Keep in mind, returns will vary depending on the individual investors portfolio, and 9.5% is a general benchmark. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Even in this case, you will still save an additional $2,000 just by using a 401(k). However, one of the key drivers behind the gap is the fees charged by many 401(k) plans. There are options to help most investors slash those fees and make more of your money work for you. In 2023, employers and employees together can contribute up to $66,000, up quite a bit from a limit of $61,000 in 2022. She lives and works in Cincinnati, Ohio. Average 401 (k) balance: $179,200. Should we give in and assume theres no way to cut down on these bloodsucking fees? Are your investments well diversified to weather market volatility? The average rate of return on 401 (k)s from 2015 to 2020 was 9.5%, according to data from retirement and financial service provider, Mid Atlantic Capital Group. Just because your employer isnt asking for out-of-pocket fees to run your 401(k) plan, it doesnt mean youre not paying them. Unfortunately, for numerous reasons, this doesnt mean a 401 (k) will actually realize a 5-8% return. Average 401k In addition, our Social Security calculator can help you visualize how much you can expect in benefits. The money that doesn't go to the employee's take-home pay gradually accumulates, the balance earns interest from investments, and by the time retirement rolls around, its grown into a substantial nest egg for the retiree. A recent report by the Securities and Exchange Commission (SEC) painted a vivid picture of how large even a seemingly small fee can be. The fee analyzer tool shows you just how much your 401(k) plan, or any other investment portfolio for that matter, is costing you. Maximum contribution: We use the current maximum contributions ($18,000 in 2015 and $53,000 including company contribution) and assume these numbers will grow with inflation over time. And yepyou guessed it, the S&P 500 reflected those tough times with an average annual return of 1% and a period of negative returns after that, leading the

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