Our 70/30 hypothetical illustration shows how returns grow
By the time participants retire, as much as 70% of their account value could come from returns, not contributions.
The demographic assumptions, returns and ending balances are hypothetical and provided for illustrative purposes only, and are not intended to provide any assurance or promise of actual returns and outcomes. Returns will be affected by the management of the investments and any adjustments to the assumed contribution rates, salary or other participant demographic information. Actual results may be higher or lower than those shown. Past results are not predictors of results in future periods. Based on an exhibit by CBS Moneywatch.
It’s why investment selection matters
Share our 70/30 returns story with clients
Download and share a PDF of this hypothetical illustration
Contributions should work as hard as participants
The following hypothetical example assumes a $40,000 starting salary with a 3% increase each year, and a 6% annual investment return.
The starting point
The participant contributes 10% of their income throughout their career starting at age 26
The turning point
The participant could earn an annual return of $7,500 in year 15, more than the $6,000 contribution that year
The retirement point
By age 65, the participant earning 6% could accrue about $1 million, with 70% of the account derived from returns
Earning 8%, returns could make up 81%, accruing $602,479 more — double the overall contribution
Hypothetical results are for illustrative purposes only and in no way represent the actual results of a specific investment. Your investment experience will differ.
Put choice of manager top of mind
The quality of the investments starts with who is managing them. Active managers that have a history of beating market indexes may give participant contributions the biggest boost.
Reach Capital Group at
(800) 421-9900
See the impact
Learn how even a 1% increase in annual returns can significantly impact retirement outcomes
Evaluate target date series
Compare up to four target date funds using our Target Date ProView tool
Find a solution
See which of our funds beat the index over the long term, and by how much
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only. Use of this website and materials is also subject to approval by your home office.
American Funds Distributors, Inc.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.