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.
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The participant contributes 10% of their income throughout their career starting at age 26
The participant could earn an annual return of $7,500 in year 15, more than the $6,000 contribution that year
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.
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.
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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.