what is average return on 401k investment for the average person for the average amount of time.?

Question

average contribution,average amount contributed,average time left in 401?

Answer 1

During my years of working in 401k industry I'd say average is 5% of income. Average balance is about 10k. And average time in the 401k is 3-4 years.

Now, those numbers are skewed and seem small because many many many people don't participate at all. Average participation rate is about 80%. So that means 20% of people are putting in zero. Those that do participate tend to still take cash distributions when they leave their jobs.

Take a look around your workplace...how many people have been there longer than 5 years...not many. Someone making 40k and putting in 5% will have about 10k in it when they leave.

Average participant in a 401k doesn't beat the market and they shouldn't. There are some that "chase the returns" and they should be beaten with a stick. Past performance doesn't dictate future returns!!! But in reality, if your 401k is your only retirement vehicle then you should be properly balanced between stocks and bonds. This will actually serve to lower your return in comparison to the market...but it prevents the big precipitous drop that will kill you. Everyone says invest in the S&P and it will serve you well. But, the market does well over time...not every year. So if you just happen to turn 67 during a depression you're screwed because you won't have time to recover. THAT'S why it's important to diversify!

Best question you didn't ask is how many roll over vs take cash distributions. In my experience it's 4 out of 10 taking rollovers and that number is growing. Which is a good thing.

Answer 2

the stock market over the last 100 years has averaged around 10% gain a year.......that is an average, so some years you will do better, like last year was very good, and some years you will do less or even lose some money

make sure your investments in your account are good and appropriate for your age, and just keep pumping that money in there and don't worry so much about what the stock market is doing in the short term.....and some day you should have a huge pile of money.

Answer 3

I don't think anyone here will have the answer...and I don't know where you would get it....but it sure would be a nice piece of information !
I "manage" five funds ( self, wife and friends)....and they are all so different... from minimum contributions to max, from 9% return 17.5% , $180,000 invested to $788,000, one person 60 the others 3, 6, and 9 years away.

Answer 4

It will definetly be average.