Michelle, there's a generalization called "The 120 rule" that can give some guidance towards the level of risk a person should take at different age levels.

Basically, a person should take less risk the closer they are to retirement. So as a person gets older, the split between stocks (higher return) and bonds (fixed return/income) should move towards bonds and out of stock.

Subtracting age from 120 gives a general rule to how to split the allocation. Given that you are 38, 120-38= 82% stock, 18% bonds/bond funds.

Now, this is just a generalization to start with. If you uncomfortable with that level of risk, you might want to go to 70/30. Personally, I think you have sufficient enough time to retirement where you shouldn't be any more conservative than that.

High yield savings accounts have been mentioned here, they could possibly be substituted for a bond fund. Depending on the fees associated with a bond mutual fund, the returns might be close (I can't comment on specific returns, as I'm aggressive in my investing, so no bonds). The important thing with that would be to treat the high yield savings account entirely as a retirement fund and not as an emergency source of cash. Just as you shouldn't sell out of the 401k, don't "sell" out of the high yield cash fund either.

The most important part of the equation is time. The sooner you start doing anything, the better off you'll be.