If you were sick to your stomach when opening your 2008 year-end statement, don’t despair. Follow the prescription below to help improve the health of your retirement investments, and to help make you feel better, too.

Consider How Much Time You Have to Recover

Even if you are relatively young and just recently started investing for retirement, you may be discouraged — especially if your account had a lower balance at the end of the year than the amount you invested. If this is your situation, keep in mind that investing is a long-term proposition; your investments will take time to grow. If you continue investing regularly, you’ll be adding more shares to your portfolio while prices are low than you would if prices were high. This could end up serving you well in the future if you continue to be patient and invest wisely.

Experts recommend that you take advantage of any employer-sponsored retirement plan — like a 401(k) — up to the amount the employer matches, or to the maximum allowable contribution, if possible. In addition, investing the maximum contribution in an IRA now will help capitalize on your retirement savings’ potential for the future.

If you have 10 or more years until retirement, you can find some comfort in knowing that market cycles have historically recovered in an average of 10 months since 1945. Even if this recession extends for a longer period, those with a longer time horizon should have time to recoup losses. When the market does recover, consider moving toward a more conservative strategy the closer you get to retirement.

For those of you who are close to or in retirement, there is hope for you as well.

Focus on What You Can Control

Most of us have no control over the economy or market, so it’s counterproductive to waste time and energy dwelling on those factors. Consider the factors that you can control and what you can do to shore up your investments.

The three most important factors you can control are:

1. Your asset allocation and diversificatio n

If you’re close to or in retirement, it still may be appropriate to hold a small portion of aggressive investments. Even in a predominantly conservative portfolio, you can diversify among different types of fixed-income funds. In addition, a smaller portion of your portfolio may be diversified among different types of stock or aggressive bond funds.

Many investors fail to reallocate to a more conservative mix once their time horizon is looming. Whether this is from intoxication with the high-flying returns of the past, trying to make up for lost time in the market, or simply lack of attention, it is crucial to remedy this situation.

Your mutual fund company may provide target-date or time-based funds that make this easier. These types of funds are diversified and designed to automatically move you to a more conservative investment mix as you get closer to the time you need the money.

2. Your investment selections

While most advisors caution against making too many changes in your portfolio while the market is down, an exception may be if a fund has performed poorly against funds with similar investment strategies over a long period of time. Luckily, transfers among retirement funds won’t penalize you with a tax burden. Now may be a good time to purge your portfolio of chronic underperformers to buy good performers at lower prices.

3. How much you are putting away for retirement

Whether you started investing later or are trying to recoup losses, investing more now may help bridge the gap between your current retirement savings and how much you need.

Consider diverting some of your discretionary spending into savings. You may have heard of the latte factor, which involves giving up expensive coffee drinks or cutting out a restaurant meal weekly… potentially adding hundreds, or even thousands, of dollars to your annual savings.

Other ways of curtailing expenses are to renegotiate high credit card interest rates, transfer balances to a card with a lower rate, and renegotiate prices with other service providers. In today’s economy, companies may prefer giving you a better deal over losing a customer. It also may be worth consolidating debt in a home equity loan, maximizing your tax deductions while potentially lowering your rate. Mortgage refinancing is another popular way to reduce expenses.

Keep It Simple

Owning every type of fund available could sabotage your diversification plan. For example, if you own more than one fund of the same type, check to ensure there is not overlap between the funds. You may be taking on more exposure to a certain investment type if two or more of your funds have similar strategies or invest in the same companies. If you want to “set it and forget it,” then you may consider an asset allocation fund.

Also, if you have various retirement accounts with previous employers, a Roth IRA here, a Traditional IRA there, it can be hard just keeping up with all of your investments. Consider consolidating your investments with one or two fund companies that have served you well.

You can rollover assets from one or more former employer’s accounts, move stock investments to a fund company brokerage account, and house all of your IRAs with one manager. This will help company representatives identify redundancies and better advise you about whether your portfolio is in line to meet your goal by the time you retire. Many fund companies also offer online tools to determine whether your portfolio is on track.

Take Two Deep Breaths and Call Your Fund Company in the Morning

The initial disappointment you feel with your investments can be put in perspective. The entire market is down, so transferring your assets from one investment to another may be too hasty. As with any health issue, information is key, so contact your mutual fund company to find out what steps portfolio managers are taking to address the current environment. You also should consult with your financial advisor, if you have one, and ask questions about current strategies and trends and how all of these affect your overall financial health. It just may help you feel better and stay on track for a healthier retirement.

This article is for educational purposes only and should not be considered investment advice. Contact a financial professional or your fund company for information specific to your investments.