Individuals with money in 401(k)s saw an increase in savings of 32 percent last year, according to a study released by the Employee Benefit Research Institute and the Investment Company Institute. This is good news for Americans who lost a reported 27 percent or more in their accounts after the financial crisis in 2008. The findings show there’s hope that money can be regained after the loss in time for retirement.
Accounts Averaged Nearly $110k in 2009
According to the report released by the Washington-based organizations, 4.3 million workers who have had money in their 401(k) accounts since 2003 and have been with the same plans over that time averaged balances of $109,723 in 2009 compared with $83,161 a year earlier.
The main reason for this jump in funds was the sharp increase in the Standard & Poor’s 500 Index last year. The index reportedly rose by about 23 percent in 2009 after falling 38 percent in 2008. This, along with many employers agreeing to match employee contributions again, helped to increase the funds found in employee accounts.
Are 401(k)s Safe Again?
After the financial crisis of 2008, which devastated the market and eliminated funds from millions of 401(k)s, many employees felt that keeping their money in these accounts was not safe.
To an extent, there is always a risk involved in putting money in a portfolio of stock market investments. However, it seems that because the market has stabilized a lot in the past year, 401(k) accounts have had a chance to rebound a bit.
Of course, it’s up to you to make sure you make the most of your 401(k) account while avoiding what could weaken it. If you take time to understand the ins and outs of these accounts and be sure to minimize withdrawals and loans, you could rebuild your nest egg to get the most bang for your buck at retirement time.
