Question: Will your 401k drop to zero?

Posted by Rachel Leigh email

(WFLX) - If you're lucky enough to still have a job, you might be wondering if your retirement fund will go to zero.

Here's some perspective: The average balance is just $50,000 which is enough to keep a couple going for a couple of years, at best, in retirement.

401k balances dropped 27 percent last year according to Fidelity, but the stock market isn't going to zero.

Already, the federal government's effort to stabilize money market mutual funds is a success.

Last fall, there was a run on money market funds, a critical part of the nation's financial infrastructure. The government guaranteed those funds. Now, the balance in those "safe as cash" funds is $4 trillion. That's more than before the run on the funds.

The short explanation? Don't obsess over your 401k balance. Take a look, too, at the number of shares you've purchased. You've been adding to the total number of shares throughout the decade, and are now buying at new lows.