This is a true story sent to me by a reader of my books. His family gave me permission to publish this sad tale, but requested I protect their anonymity.

Bill Hacknett (not his real name) had planned well for retirement. He was a senior executive with a major, publicly traded company. He had spent his entire working career in corporate America. When his company downsized, it was not a problem for him. Over his 30-year employment history, he had accumulated significant assets in his 401(k) plan and, in his late fifties, was ready for early retirement.

Then disaster struck.

I've got bad news for the 30,000 participants in Dell's (NASDAQ: DELL) $1.6 billion 401(k) plan. They're going to have to work another ten years to earn up to $202,000 in lost retirement savings, compared to the participants in the top-rated plan in its peer group.

Dell's plan isn't all that bad. It's about average.

It took me ten seconds to get this information. How did I do it?

I don't mean to pile on. I know looking at your 401(k) statement is so painful these days many employees don't bother to open it.

History tells us that markets recover over time. Your 401(k) will increase in value, but it will still be far short of what you will need to retire. Why?

Because of hidden costs that enrich 401(k) providers. These costs are totally unnecessary and could be easily eliminated if only your employer cared enough to do the right thing. Most don't.

There is no end of research indicating that index funds outperform funds that try to "beat the markets." I call these funds "hyperactively managed funds." Index funds are also far less expensive.

While "less expensive" is good for employees, it is bad for brokers and advisors to these plans because it deprives them of excessive fees. The porky pig fees in most 401(k) plans include undisclosed trading costs, the payment of excessive brokerage commissions, the practice of subsidizing record-keeping services with high fund management fees and the payment of marketing fees for selling the high-cost funds in the plan, among many others.

Let's see if I can touch on your worst fears:

A collapse of the banking system and the insolvency of the FDIC is surely among them.

The Comptroller General advised the Senate Banking Committee that both were likely in April, 1991.

An "unprecedented" worldwide "economic convulsion" -- Newsweek used the quoted language in September, 1998.

A fundamental change in the world's economic condition. Fortune reported on that view in September, 1998.

The worst economic conditions since the Depression. Time made that observation in June, 1970.

Investor "shock felt round the world" was breathlessly reported by Time in November, 1987, complete with a story about a trader who withdrew $100 from his ATM because it gave him "a sense of security."

Pillars of the NYSE crumbling from the onslaught of a huge bear graced the cover of Newsweek in September, 1974.

The triple whammy of "inflation, recession and a frantic bear market" was reported by Life magazine on the cover of its June 5, 1970 issue.

This is part of a series of columns by retirement expert Dan Solin. Please bring him your questions in the comments box and he will answer as many as he can.

Is this a good time to invest, or should you sit on the sidelines until the market has "bottomed out"? This is the most common question I am asked.

It would be great if there was a way to tell when the market had reached its low. If you could do this, you would be able to buy stocks when the markets were taking off and retreat to risk-free investments, like cash and Treasury bills, in down markets.

Unfortunately, the data on timing the markets is very dismal.

One large study looked at more than 15,000 predictions by 237 market timing newsletters over a 12-year period. At the end of the period studied, 94.5% of the newsletters went bust. Not very impressive.

The financial media likes to hype stories suggesting that the markets are tanking or are poised for a rebound. These predictions are usually inaccurate and generally unreliable.

Here's a better question for you to consider: Should you be in the markets at all?

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: Should I invest my 401(k) funds in company stock?

A: No.

A recent study revealed a very troublesome trend.

Most of the cash in the the retirement plans of some of the nation's biggest blue chip firms was sunk into company stock.

Since the Enron fiasco, employees are painfully aware of the dangers of investing their 401(k) funds in company stock. But it shouldn't take a meltdown like Enron to dissuade employees from making this mistake.

Don't be fooled into believing that, because you work at a company, you have some special insight into how that company's stock will perform.

Your paycheck depends on the economic health of your employer. Don't make the same bet with your retirement money.

You want a portfolio that has the right asset allocation for you and is globally diversified. If you invest in company stock, you are violating basic rules of investing by concentrating assets in one stock. This gives you much more risk, without a commensurate increase in expected returns.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: How do I choose between a 401(k) plan and an IRA?

A: You don't necessarily have to make a choice, since you are permitted to invest in both an 401(k) and an IRA, subject to limits on the amount of your contributions to each plan.

Most investors should contribute the minimum amount to their 401(k) required to trigger the maximum employer match.

Once you have maxed out your 401(k), consider a Roth IRA.

While contributions to a Roth IRA are not tax deductible, there is no penalty for early withdrawals up to the amount contributed, and no tax on investment earnings once you reach age 59 ½.

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: How can I find out what fees I'm paying in my 401(k) plan?

A: There is over $6 trillion invested in 401(k) plans.

It is a pot of gold that sends advisors, insurance companies and the mutual fund industry into a feeding frenzy of fee gouging.

Most 401(k) plans are polluted with unnecessary fees, some of which are disclosed and many of which are not.

It is a national disgrace that is imperiling a secure retirement for millions of hard working employees.

Ask your Human Resources Department or Plan Administrator for a breakdown of all fees in your plan. If they can't -- or won't -- give it to you, ask them to order a fee audit, where specially trained accountants can make this determination.

Remember, all costs in these plans directly affect your returns. You have a right to know what they are.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: What can I do if I have a lousy 401(k) plan?

