401k Plans 50% Growth

[Guest scarletrose]

anyone seen growth of their 401k retirement savings like that of what this article claims http://www.research401k.com/401k-longterm-growth.html ?

"A study carried out by 2 Washington DC state organizations revealed that 401k participants who contributed payments towards their employer sponsored 401k retirement plans over the past 7 years have seen growth rates of over 50%. This is inspite of the tech boom bust of 2000 and market declines in 2002."

[austin3515]

Sounds like their funds have gone up 50% over seven years - not 50% each year. That sounds pretty average actually (<7% per year, after the affects of compounding).

[Guest mjb]

50% for 6 yrs (1999-05) is 7%. what was they invesing in? an index fund?

[Kevin C]

The article says "Long Term Contributors saw their savings grow from $67,785 in 1999 to $102,014 in the year 2005." That sounds like they are talking about increases in account balances, not investment return. The balance increased 50% over the period, but that increase would include new contributions.

From 1/1/1999 through 12/31/2005 the S&P 500 index had an annualized return of 1.77% per year and a total return of 13.05%. I would be very surprised if the average 401(k) participant had better investment returns than that. A well diversified portfolio would have had much better returns for that time period, but I think an annualized return of 6%-7%/yr would still be considered well above average.