserved retirement!

Clyde McDade is a Financial Copywriter. He's the author of the upcoming E-book, "How to Grow More Money for Retirement and Your Child's College Fund." He can be reached at

The information in this article is not to be taken as financial or investing advice. Always seek the services of a Financial Advisor, Accountant or Financial Planner.