QI have been working at the same company for 20 years and have contributed to my company-sponsored 401(k) retirement plan the whole time.

A recent retirement plan statement I received shows the total employee and employer contributions as well as the current total value (roughly $200,000).

I was surprised to see that the total value was 5 percent less than the contributions. It seems to me that I could have done better using a savings account.

Given my information, are these numbers normal for most people saving for retirement?

FRUSTRATED RETIREMENT INVESTOR

ASad to say, your experience is typical. The sorry performance largely reflects the economic and financial trauma of the past several years.

For example, the average annual return on stocks from 2000 to 2010 is negative 0.95 percent, according to Ibbotson Associates, a Morningstar company. However, cushioning the financial blow somewhat over the past decade for diversified savers is the 7.69 percent return on long-term U.S. Treasuries.

The uncertainty about future performance is built into the 401(k) retirement savings plan.

Here's a thought exercise: Imagine you're back in 1946 and you were deciding how to allocate your money in a 401(k). (It's a thought exercise since the 401(k) didn't exist.)

In your memory banks is the economic trauma of the 1930s, when stocks eked out a mere 1.4 percent gain. But bonds gained about 6 percent for the decade.

Or maybe you prefer looking at the longer sweep of history. In that case you'd notice that stock and bond returns essentially ran neck and neck.

So, you might put half of your money in stocks and the rest in bonds if you found the long-term story convincing. But if the 1930s taught you to be more conservative, maybe investing 70 percent in bonds makes more sense.

Problem is, from 1946 to 2000 Ibbotson calculates that stocks sported an average annual return of 12.95 percent and bonds 5.27 percent. You can play with the numbers in different ways, but the conclusion will always be the same: You can't get rid of the uncertainty.

I think this is too much uncertainty for most workers to absorb. The employee bears all the risk with the 401(k), deciding how much to invest and where to invest it.

What's more, a cottage industry of behavioral economists has chronicled how poor most of us are at making sound investment decisions. There's little time to learn modern portfolio money management techniques between heightened demands on our time at work and at home.

That said, the 401(k), flaws and all, is here to stay. The good news is that companies and providers are striving to make it better. For example, companies are limiting investment choices, making it easier to diversify and boosting participation by enrolling workers automatically unless they choose to "opt out."

But we still have to make our own investment choices.

One lesson to take away from the past couple of years is that diversification still pays (although diversification doesn't offer much protection over a short time frame, say, 6 months.) It's better for most of us to diversify rather than try to predict which assets will zig and which assets will zag.

Another lesson I take away is that when it comes to retirement savings the basic money question to ask isn't "How much money will I make on my investments?" but "How much can I afford to lose?"

You should then pursue an investment strategy that minimizes the downside while allowing for growth. You don't want to be 70 years old with a portfolio that has lost half its value. Period.

To be sure, the financial specifics of everyone's margin of safety can differ. But the basic perspective holds.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.