http://www.latimes.com/business/la-fi-retirement-trading-20120709,0,3209088.story By Walter Hamilton, Los Angeles Times July 9, 2012, 5:01 a.m. Americans worried about running out of money in their golden years are trying a new investment strategy: day trading their retirement funds. Disillusioned with the conventional buy-and-hold approach, baby boomers are anxious to improve their retirement prospects after two punishing bear markets in the last decade. Some people are trading the mutual funds in their 401(k) plans more frequently. Others are venturing into options. And some aggressive investors have begun day trading their nest eggs â all in a bid to make up for lost time. "A lot more frequent trading is happening," said Chad Carlson, a financial planner based outside of Chicago. "People are saying, 'I'm that much closer to retirement so I have to do something.'" That thinking prompted 49-year-old Vlad Tokarev to start day trading his three individual retirement accounts last year. The Minneapolis biomedical software engineer wants to quit working before age 65. But after watching his 401(k) get pounded in the last bear market, he fears that another plunge in the stock market could wreak havoc with his plans. Minutes before the market closes every day, Tokarev buys or sells a mutual fund linked to the Standard & Poor's 500 stock index. His goal is to profit from temporary fluctuations in stock prices, so he buys when stocks are falling and sells when they're rising. "I didn't see a lot of returns using the buy-and-hold method," he said. Most Americans with IRA or 401(k) accounts embrace the "set it and forget it" philosophy. Only about 15% of investors made any change to their 401(k)s last year, according to benefits firm Aon Hewitt. But among those willing to make shifts, there's a growing inclination to do so more frequently as retirement approaches, according to some financial planners. These experts sympathize with investor frustrations but predict that this type of trading will backfire for most. Day trading was popular during the bull market of the 1990s, when investors moved in and out of stocks dozens of times each day seeking a quick profit. It was considered a risky practice at the time, and the technology crash a few years later wiped out many day traders. "You get the guy who hits the home run who everyone wants to be like, and then you get the guy who is the big loser," said Winfield Evens, a partner at Aon Hewitt. The average 60-year-old has only $114,500 in his or her 401(k), and half have less than $37,300, according to Aon Hewitt. Americans are a collective $6.6 trillion short of the amount they need to retire comfortably, according to a 2010 analysis by the Center for Retirement Research at Boston College. Those type of numbers have even helped spur a cottage industry for advisors who preach the benefits of trading 401(k) and other retirement accounts. Richard Schmitt, an adjunct professor at Golden Gate University in San Francisco and a former retirement plan consultant, has come out with a book called "401(k) Day Trading: The Art of Cashing in on a Shaky Market in Minutes a Day." The book, published in October by Wiley Trading, has a list price of $49.95. "I've seen so many people make their 401(k)s into 201(k)s," Schmitt said of day trading. "This gives you the opportunity to make it into an 801(k)." Schmitt has been day trading his 401(k) account for four years, during which time, he said, he has beaten the S&P 500 by 15.2%. Todd Larsen, a mechanical engineer from Willow Park, Texas, runs http://www.401ktradingsystem.com, a website that advises followers to shift their money once a month. The site, which charges a one-time fee of $199, says it recommends safe money-market funds about 75% of the time and guides people into higher-risk stock funds only "when conditions are very favorable for a gain." Younger Americans who have been frustrated by the market also are trying their hand at day trading. Joe Hansman, 29, who handles customer complaints at Wells Fargo, shifts money among two conservative mutual funds in his 401(k) and the banking company's own stock. He trades 10 to 15 times a month, steering money into Wells Fargo's stock when he expects it to rally for a few day. "When I told my wife about it she was really nervous â¦ until I educated her on what it all entails and how poorly [the 401(k)] was performing before that," Hansman said. "She's still not 100% behind it but she said, 'Just don't lose everything. If you do I'll divorce you.' " The fund industry frowns on day trading, which it says raises costs for other investors, and imposes fees and restrictions to prohibit it. Schmitt and others circumvent the rules by using multiple accounts â buying in one and selling in another â to mask the frequency of their trading. Trading also has been made easier by the increasing availability of so-called brokerage windows, which are accounts within 401(k) plans that typically allow daily trading in funds and stocks. About 29% of companies offer them, up from 12% a decade ago, according to Aon Hewitt. Among the companies offering brokerage windows are Home Depot Inc. andHewlett-Packard Co. Brokerage windows typically are used by experienced investors with higher incomes and larger 401(k) balances. The average person with such an account trades more than 20 times a year, according to Charles Schwab Corp. Some people are trying another potentially risky tactic to overcome the weak market â trading stock options in their IRA accounts. They agree to buy a falling stock, or sell a rising one, in exchange for a set payment. The goal is to pocket steady fees without having to buy or sell at inopportune times. As many as 40% of people trading options at the Motley Fool do so in retirement accounts, said Jeff Fischer, an options advisor at the investment website. "There is â I don't want to use the word 'desperation' â but it's close to that," Fischer said. "Ten years of a flat stock market bumps up against reality for people in their 50s or 60s who are running out of time to see appreciation" in the stock market. Prudent options investing can generate annual returns of 6% to 12%, Fischer said. But there are risks, including being forced to buy stocks as they plummet in price. "We have had a few sad stories like that," Fischer said. Trading options can be scary, said a retiree who uses options to boost his income. "The very first trade, my palms were sweating so badly that I almost drenched a keyboard," said the man, who asked that his name not be used. But he has made money over time, he said. "I want to do the things in retirement that I have always wanted to do," he said. "Traveling has been at the top of our list, and options [have] helped finance going to some very nice vacation spots." Tokarev, the software engineer, said he is careful not to take excessive risks. He trades only one-third of his retirement savings. And he believes that day trading is safer than entrusting his retirement savings to Wall Street. At best, he and others foresee a flat market that will deliver middling returns at best. The risk, as they see it, is not doing anything. But experts say that for many, day trading may not be worth the risk. "That's what people usually say about day trading â but I don't see how it can be dangerous," Tokarev said.