First Person: My 401(k) Balance Is at a Record High, but I’m Not Celebrating

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A new report released by Fidelity showed that 401(k) balances have reached a record high. Even though my account also at its all-time high last year, I'm not celebrating. When the value of the account goes up, I've noticed the price of shares also go up. If there is a sharp drop in stock prices, the value of my entire account will likely dip back to the lows I saw during the Great Recession.

According to a recent article by CNNMoney, the strong stock market and increased contributions by workers helped most saves recover from the recession losses. The average Fidelity 401(k) balance rose 12 percent in the past year from $69,100 to $77,300.

In fact, more than 94 percent of the workers had an account balance that was higher than what they had before the 2007 stock market crash.

Rebalancing my portfolio

My first instinct is to rebalance my portfolio now that the value of my retirement account is at a record high. However, I don't want to start moving money out of aggressive funds into more conservative ones at the age of 40. Considering I won't reach full retirement age for another 27 years, I might as well continue to invest in more aggressive funds. I can weather the inevitable stock market dips, but it's never fun to watch.

Setting targets based on my age

According to an AARP blog, older workers are getting closer to a more comfortable retirement. The blog cited the same Fidelity Investments report, revealing how much money different age groups have stocked in their 401(k) plans. Workers ages 50 to 54 had $111,900; ages 55 to 59 had $134,600; ages 60 to 64 had $133,100 and ages 65 to 69 had $136,800. Based on the new data about the average amount people have saved in their 401(k), I may have been saving too much for retirement.

Considering other retirement income

While the Fidelity report looked at average 401(k) balances, it didn't reveal how much people have saved overall for retirement. Some people will rely on pensions. I have a Roth IRA account that I can use for retirement. Even though I have been saving enough in my 401(k), I have not been saving enough in my Roth IRA. It's unlikely I'll receive a pension when I retire unless I change careers.

During the recession, I knew a lot of retired people who cashed out of their 401(k) plans when the values of the accounts had hit bottom. If I were older, I'd move my money out of aggressive funds and into more conservative funds now that the account balances are at an all-time high. However, since I'm not close enough to retiring, I know it's more prudent to stick it out with the stock market. I don't like it, but I don't have any other choice if I want a chance at a comfortable retirement.

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More from this contributor:

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