The average retirement account had returns of about 18% in 2023—we're still waiting for data for 2024, but given stock and bond market returns, they should have been as strong or stronger—marking another robust year for many retirement savers.

But you don't want to be left behind if your returns aren't quite where you want them to be. Understanding how your 401(k) performs compared with others can help you gauge whether you're on tr𓄧ack for retirement.

How 401(K)s Work

A 401(k) is a 澳洲幸运5官方开奖结果体彩网:defined contribution retirement plan that lets employees save pre-tax dollars through automatic payroll deductions, often with matching employer contributions. With nearly $9 trillion collectively held by Americans 401(k)s, they are a cornerstone of private-sector retirement.

Most plans offer a range of investment options, including active mutual funds and index funds. 澳洲幸运5官方开奖结果体彩网:Target-date funds are the most popular choice.

Average/Median 401(k) Balances

The average 401(k) balance in 2024 was $132,300, but the median balance (the midpoint of all accounts) was significantly lower at around $35,000. That means a relatively small number of very large accounts pull the average up considerably—nearly 30% of plan participants had balances under $10,000.

As you might expect, older workers closer to retirement are likelier to have larger account balances than younger cohorts since they've had more time in the workforce to accumulate savings. These patterns highlight how early and consistent saving can lead to strong long-term growth.

For perspective, long-term savers, particularly Gen-Xers who have stayed in their plans for 15-plus years, have much higher balances, averaging $586,100.

Disparities in 401(k)s Balances

Many disparities exist across demographic group🍷🐷s.

Men are somewhat more likely than women to own retirement accounts (47.8% vs 43.5%). Men also consistently have higher 401(k) account balances than women. These are the figures for 2023:

• Men: $157,489 (avg.)/ $42,263 (median)
• Women: $112,401 (avg.)/ $31,164

There are also significant differences by race and ethnicity. About 54% of whites and 46.8% of Asians own retirement accounts, compared with 37% of Blacks and just 28.3% of Latinos.

Average/Median 401(k) Returns

In recent years, 401(k) participants have seen strong 🌳returns 𒀰because of positive performance in financial markets.

For 2023, the average total return for 401(k) plans administered by Vanguard was 18.1% (median, 19.2%), while the personal return (which accounts for contributions and withdrawals) was 17.6% (median, 18.9%). Looking at longer-term performance, over the five years ending in 2023, participants avꦰeraged 9.7% annually (median, 10.4%) with an 8.9% personal return (median, 9.2%).

Factors Impacting 401(k) Returns

Se𓆉veral factors influence 401(k) portfolio returns:

• Investment choices: Those in target-date funds generally had more consistent returns with less extreme shifts.
• Age affects risk tolerance: Younger participants typically had more in stocks, with those under 45 on average holding a portfolio made up of almost 90% in stocks.
• Trading activity: About 95% of participants didn't change their accounts in 2023, maintaining their long-term investment strategy.

The Bottom Line

While comparing your balance and returns to averages can be useful, remember that retirement savings are highl🎐y personal and depend on factors like age, sꩲalary, and years until retirement. Focus on maintaining the contribution levels you can afford and ensuring your investment mix aligns with your retirement timeline.