Is your 401k or IRA money growing enough for you to actual retire someday?

Apr 15

If you have a 401(k) and IRA, congrats! You are already an investor. At some point you’ve probably asked yourself “is what I’m doing enough for me to eventually retire comfortably someday?”

Or you might be acutely aware that what you are doing isn’t enough. It’s not a great feeling so I’m giving you a virtual hug for this one.

How much you are investing and at what frequency is super important and this financial independence calculator and training can help you start to figure out if you’re on track to retire comfortably.

But I want to take this a step further and ask another critical question:

Is the money you’ve already invested—whether in a 401(k), IRA, or another account—growing in a way that sets you up for the future you want?

If you don’t know how your investments are performing, or even if they’re growing at all, you’re not alone. This is one of the most common questions I hear from women.

In full transparency, it’s the same question I asked myself after opening a Roth IRA in my early 20s, only to let it sit untouched for four years. I regret that now, because ignoring your investments can come with a big cost (and it definitely cost me.)

I hate to say it this way but when you don’t pay attention to your retirement accounts, you’re just completely winging it. You might be getting some growth, but lower than desirable returns, even just for a few years, could mean tens or even hundreds of thousands of dollars less in retirement.

The good news is, you don’t need to be a financial expert to make sure your money is growing the way it should.

Here’s one way to compare your portfolio to the overall average return of the stock market:

How to Gauge Your Portfolio’s Performance

One simple way to get a sense of how your stock investments are performing, is by comparing them to the S&P 500.

To find the return of the S&P 500 over various time periods, you can literally just type S&P 500 into google and see everything from 1 day to 5 year returns.

The **S&P 500** is a benchmark that tracks the performance of 500 of the largest companies in the U.S., including companies you’ve heard of like Apple, Amazon, and Coca-Cola. It’s widely used because these companies drive much of the U.S. stock market’s growth, making the S&P 500 a good tool to start to measure how your retirement or investment account is growing by comparison.

Here’s why it matters: Over the long term, the S&P 500 has historically delivered an average annual return of about 10%, and over the past five years, it’s averaged closer to ~14% annually (before inflation).

If your portfolio’s returns over time are consistently well below the average 10% return of the S&P 500, you might be leaving money on the table.

Even if you’re 30% of your portfolio is in bonds, the historical 30 year performance on a portfolio that has 70% in stocks and 30% in bonds is a roughly ~8% annual return.

It’s also important to note that the S&P 500 only includes large US companies and this group of companies has outperformed other sectors of the stock market over the last 10 years.

If you are investing in other small US companies, international companies, or some of your portfolio is held in bonds, a lower risk investment that reduces volatility in your portfolio, you should expect to see a lower average return than the S&P 500 and to some degree, that’s okay.

As an aside, personally I think investing in just the S&P 500 is somewhat risky because you are only investing in large US companies which means your portfolio is less diversified. Said another way, you are putting all your eggs in the large US company basket.

Growth Takes Time

Regardless of what you find in your portfolio, it’s important to understand that growth isn’t immediate or linear. Investments, like a well-planned garden, need time to grow and thrive.

Sometimes I will hear feedback from people saying “my financial advisor did amazing/horrible for me this year.” The reality is that they only have so much control. They only way to really understand how they are doing is to compare their efforts to the market.

The stock market naturally goes through seasons of fluctuation. Some years will be incredibly strong, and others might feel like setbacks. But over the long term, a diversified portfolio should reflect steady growth and always has.

That’s why it’s better to evaluate performance over a 5 to 10 year period, rather than focusing on a single year. This long-term view gives you a more accurate picture of how your money is performing.

3 Steps to Evaluate Your Portfolio

If you’re ready to see how your investments stack up, here’s a simple process to get started:

1. Find the historical performance of your investments.
Log into your 401(k) or brokerage account. Look for the section that shows “annualized returns” over multiple time frames—like 1, 5, or 10 years.

2. Look up the S&P 500’s historical average return.
A quick Google search (see image above)—just type in “S&P 500”—and you will see a data table of the historical performance of the S&P 500. Now, you can compare your portfolio’s returns over the same time frames.

3. Compare your returns to the S&P 500.
If your portfolio is significantly underperforming the S&P 500, you may need to revisit your strategy.

For example:

If you’re investing conservatively (e.g., with a larger percentage in bonds), your returns will naturally be lower than the S&P 500, but you should still see meaningful growth.
Even with 20% your portfolio in bonds, an ~11%+ annual return over the past five years would still be reasonable.
Even with 40% in bonds you should have seen an ~8%+ return over the last 5 years.

The Scary Impact of Underperforming Investments

To put this into perspective, let’s look at a quick example:

If you invested $50,000 today and earned the average S&P 500 return (10%), it would grow to $336,375 in 20 years. At a lower return of 6%, it would only grow to $179,085.

That’s a difference of over $157,000—money you could have used to retire earlier, travel, or create more financial freedom.

Don’t Forget About Fees

Another reason portfolios underperform is hidden fees.

Every single fund you choose or you advisor chooses on your behalf has a fee called an “expense ratio”.

If these fees are too high, they can quietly eat into your returns over time. For example, a 1% annual fee might not sound like much, but over 20-30 years, it could cost you tens of thousands of dollars in lost growth.

Financial advisor fees are also something to look out for—this is such a big mistake that CNBC even covered my story of how I lost out on thousands by hiring the wrong (expensive) advisor.

Reflect on Your Strategy

How confident are you in your investment choice in your 401(k), IRA, or other investing account?
On a scale of 1 to 10, do you feel secure that your money is growing—or are you unsure if it’s enough?
What’s the long-term impact of staying where you are?
If your portfolio keeps performing at its current rate, will you feel financially secure 10 or 20 years from now?
On the flip side: Imagine knowing exactly what you are invested in and why? Imagine knowing your investments are set up to steadily growing toward your goals. What would that do for your peace of mind and your future?

Are You Ready to Do Something Different?

If you’re feeling uncertain about your investments or overwhelmed by where to start, you don’t have to figure it out alone.

You don’t have to wait to take control of your money—don’t miss my next free beginner investing workshop coming up soon. Learn more here and save your seat early!