There was a slightly different take on last week's news from Fidelity about 401(k) balances being at their best point in recent history – and I think it's worth sharing.
The Motley Fool – at one point a pretty influential media entity for Joe Average to learn a few tricks to help mess around on the stock market, before the Big Crash made stock market investing an unpleasant prospect for part-timers – suggests that the 401(k)'s recent rise to the top could be in danger.
And that's because the slightly panicked post-election sell-off for the Dow is suddenly making that little-publicized bull market look like its time may be coming to an end.
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As we learned last week, 401(k) fortunes are up both because of an upwards trend in the stock market and because many employers are doing well enough to restore their contribution matches, prompting participants to get back in the game.
The Fool raises the question, when the Dow starts to take a tumble, will all those just-a-little-bit-hopeful investors suddenly get cold feet and … start spending their fledgling retirement savings dollars on Christmas presents (or make some alternative investments that always seem to take off big-time following the election cycle)?
The prevailing logic – and the drum we all continue to beat – is that you need to help convince participants to keep making their contributions despite these continued stock market fluctuations, as things will (fingers crossed) work out better in the end.
And as for those market worries? They're just part of the fun. Sadly they do frighten the easily frightened (and believe me, once you've already lost most of the value of your limited retirement savings once, I don't blame them), but a longer-term strategy also accepts this risk as part of the price of playing the game.
Whatever the case, the main secret is to try to get those participants involved, engaged and informed, however you can. Not taking part accomplishes … nothing.
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