What Are the Average 401(k) Returns? See How Yours Compare

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 track for retirement.

Key Takeaways

• The average 401(k) return in 2023 was about 17.5% to 18%.
• Retirement account returns depend on the mix of assets you or your fund choices are invested in.
• Target-date funds are often the default option for 401(k) plans.

How 401(K)s Work

A 401(k) is a 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. Target-date funds are the most popular choice.

If you’re in target-date funds, you might have returns lower than average, especially as your fund becomes more conservative as you near retirement. That’s by design: they prioritize steadier, more predictable growth aligned with your retirement timeline over chasing maximum returns.

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 groups.

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.

Advisor Insight

In 2024, the average total contribution rate to 401(k)s (including both employee and employer contributions) was 14.1% of one’s salary.

Average/Median 401(k) Returns

In recent years, 401(k) participants have seen strong returns because 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 averaged 9.7% annually (median, 10.4%) with an 8.9% personal return (median, 9.2%).

Factors Impacting 401(k) Returns

Several 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 highly personal and depend on factors like age, salary, and years until retirement. Focus on maintaining the contribution levels you can afford and ensuring your investment mix aligns with your retirement timeline.