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Big surge in 401(k) balances, but workers still not saving enough

A surging stock market has accelerated the recovery of many workers' retirement plans over the past few years. New data from Fidelity Investments—the nation's leading 401(k) provider—show an impressive 92 percent gain in the average 401(k) account balance since the market low of the economic downturn in 2009.

By the end of the first quarter of this year, the average 401(k) was worth $88,600, up from $46,200 on average five years ago, according a the report released Tuesday.

"About three-quarters of the account balance growth has been due to the market and about 25 percent or a quarter has been due to employees putting more money into their 401(k) plans," said Jeanne Thompson, a vice president at Fidelity.

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"When we look over a 10-year period, what we find is that 50 percent is due to the account balance growth, to the market growth, and 50 percent is due to employee and employer contributions. What that really drives home is that it's really important over the long term not only to put money into your 401(k) but also to make sure you're invested appropriately for your age."

Despite market gains, many workers are not putting money in their employer's retirement plans. Fidelity found that almost one-third of workers who have access to a 401(k) plan are not contributing. Those who are offered a matching contribution from their employer may not take advantage of it either.

Fidelity found workers save about 8 percent of their pay in a 401(k) on average, according to the report which compiled data for 13 million active and retired employees in over 21,000 plans. But most financial experts agree saving 8 percent of pay is not enough to ensure a comfortable retirement for most workers.

"We really recommend to replace a good amount of your income in retirement that you save 10-15 percent (of pay). We understand that in the beginning when you're young and you're just starting out you may not be able to start out at 10-15 so you start out where you can and every year we recommend increasing that annually."

Jin Lee | Bloomberg | Getty Images

Many workers worry they won't have enough money to live comfortably in retirement. If they have drug expenses, a Medicare-eligible married couple retiring at age 65 should plan for $360,000 in retirement savings to cover medical costs, according to a 2013 study by the Employee Benefits Research Institute. That's more than four times the average 401(k) balance today.

The big problem is most workers have no idea how much money they'll need. "Only 4 in 10 workers are using retirement savings calculators. That means the majority is still guessing and don't understand how much they need to save for retirement," said Greg Burrows, senior vice president of retirement and investor services at the Principal Financial Group.

To find out how much money you'll need for retirement, the first step—no matter what age—is to figure out where you stand.

"No savings plan is going to be implemented without a really honest assessment and look (at spending)," Burrows said. Financial advisors say workers need to assess how, why and where they're spending money and then they'll more than likely need to make some changes in their spending to free up cash for savings. The solution is simple, but takes discipline.

—By CNBC's Sharon Epperson.

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