401(k) fortitude

The big hits to your retirement savings may be inducing a wave of “pension nostalgia,” said Paulette Miniter in The Christian Science Monitor, but if history is any guide, your 401(k)s “probably aren’t too far away from getting back to work.” So, "take heart." Stocks, down 40 percent from their last peak, generally bounce back long before the economy does.

Is that a risk we should force workers to take? said The New York Times in an editorial. On top of the market losses, “the damage to your retirement security is likely worse than what the numbers say on your statement,” since companies are scaling back or cutting their 401(k) match. Even if there’s an uptick, there’s “no guarantee that today’s battered 401(k)s will rebound powerfully.”

Right now, stock indexes are “like a dangerous animal in a cage,” said Ben Steverman in BusinessWeek online, pacing “back and forth within the same trading range.” Government action sends them up; dire economic news brings them down. The market could “break out of its box” in the second half or 2009, but it might not happen until the housing market stabilizes.

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That won’t help you much if you need “crisis cash” now, said Brett Arends in The Wall Street Journal, like if you’ve lost your job. Resist the urge to take a loan from your 401(k), though. You’ll have to pay taxes and penalties if you can’t pay it back in time, and your 401(k) is one thing creditors can't touch if you have to declare bankruptcy. Use a credit card or, if you can, a home equity loan instead.