How much money do I need to retire?

Retirement is expensive. In fact, if you don’t have $1.7 million in your 401(k) by the time you hang up your career, it might just be out of reach. Don’t let retiring comfortably become a source of stress. Look at how your retirement accounts and 401(k) are performing now. You might not have to do anything, but chances are your accounts are not performing at their fullest potential.

How we approach our 401(k)

At least that’s the sentiment of a group of 1,000 401(k) participants who were surveyed on behalf of Schwab Retirement Plan Services, Inc. The participants were all employed by companies that contribute to their 401(k) accounts — and also largely agreed on a few other retirement-related trends, which are disturbing enough without that daunting magic number of $1.7 million.

Most respondents indicated that the 401(k) — an employer-sponsored financial account supported by tax-deferred contributions — was their only or largest source of retirement savings. About two-thirds of them attribute their first investments to 401(k)s, and two-thirds of those people said they consider it savings rather than investments.

What this suggests is that most participants are not using their 401(k) account to its fullest potential.

Take a look at your retirement accounts

First, $1.7 million is a lot of money to put away even if you’re working steadily from ages 22 to 69. Typical contribution rates to a 401(k) are a percentage of salary in the single digits with a limited company match.

But on top of that, the Schwab survey found that most people are too dependent on the 401(k) model — and something as important as retirement money shouldn’t necessarily be in one centralized place.

The good news is that many 401(k) plans offer a wide variety of vehicles that can diversify your investment money.

Take the long view of your accounts

To gather some intel on how to best approach ones 401(k), we spoke with Jerry Braakman, chief investment officer of First American Trust, who overseas $1.5 billion in assets under management. “Retirement funds normally require investment over multiple decades and thus a long term view, which includes a reasonable allocation to equities. Concentrated positions is what gets investors into trouble,” Braakman said.

“To ensure reasonable return regardless of market and economic environment, proper diversification is paramount. Diversification should consider domestic versus foreign, market capitalization, growth versus value, bond duration and credit risk.”

Stay hands off

Financial advisors are an excellent resource for retirement planning, and many 401(k) plans have automated options that allocate the money for you depending on your retirement objectives.

Whatever your approach to your 401(k), make sure your investments are diverse — and consider seeking out more financial education in this important area.