With stock market soaring, your 401(k) may need a tune-up

Stocks are in record territory, which probably is great news for your 401(k). Fidelity Investments reported Thursday that average account balances hit a new high in the third quarter, propelled mainly by surging equities markets.

This might be news to you if you don’t track the market closely and rarely check your account balance. In any case, now is a good time to take a peek – to pat yourself on the back, but also, perhaps, to do some rebalancing to keep your plan on track.

Fidelity is the nation’s largest 401(k) plan provider, so trends among its customers hold up a mirror to the rest of the industry. The company said the average retirement saver’s balance hit a new high of $84,300 at end of the third quarter, up 11.1 percent from a year ago. The gains were bigger for those who have been active in their plans for the past 10 years; they were up 19.6 percent,to $223,100.
Roughly three-quarters of the gains came from the market’s gains rather than contributions, Fidelity said. (The Standard & Poor’s 500-stock index is up about 20 percent year to date.) So if you’re trying to adhere to a predetermined asset allocation mix – and I hope you are – this may be a time to sell some

Rebalancing once or twice a year is fine for most people. Many plans offer automatic rebalancing options – Fidelity says 61 percent of all plans it administers have this feature. Meanwhile, many retirement investors are putting their plans on auto-pilot. One out of three retirement savers at Fidelity now use target date funds (TDFs) or a managed account. A decade ago almost all of its investors were do-it-yourselfers.

Learn more at Reuters Money.