Employee 401(k) accounts are growing fast, thanks to the surging stock market and increased contributions from workers and their employers.
The average account balance grew nearly 12 percent last year, Fidelity Investments said. The average was $77,300 at the end of 2012, up from $69,100 a year earlier, according to Fidelity, the nation's largest 401(k) administrator.
The average balance is up sharply since the stock market hit bottom in early 2009, after the financial crisis. Back then, the average was $46,200.
The Standard & Poor's 500 stock index was up nearly 7 percent for the year through Wednesday. So it's likely that account balances will climb further when first-quarter numbers are in for the 12 million 401(k) accounts that Fidelity administers.
In the final three months of last year, 401(k) balances rose a modest 2 percent. The average balance was $75,900 at the end of the third quarter.
The S&P 500 and a broad U.S. bond market index finished the fourth quarter largely unchanged, although there was plenty of drama. Stocks tumbled after President Obama's re-election as it appeared talks to avert the "fiscal cliff" would become fiercely partisan. But the market recovered as negotiators slowly made progress, ultimately reaching a Jan. 1 deal to avoid severe tax increases and delay spending cuts.
For the full year, the S&P 500 posted a return of 16 percent and bonds were up about 4 percent as corporate profits improved and the economy continued to recover from the Great Recession.
Fidelity estimates that about two-thirds of last year's increase in the average 401(k) balance was attributed to investment returns and one-third to worker contributions and employer matches. Over the past 10 years, those two components have played a roughly equal role in boosting account balances, with 53 percent attributed to contributions and 47 percent to market gains.
"You really need to contribute to your account because those contributions have an equal weighting to the market appreciation over the long term," says Beth McHugh, vice president of market insights at Boston-based Fidelity.
Workers who have stayed in the market long term have found it difficult to rely solely on investment gains to build up 401(k) savings. The S&P 500 remains about 3 percent below its historic peak in October 2007.