More than 97 million Americans have access to an employer-sponsored retirement plan. If your retirement savings is a portion of the $5.3 trillion invested in 401(k)s, you may have wondered how your company's plan stacks up to the competition. Let's take a look.
Average employee contribution: $6,940. That's the average annual employee 401(k) contribution during the 12 months ending March 2019, according to Fidelity. The 401(k) contribution limit for employees is currently $19,000 per year, with those 50 or over allowed to save $25,000.
Average employer contribution: $4,040. That's the free money employers chipped in, according to Fidelity data. If you add the average employee and employer contributions together, the combined total represents an average savings rate of 13.5% of salary. That's within the recommended 10% to 15% salary savings range for retirement.
Number of investment choices: 8 to 12. The average 401(k) plan includes between eight and 12 investment options, most commonly mutual funds that offer exposure to domestic and international stocks, bonds and money market funds.
Average annual 401(k) return: 10.2%. Many variables determine a 401(k)'s return, making it hard to land on an average 401(k) return. But Vanguard gives us this general snapshot based on the five years ending Dec. 2017.
Average 401(k) fees: 0.20%-5%. In a TD Ameritrade survey, 96% of investors knew how much they paid for streaming services like Netflix, yet only a quarter knew how much they paid in 401(k) fees. Let's set the record straight: You are paying between 0.20% and 5% of your balance in fees, according to 401(k) analytics firm BrightScope, which said the larger the plan, the lower the fees. Although employers frequently cover a portion of the administrative costs, Callan's research found that in 32% of plans, participants are on the hook for all fees.
Average 401(k) balance: $103,700. This average 401(k) balance as of the end of March 2019 from Fidelity is somewhat misleading since it doesn't take into account participant age and time of the job. The average balance of participants in their 40s with two years or less of tenure at their employer, for example, was roughly $20,000 at year-end 2016, according to Investment Company Institute and the Employee Benefit Research Institute research. Folks with between 20 and 30 years at the same company had an average of nearly $167,000.
Dayana Yochim is a writer at NerdWallet. E-mail: dyochim@nerdwallet.com. Twitter: @DayanaYochim.
