After years of stagnation, 401(k) policies are starting to earn money again, which is great news for many people. Those looking down the barrel of retirement and those just starting to save for it are sure to be relieved.
Avoid anxiety
When the economy tanked, so did most 401(k) accounts invested mostly in stock. That meant a lot of retirees and soon-to-be retirees were really struggling for a few years. Now, “Generation Y” is really negative about the possibility of retirement.
A lot of 401(k) plans and accounts are beginning to make more cash now, which is some good news for many people nearing retirement, according to USA Today.
Some balances up 25 percent
Reports vary, but a variety of studies and releases from numerous businesses indicate healthy gains during the last few years. Lipper, according to USA Today, reports the average stock mutual fund has appreciated 11.4 percent over the year. Since 401(k) plans are basically a tax-protected mutual fund with some elements of a trust or other maturing asset, many will have gained that much or possibly more.
Since 2009 when the industry hit rock bottom, the typical stock mutual fund really increase 124 percent, according to Lipper, which is great news. At the beginning of the year, the typical 401(k) account had $70,970, according to Aon Hewitt, which increased to $74,380.
Time magazine pointed out that the average employer-sponsored retirement plan valued 25 percent during the last three years, 401(k) plans increased 28 percent, as reported by investment firm Funds Advisor.
There was an 80 percent increase seen in Mississippi and 1 percent in Arkansas, so it definitely varied a lot by states. Blue states saw 25 percent increases while red states saw 28 percent increases.
Normal contributors liked biggest gains
People who contributed to their 401(k) plans regularly saw the most gains, which both Time and USA Today reported to be a common thing.
Just like a snowball, retirement accounts can make more cash and accumulate more with more cash added to it. Just a little more money should be contributed to the account monthly so that it can make more money each month.
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