Will Your 401k Hit Zero?
By: Gerri Willis, CNN
Updated: February 23, 2009
Dow blue chips have lost almost half their value since stocks hit their high-mark 16 short months ago.
A lot of people are wondering if their retirement fund will go to zero.
Let's get some perspective here. The average balance is just $50 thousand, which is enough to keep a couple going for a couple of years at best
in retirement.
401k balances dropped 27 percent last year, according to Fidelity. But the short answer is no -- the stock market isn't going to zero. The fears that the financial rescue attempts are doomed to fail is overblown.
Already, the federal government's effort to stabilize money market mutual funds is a success.
Last fall, there was a run on money market funds, which are a critical part of the nation's financial infrastructure.
The government guaranteed those funds, and now the balance in those "safe as cash" funds is $4 trillion -- more than before the run on the funds.
And there is a tendency to focus on returns. Just take a look at how the S&P 500 index did during the past couple of years.
Don't obsess over your 401k balance.
Take a look, too, at the number of shares you've purchased. You've been adding to the total number of shares throughout the decade and are buying now at lows.
