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updated 3/21/2011 3:55:18 PM ET 2011-03-21T19:55:18

Americans who were afraid to open their 401(k) statements during the recession are finding good news inside the envelope now: For the most part, their accounts have come all the way back and then some.

Nine in 10 of the popular retirement plans are at least back to where they were in October 2007, the peak of the stock market. Since the bull market began in March 2009, stocks have almost doubled.

And many investors who kept their nerve and continued putting some of their paycheck into a 401(k) during the market's worst months are now ahead.

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"I thought it would be more like six to eight years of pain, so I'm more than happy," says Brett Hacker, a photographer for a TV station in Kansas City, Mo.

The married father of two says most of his account is invested in a mutual fund that tracks the Standard & Poor's 500 index, and the rest in Meredith Corp., his employer. His balance fell 53 percent in the downturn. He's now 15 percent ahead of where he stood in 2007.

"By the time that the market started going down, I thought it was too far gone to jump out — and I just let it ride," Hacker says. "I figured that I was in for a long haul."

Account balances didn't recover entirely from the strength of the market. Those automatic paycheck deductions helped a lot.

On average, 401(k) participants put in about 8 percent of their pay from 2003 to 2006, says business consulting firm Aon Hewitt. Contributions slipped slightly during the recession, falling from an average 7.7 percent in 2007, to the current average around 7.3 percent.

Advisers typically recommend setting aside from 11 percent to 15 percent of your salary to enable you to live comfortably in retirement, and ensure you save enough to last for decades.

A 401(k) plan allows employees to deposit part of their salary into an account and not pay income tax on the money until it's later withdrawn in retirement. Employers may also match a certain portion of a worker's contributions. Taking money from the account prior to age 59 ½ will trigger taxes and a penalty.

An Associated Press analysis of 401(k) balance data provided by the nonpartisan Employee Benefit Research Institute in Washington, D.C., shows the youngest workers with the shortest time on the job saw the most significant recovery.

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If the stock market has declined, says Jack VanDerhei, EBRI's research director, it's almost always true that workers with fewer years on the job are going to recover more quickly. That's because they can make up losses more readily by continuing their payroll deductions. The money they've contributed since 2009 makes up a larger portion of their total account balance.

A snapshot of the findings:

1 to 4 years on the job
Because they're just starting new positions, the average 401(k) account balance is small. This enabled the average worker to make up for losses since 2007 by continuing payroll deductions. The youngest workers, with the smallest savings, saw their balances rise by more than 50 percent since 2007. Average account balances range from $18,000 for the youngest workers to $39,000 for the older members of this group.

5 to 9 years on the job
These workers' 401(k) balances are generally 2 to 4 percent higher than in 2007. Depending on age, average account balances range from $36,000 to $70,000.

10 to 29 years on the job
Workers at this level of seniority still haven't recovered their losses since 2007. Their balances on March 1 were 5 to 8 percent lower than at the market's peak. Average account balances range from $44,000 for the youngest workers to $187,000 for the oldest in this group.

30-plus years on the job
This group has only recently moved into positive territory. Their accounts are up roughly 1 percent. Average account balances range from $175,000 for those age 46 to 55, to nearly $217,000 for those age 56 to 65. Their gains a likely due to more conservative asset allocations. Having a smaller portion of their accounts in stocks as they approach retirement age would have limited their losses in the downturn.

Those who bailed out of stocks near the bottom locked in their losses — and if they were afraid to reinvest, they lost out on the recovery. Hacker knows colleagues in that situation, and he's thankful he stayed the course.

Most investors sought to recession-proof at least some of their money by pulling out of the stock market. Last year they withdrew almost $97 billion from U.S. stock funds and put more than $240 billion into bond funds, according to the Investment Company Institute.

One lesson of the past four years for retirement investors is the importance of sticking with a strategy instead of trying to anticipate the direction of the market, says Brian Wagenbach, branch manager for the Charles Schwab offices in Minneapolis.

The S&P 500 was up more than 26 percent in 2009. However, an investor who pulled out of the market and missed just the top 10 trading days that year would have forfeited 44 percent in potential gains, according to Wagenbach.

"That's the big lesson when you have this kind of market volatility," he says. "You have to participate. Time in the market is much more important than timing the market."

The stock market's volatility also reinforced the importance of having an appropriate mix of stocks, bonds and cash, for your age and investment goals. But it doesn't end there, it's critical to rebalance your portfolio to keep that mix on target, says Ron Florance, Managing Director of Investment Strategy for Wells Fargo Private Bank.

"Not letting your investment strategy be driven by fear and greed, but opportunity and fundamentals clearly is a winning strategy," he says.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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