WASHINGTON – The economic recovery may be slow, but 401K balances are at a 12-year high.
The average 401K account balance jumped to nearly $76,000 at the end of September, up 18 percent from what it was a year ago.
Andrea Coombes, personal finance editor for MarketWatch, says the jump had a lot to do with market gains.
“In recent days, the market has not been looking good,” Coombes says. “But over the past year through the third quarter, the market really helped push average 401K balances higher. About three-fourths of the gain was from the market and about a quarter of the increase in balances was workers contributing to the plan as well as their employers contributing.”
So how can people keep what they have gained, now that the market is not doing as well?
“I think it’s a really scary time for people with the market falling so dramatically recently,” she says. “You need to think about your long-term focus. You need to have an idea of how you want to invest for the long haul.”
Prospective buyers should also keep an eye on how well the market is doing to pinpoint good times to invest in stocks.
“Think about when the market falls,” Coombes says. “That’s a buying opportunity. You’re getting stocks on the cheap.”
WTOP’s Veronica Robinson contributed to this report. Follow @WTOP on Twitter.