Small Change: Finally, You Can Take the 401(k) Blinders Off

When was the last time you checked your 401(k)?

A few months ago, a friend of mine confided that she was scared to look at her balance after opening her statement to find that her account had nearly been wiped out. Many other workers have taken the same eyes-closed strategy. It's like riding a roller coaster: If you don't watch, maybe it won't be as bad.

But you may want to pry your eyelids open again. The recent stock market rally that lifted the Dow over 9000 has also given retirement accounts a boost. Encouraged, I peeked at my 401(k) balance and found that it has increased in the past three months, finally recouping my 2008 losses and then some.

According to the Employee Benefit Research Institute, workers in every age group and tenure have seen improvements in their retirement accounts since the stock markets hit bottom on March 9. The gains ranged from nearly 15 percent growth among workers ages 25 to 34 with one to four years of experience to about 3 percent for workers 55 to 64 with 20 to 29 years of experience.

The group's analysis also shows that younger, inexperienced workers have rebounded much more readily from the stock markets' mood swings. Their retirement accounts are up about 67 percent compared with Jan. 1, 2008, though one imagines they weren't very high to begin with. Older workers' accounts are still 13 percent off from that date.

There is much debate over how to handle your 401(k) in a volatile economy, and the strategy that is best for you will clearly depend on your career stage, age, needs in retirement and appetite for risk.

But at least it seems that this roller-coaster ride is almost over. It's safe to open your eyes again.

-- Ylan Q. Mui