401(k)s did well in 2024, but not just due to market gains. You deserve credit, too

CNN — Last year was a pretty good year if you were among the tens of millions of employees who put their savings to work in a 401 plan. Based on the latest data from Fidelity and Vanguard, in 2024 many employees increased their savings rates, participants stayed diversified, and the vast majority didn’t tap their accounts for a loan or hardship withdrawal. What 401 participants accumulated Fidelity reported that as of the end of the fourth quarter in 2024, the average 401 balance had risen by 11% for the year to $131,700. For most people who don’t land jobs with seriously fat paychecks, the secret sauce to building financial security for yourself is saving consistently in every year of your career and investing that money in a diversified portfolio that lets you benefit from gains during bull markets while protecting you from the worst declines in bear markets. As for allocation and diversification, Vanguard found that two-thirds of participants in its database had professionally managed allocations — meaning they invested in a target-date fund, a traditional balance fund or a managed account.