The economic meltdown forced an increasing number of people to slow or halt contributions to their 401(k) accounts. From mid-2008 through the first quarter of 2009, more employees reduced their contributions than increased them, according to Fidelity Investments, which manages 11.2 million 401(k) accounts.
But, despite the economic meltdown that saw many retirement accounts severely wounded, participation in 401(k) plans held steady in 2008, even as the average account lost 28 percent of its value, according to Hewitt Associates , which tracks retirement plans.
More people moved their money into cash or bonds for safety and, overall, the contribution rate dropped less than half a percentage point, the company said.
And, in the first half of 2009, when stocks hit their worst levels and then pivoted higher, only 9 percent of investors made trades in their 401(k) accounts, according to Vanguard.
"You saw people essentially still keeping faith in their 401(k), even in a terrible market," said Vandermillen of Principal Financial Group.
That's a strategy followed by Chris Barger. The 27-year old from Harrisburg, Pa., said she panicked as she watched her 401(k) drop by more than 30 percent late last year and in early 2009. Like many people watching the markets tank, she worried that it was time to get out of the stock market all together and seek safer investments.
"When it was bad, it was down 36 percent," the telecommunications systems performance engineer said. But "I stuck with my 401(k) because I'm only 27 and I knew the market would turn around."
Barger said her 401(k) has gained back about 10 percent of its value in the past six months.
Tax-deferred 401(k) plans, and others like it, such as the 403(b) and the IRA, have long been popular ways to plan and invest for retirement, particularly plans that allow employers to match all or part of contributions.
The best way to regain some of that lost value is to continue to contribute and keep money in the stock market to take advantage of gains that are bound to come with economic recovery, financial planners say. Historically, the S&P 500 returns about 9.7 percent annually.
But economists warn that a rising Dow does not mean the economy's problems are over, or that 401(k)'s are going to fully recover anytime soon. The current bull market could even stall the rally if investor's cash in their gains, economists say. And, even if the recession is technically nearing an end, 15 million people are still unemployed.
"It's important to remember that we still have a ways to go here," said Investment advisor Jeff Hoachlander of St Louis-based investment firm Edward Jones.
Dolores Holmes, 58, who hopes to retire someday from running her bed and breakfast in Lambertville, N.J., saw her retirement savings drop almost 80 percent, and still has a long way to go to get back to where she was.
"There was a big increase, this big last statement which was very positive," Holmes said. "I'm just holding my breath and hope it keeps on going up."