Wall Street gains boost 401(k) balances

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Wall Street's historic gains in 2013 have boosted the value of Americans' retirement accounts to record highs, according to several plan managers, restoring a critical component of household wealth.

Fidelity Investments, the nation's largest provider of retirement plans, said the average balance in its accounts at the end of last year was $89,300 — nearly double the amount during the depths of the recession. Vanguard, another major fund manager, said its plans clocked in at $101,650, the highest level since it began tracking the data in 1999.

"While there is more to be done to help Americans save more effectively for their retirement, these are positive trends that show we are clearly moving in the right direction," said Jean Young, senior analyst at the Vanguard Center for Retirement Research.

The rebound comes just as the wave of baby boomers reaching retirement age is beginning to crest. The most recent census showed the ranks of seniors at historic levels: More than 40 million people were age 65 or older, making up 13 percent of the population.

Some economists have argued that the rapid rise in stocks could encourage some older Americans who delayed retirement during the downturn to finally to leave their jobs.

Retirement accounts have become an increasingly important part of workers' long-term financial security as fewer companies provide pensions and other defined benefits. Though retirement accounts give workers more control over their savings, the recent financial crisis also highlighted the enormous risks to which their nest eggs are exposed.

Since then, stock markets have skyrocketed as the economic picture has improved and the Federal Reserve has sponsored an unprecedented infusion of stimulus. The Dow Jones Industrial Average gained almost 30 percent last year to reach new nominal highs. According to Fidelity, market gains fueled more than three-quarters of the increase in 401k balances.

Contributions from employees or their companies accounted for the remainder of the gains.

An analysis by the Federal Reserve Bank of Philadelphia found that the percentage of people who said they were leaving the workforce to retire began to rise in 2010, after the recession ended. But the number picked up in 2012 as the stock market began to improve.

Since then, retirement has been the most important contributor to people leaving the labor force, the research found.