A: Complain to your Human Resources Department or your Plan Administrator.

Here's how to get their attention.

Ask them why your plan is not as good as the one for members of Congress. You can view this plan at www.tsp.gov.

This $220 billion plan covers all federal employees, including the military. It has only index funds and Target Retirement Funds as investment options. It has extremely low costs.

This plan is geared to make it almost impossible for plan participants to make bad choices. Most 401(k) plans do exactly the opposite.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: How can I tell if I have a good 401k plan?

A: The best possible 401(k) plan would have no actively managed funds. It would have Target Retirement Funds, where the underlying funds are low cost index funds (like the Vanguard Target Retirement Funds).

It would also have a broad domestic stock index fund, a broad international stock index fund and a broad domestic bond index fund. All of these funds would have very low expense ratios.

This is the kind of excellent plan provided to the United States Congress and to other government employees, including the military.

Most 401(k) plans have brand name actively managed funds as investment options. My advice is to ignore them.

As long as you have at least three low cost, broadly diversified stock and bond index funds, and a selection of Target Retirement Funds, you have a decent plan.

A good plan would also have an independent advisor who agreed to be a "fiduciary" to the plan. This means that the advisor would have total allegiance to the plan participants and would not accept any compensation, directly or indirectly, from any fund that was included in the plan or from any other provider of services to the plan. Most 401(k) plans are not good plans -- at least not for the participants in the plan!

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: What investments should I select for my 401(k) plan?

A: For most employees with a 401(k) plan, the best investment option is a Target Retirement Fund. These funds allocate assets between stocks and bonds in amounts that are generally appropriate for most investors. Best of all, they automatically rebalance to become more conservative as retirement nears.

I like them because of their simplicity: You invest in one fund and have no other choices to make.

However, these funds are not for everyone. If you determine the asset allocation in a Target Retirement Fund is not right for you, you can customize your fund choices using index funds in your plan.

First, determine the right asset allocation (the percent stock and percent bonds you want in your portfolio). If your plan has a broad "domestic stock" index fund, invest 70% of the amount you have allocated to stocks in that fund. Invest the remaining 30% of your stock allocation in a broad "international stock" index fund. Invest 100% of the bonds allocation in broad, "domestic bond" index fund.

If your plan does not have these categories of index funds, you will need to determine which of the available options is closest to them. The unfortunate reality is that, with few exceptions, fund options in 401(k) plans make it difficult for employees to achieve market returns.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This post is part of a series where retirement expert Dan Solin offers simple answers to the ten toughest retirement questions. See all 10.

Q: How much should I save for retirement?

A: I have bad news and worse news.

Most experts believe you will need 75% of your "pre-retirement" income in order to live with dignity in your later years. In order to reach that goal you need to save 15% of your income.

That's the bad news. Keep in mind, that number includes any corporate match your employer provides.

The really bad news is that you have to maintain this rate of savings for 40 years, with no borrowing or pre-retirement payout.

Here is the real kicker: This calculation also assumes that you will achieve market returns with your investments.

Unfortunately, the average investor only achieves one-third of market returns because of high costs, poor investment choices and lack of financial education.

If you have less than 40 years until retirement and haven't been saving 15% of your income, you may need to start socking away 20% or more to catch up.

Remember, you need to be sure you are investing in a properly allocated portfolio of low cost index funds so you can achieve market returns. Unless you dramatically change the way you invest, you may be in for a serious post-retirement shocker.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, June 24, 2008)

This is the part of a series of columns called "The Naked Truth," by retirement expert Dan Solin. Please bring him your questions, in the comments box, and he will answer as many as he can.

Question: What about those of us that are stuck with our money in auction rate securities? What do we do?

I see three options: Sit around and wait for redemption; sue; sell on the secondary market at 90% (or whatever the going rate is at the time).

It seems to me that if someone needs the money badly, selling on the secondary market and suing for the losses might be the best approach.

If one doesn't have to have his hands on the money, wouldn't waiting for par redemption be the best choice?

Answer: Holders of auction rate securities are in a tough situation. It will be very difficult to quantify damages because no one knows when you will be able to sell these securities and recoup your losses.

This is the part of a series of columns called "The Naked Truth," by retirement expert Dan Solin. Please bring him your questions, in the comments box, and he will answer as many as he can.

William Galvin, the Secretary of the Commonwealth of Massachusetts, has sued UBS, accusing it of misleading retail investors to buy auction rate securities when it knew that the market for them was crashing.

The Complaint has a familiar ring to it. It alleges that UBS favored its institutional clients over its retail clients (big surprise!), urging its retail clients to buy these securities when its institutional clients were selling them. UBS sold these securities by representing to its retail clients that they were safe, liquid and secure--the equivalent of cash.

Among the duped investors was a seventy-eight year old retiree who was told that these securities had a "7 day liquidity." He is still waiting.

This is the part of a new series of columns called "The Naked Truth," by retirement expert Dan Solin. Please bring him your questions, in the comments box, and he will answer as many as he can.

Wal-Mart (NYSE: WMT) is the world's largest company with over $380 billion in revenues. It's success is based on it ability to squeeze vendors to the breaking point. The largest manufacturers are no match for this retail giant.

Wal-Mart's 401(k) plan has over $9.5 billion in assets. Its modestly paid employees count on this plan to fund their retirement.

A recent class action lawsuit makes allegations which, if true, will cause many of these employees to be great disappointed.