Retirement investing is important, but not quite as effortless as it's sometimes made out to be.

Onward and upward forecasts for 401(k) employee retirement accounts often disregard that financial markets carry inherent risk, which means periods will occur when asset values decline. If a sharp decline occurs close to retirement, it spells serious trouble for investors who counted their chickens before they were hatched.

That's why ongoing asset allocation, low-expense selections, and considering your 401(k) in the context of all your investments should be your game plan.

The good news is that 401(k) investors have continued to invest 6 to 7 percent of their income in these important retirement savings vehicles automatically despite the market volatility of the past two years. In addition, the majority of companies that temporarily suspended their matching contributions to 401(k)s are expected to reinstate them by the end of this year.

The bad news is that the panicked moves by investors into more conservative portfolio choices amid the downturn seems to have frozen their investment confidence.

"At the peak of the stock market, 401(k) investors had 70 percent of their portfolios in equities, and by the bottom of the market a year ago that number had fallen to 50 percent," says Pamela Hess, director of retirement research for Hewitt Associates, in Lincolnshire, Ill. "Even though the market has rebounded, no money moved back into equities, and that means it has been locked into inferior-performing investments because they have no overall strategy."

Pin some of the blame on the 401(k) offerings of many employers. They began to offer a bushel of different investment choices that were more confusing to the average worker than diversifying. The large number of names and styles of mutual funds made many investors decide to stick with the simplest money-market type of choices. They didn't want to invest in something that wasn't prudent or wind up with overlapping funds.

A dramatic rise in the offering of target-date funds, which aim toward a date that's usually retirement age, has been the strongest 401(k) trend in recent years. The problem is that, although these start out with an asset mix favoring equities and gradually ease into more fixed-rate choices as the end-date nears, they carry no guarantee.

Their asset allocation steps do not preclude a possible nosedive such as they took in the 2008 debacle. Results of various target funds also differed considerably.

"For many people, target-date funds may be the best option, but for others it is a terrible choice because age is not the most important criteria for investing," warns Harold Evensky, certified financial planner and president of Evensky & Katz, in Coral Gables, Fla. "Two 60-year-olds with the same income, family, and neighborhood may have radically different retirement needs and each has to look at the risks and rewards of their particular portfolio."

Fewer 401(k) investors made an investment trade in the past year than in the five years that Hewitt Associates has been tracking such moves. Their balances still haven't returned to their levels at the end of 2007, the consulting firm found.

"While the 'stay the course' message has been heeded by 401(k) investors, the message now should be to do some realistic planning for their account," says David Wray, president of the Chicago-based Profit Sharing/401(k) Council of America. "They changed their allocation for new money to be more conservative, but they should be figuring out what they're actually going to need to spend in retirement."

Wray encourages investors to look beyond the names of funds and examine their prospectuses to see what they're really getting. For example, if you have a greater risk tolerance than your target fund, it may be too conservative.

"More employers are offering tools to make better investment decisions and more companies are advertising that fact," says Hewitt's Hess. "It's a balancing act, in that companies want to give enough information but don't want to be in a position of telling them what to invest in."

Some companies are trimming back their number of investment choices to make them clearer, while others are adding brokerage self-directed accounts in which investors opt for stocks or exchange-traded funds.

Investors who aren't sure how to initiate a strategy could start with 60 percent stocks and 40 percent bonds, then adjust up or down from there, says Evensky. Stocks carry more market risk and bonds carry more inflation risk, so you must find the balance best for you, he says. Keep in mind all of your other investments when making your 401(k) decisions.

"Money in your personal account and money in your 401(k) should be treated holistically because all of it is your money," says Evensky. "Some people have the same mutual funds in their 401(k) as in their taxable accounts, and that means a lot of redundancy."

With investment returns likely to be modest for an extended period of time, expenses become more important, he says. An extra percentage in annual cost could have an impact on how much return you keep. He often recommends stock index funds for his clients' 401(k) accounts because their lack of active management means expenses are low, and you'll also be assured of market return.