And if the market goes back to running flat, the 401k’s won’t shrink. They just won’t gain interest. “Oh no”.
Sure, it sucks, but it isn’t the end of the world, and if stocks run flat and 401ks run flat, then inflation should be running flat as well. It could bankrupt some companies and screw some people over if their retirements are not 401ks and are instead in company stock and stock options, but if you took nothing but stock options and didn’t go with a traditional 401k or other savings, than that’s a large risk you took on yourself.
401k’s are federally protected under the Employment Retirement Income Security Act and assure that your contributions are protected right down to the month and no angry creditors or company bankruptcy can go after that money.
That isn’t to say a market crash won’t cause your 401k to go down, but the market won’t “crash” by hitting a ceiling, and most 401ks aren’t just in the US stock market. They’re diversified among foreign and domestic stuff, and not just stock markets, so even a large crash isn’t going to wipe out anyone’s 401k. Just reduce it by maybe 20% or less, depending on options you’ve chosen with your 401k.