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Table of Contents
- Average 401(k) employee contribution: 7.4%
- Average 401(k) employer contribution: 4.5%
- Number of 401(k) investment choices: 27.2
- Average annual 401(k) return: 4.9%
- Average 401(k) fees: 0.2%-5%
- Average 401(k) balance: $112,572
- Portion of plans that offer a Roth 401(k): 80%
- Average IRA balance: $109,000
- Average IRA contribution: $2,700
Americans had $7.2 trillion invested in 401(k)s and $13 trillion in IRAs in the second quarter of 2023, according to the Investment Company Institute.
If your retirement savings is a portion of one of those totals, you may have wondered how your plan — and the investment choices you have within it — compares. Let’s take a look.
Average 401(k) employee contribution: 7.4%
The average annual employee 401(k) contribution was 7.4% of pay in 2022, according to Vanguard, which is one of the largest retirement-account recordkeepers. The IRS sets the bar for contributions pretty high: The 401(k) contribution limit for employees is $22,500 per year in 2023 and $23,000 in 2024. Those 50 and older are allowed to save up to $30,000 in 2023 and $30,500 in 2024.
» Dive deeper: Explore average and median retirement savings by age
Average 401(k) employer contribution: 4.5%
Probably the best feature of 401(k) plans is the employer contribution — aka free money — typically provided by matching a portion of what employees save. There’s a dizzying array of formulas companies use to determine how much of your contributions they’ll match. The most common formula, according to Vanguard’s 2023 How America Saves report, is 50% of every dollar an employee contributes, up to 6% of their salary.
The more telling number is the value of the match. That figure — according to Vanguard — is 4.5% of pay on average per year.
The average total participant contribution rate, combining employer and employee contributions, was 11.3%, so Americans have work to do — financial pros recommend saving 12% to 15% of your salary for retirement.
Number of 401(k) investment choices: 27.2
The average plan at Vanguard offered 27.2 investment choices in 2022. But some other plans may provide half that. The Financial Industry Regulatory Authority (FINRA) said most plans provide at least three options, most commonly mutual funds that offer exposure to domestic and international stocks, bonds, and money market funds.
About 86% of the 401(k) plans jointly analyzed by the Investment Company Institute and the Employee Benefit Research Institute offer target-date mutual funds. Known as a “set it and forget it” retirement investment, target-date funds include a mix of investments that automatically rebalance as you get closer to retirement.
At Vanguard, 98% of plans offered target-date funds, and investments in target-date funds reached 40% in 2022.
Average annual 401(k) return: 4.9%
Many variables determine a 401(k)’s return, including the investments you choose, stock market performance and 401(k) fees.
Those variables make it hard to land on an average 401(k) return, but Vanguard gives us a general snapshot based on the five years ending in December 2022: Rocky bond and equities markets dragged down returns in 2022, but strong stock market returns and plan contributions helped level things out, and the average annual return for those enrolled all five years was 4.9%.
Average 401(k) fees: 0.2%-5%
You might not know it, but if you have a 401(k), you are definitely paying 401(k) fees — between 0.2% and 5% of your balance, according to the BrightScope/ICI Defined Contribution Plan Profile.
Generally, the larger the plan, the lower the fees. Your plan is required to send you a quarterly fee disclosure statement. If you don’t like what you see, consider investing just enough money in your 401(k) to get the company match for the year. Then contribute any additional retirement savings to an IRA, where you have much more control over costs and investment choices.
Average 401(k) balance: $112,572
You skipped all that stuff above to scroll down to this number, didn’t you? No judgment from us: Financial rubbernecking is a beloved pastime.
Without further ado, the average 401(k) balance at Vanguard in 2022 was $112,572. The median was $27,376.
» MORE: See our breakdown of the average 401(k) balance by age
Portion of plans that offer a Roth 401(k): 80%
The Roth 401(k) is a mashup of a 401(k) and a Roth IRA, an individual retirement account you fund with post-tax dollars in exchange for tax-free investment growth and withdrawals in retirement.
Nearly 80% of Vanguard’s plans now offer a Roth 401(k).
Although you don’t get a tax deduction on your contributions as you do in a traditional 401(k), there’s a lot to like about a Roth 401(k), including the fact that it’s a convenient workaround for those who earn too much to contribute to a Roth IRA, which has income limits for eligibility.
Average IRA balance: $109,000
According to Fidelity Investments, the average IRA balance was $113,800 in the second quarter of 2023. The plan provider said it has 14.3 million IRAs, an 11% year-over-year increase.
Average IRA balance by age
Average IRA balance
Source: Fidelity Investments
Number of Roth IRAs
Fidelity said it had 14.3 million IRAs in the second quarter of 2023, and of those, 59.1% of all IRA contributions went to Roth accounts.
Average IRA contribution: $2,700
The IRS allows investors to contribute up to $6,500 a year to IRA accounts ($7,500 for those 50-plus) in 2023, and $7,000 a year ($8,000 for those 50-plus) in 2024..
Not everyone contributes annually, and the average contribution was down year over year, according to Fidelity. In the second quarter of 2023, the average IRA contribution was $2,000, down from $2,100 in the second quarter of 2022 and down from $2,450 in the second quarter of 2021. That may in part be due to consumers feeling the pinch of inflation and rising interest rates.
All of this retirement account gawking is only worthwhile if it inspires you to look more closely at your own savings. Ultimately, it’s all about answering one key question: Am I saving enough, and in the right accounts?
» MORE: See how to choose between an IRA vs. 401(k)
According to Fidelity, Americans have only 78% of the income they’ll need for retirement. If you want to get on track, a retirement calculator will crunch your numbers and provide a personalized recommendation for how much you’ll need for retirement and how much to save each month to achieve that goal.