401(k) savings hits 10-Year highRetirement savers are back on track after the 2008 stock market downturn, according to a report from Fidelity Investments, the nation's largest provider of workplace retirement savings plans.

Fidelity reported that the average 401(k) savings reached a 10-year high at the end of 2010 with the average saver putting away 8.2% of their paychecks, before the employer match. Employers typically kick in another 50% of employee contributions up to 6% saved, Fidelity says.The average savings balance was $71,500 at the end of 2010. Participants who had saved steadily since 2000 had an average balance of $183,100 -- a pretty nice chunk of change.

Saving $1 million for retirement is the gold standard. Using generally-accepted forumulas, you can expect to pull $40,000 annually from a $1 million pot of money without depleting it before you reach 85, which is about the age at which Social Security predicts your death.

How do you save $1 million in your retirement plan?

Using Bankrate.com's retirement savings calculator, if you earn $45,000 annually and put 7% of it in your retirement savings -- with no employer match -- and get a 3% raise every year, regularly bumping up your savings on which you earn a modest 3% rate of return, by the time you've saved for 20 years, you should have more than $1 million. If you increase your savings rate to 10%, you'll end up with close to $1.5 million. And if you can persuade your employer to kick in at least 1%, you'll have another $100,000 or so.

Of course, making this scenario work requires that you have steady employment and get regular raises, a situation that hasn't been all that easy for many people to achieve in the last decade. Still, most people work longer than 20 years. If you extend this scenario to 30 years, you'll have a better shot at it and if you get really lucky and are able to save steadily, you'll have more than $2.5 million. Enough to really enjoy your old age.

If you think this kind of regular savings sounds impossible, Fidelity begs to differ, dispelling three of the most common misconceptions people have about 401(k) plans.

Myth 1: Most workers don't participate in the 401(k) plan their employers offer. About 53% of employees who earn between $20,000 and $40,000 put money in their 401(k)s. More than 71% of participants earning between $40,000 and $60,000 participate.

Myth 2: Most employers suspended their company match during the recession and have not reinstated it. Only 8% of Fidelity plan sponsors reduced or eliminated their employer contributions during the height of recession in 2008 and 2009. Since then, more than 55% have already reinstated this benefit or plan to do so in the next year.

Myth 3: Most people take loans or cash out of their 401(k)s. Only 30% of participants opt to cash out of their 401(k)s in the months following a separation. The rest either leave the money where it is or roll it over into another qualified retirement account such as an IRA.

One way to get ahead of the game this year is to save the 2% of Social Security payroll taxes that aren't being collected in 2011 and add that $900 to your 401(k). If you are 30 years old and make $45,000 a year, by the time you're 65, at 3% a year that money could grow to more than $2,500 and be a totally painless boost to your retirement savings.

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