“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.”
401k’s are a great way to build wealth for retirement but don’t read too much into the short quote provided on this site. They speak of 50% growth rates over the past 7 years, but they don’t define this. Is it the actual growth rate of the underlying investment? Is it an annualized growth rate? Does it include the employer’s contribution? Who knows? 401k’s aren’t rocket science and they don’t generate greater returns than other market investments. Their draw is the tax benefit and the employer contribution. If you look at it this way you are immediately getting a return of your marginal tax rate say 23% plus your employer’s contribution of say 3-6% which is not a bad benefit especially over the long term.