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Retirement Options…So many to choose from?

I contribute 5% and my employer matches 4% for a total of 9% of my income to a (or more than one) retirement account. I can choose to have all of it put into one type or break it up into more than one type. There are 18 investment options:
Portfolios: 2045, 2035, 2025, 2015 and Solution Income.
Stability: Fixed
Bonds: Intermediate or High Yield
Large Cap Value: Stock Index or Vamgaurd
Large Cap: Fidelity VIP Contrafund or Growth fund
Small/Mid/Specialty: Baron, Franklin Balance Sheet, Franklin sm cap, Fidelity VIP, Oppenheimer Main St, Wanger U.S.
Global/International: EuroPacific Growth or Mutual Discovery
I can say that I want a certain percent of my overall contributions into each type or one specific account, but I don’t know which ones I should go with. Maybe someone here will know.
I don’t really make a ton of money, so my total contribution (employer included) is about 4K a year. Can someone help out?

The easiest way to do it and really the only one that anyone could recommend here, would be one of the portfolios you have listed first. These look like (and you would have to verify) what are called lifestyle funds. The way they work is that you would pick when you plan to retire (let’s say 25 years from now). Since this is 2010, add 25 years and you get 2035 – you would invest in the 2035 fund. The fund then rebalances the money in your account on a periodic basis (semi-annually or annually) based upon your expected retirement, moving from more aggressive to more conservative as you age.

The problem with this type of fund is that the fund uses an algorythm that takes everyone’s expected risk tolerances and retirement needs into account providing a one-size fits all portfolio. While this is fine for the majority of investors it might or might not be good for you (for example, if alzheimers ran in your family and you could expect to need a large sum of money for end-of-life care, you would probably need to be more aggressive than the average portfolio, or if you were planning to retire to a low cost off-shore country where there is socialized medicine and no income tax, you might need a less aggressive than average portfolio).

The proper way to do this is to find out of your employer offers investment/retirement education/advice and sit down with a retirement advisor to map out your tolerances, projected retirement needs, etc. and create a personalized portfolio (i.e, some growth, some income, some overseas, some fixed. This should be done every year or two to ensure you are on track and to rebalance the portfolio (some parts will grow faster than others and put the percentages out of whack).

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