In March 2019, this bull market celebrated its 10th
birthday and now sits a whisper below its all-time
high. Born from the financial crisis in March 2009, the
S&P has delivered a staggering total return north of
400% to investors.
And although this bull market is elderly by historical
standards and is still more than two years away from
being the longest bull market on record, ask yourself:
What would a 20-year bull market look like?
Current 10-Year Bull Market
Before we answer that question, let’s keep some
perspective on the current bull market:
The markets dropped about 60% during the
financial crisis and then the bull came out of
the gates fast, jumping 37% in the first two
months and 69% in its first year
Its best calendar year was 2013 when it
gained 32.4%, followed by 2009 (+26.5%) and
2018 was its weakest year (down 4.4%),
breaking its streak of nine straight positive
This 10-year bull has grown by an average
rate of 17.7% per year
For perspective, the long-term average annual
return of the stock market has been roughly 10%.
Average 401(k) Balances by Age
It should not surprise you that 401(k) balances
increase with age. Below are the numbers from
Fidelity’s retirement study:
Ages 20-29: Average 401(k) balance: $11,600
Ages 30-39: Average 401(k) balance: $43,600
Ages 40-49: Average 401(k) balance: $106,200
Ages 50-59: Average 401(k) balance: $179,100
Ages 60-69: Average 401(k) balance: $198,600
What Does a 20-Year Bull Market Do?
Let’s have some fun and assume that this bull market
grows by 12% per year – which is considerably less
than its current 10-year run of 17.7% per year and
slightly more than the 10% long-term average annual
return of the market.
And to make it more real, let’s assume that $500 per
month is added – which is incidentally about 1/3 of the
maximum annual allowance of $19,000 per year for
2019, up from $18,500.
Note that if you are 50 and over and looking to add
more, the catch-up contributions will remain the same
for 2019, allowing you to add an additional $6,000 to
Although we will all be a decade older, here are what
those average account balances would grow to if we
enjoyed 10 more years of this bull market:
Ages 20-29: Ending 401(k) balance: $148,045.72
Ages 30-39: Ending 401(k) balance: $247,432.94
Ages 40-49: Ending 401(k) balance: $441,858.98
Ages 50-59: Ending 401(k) balance: $668,275.41
Ages 60-69: Average 401(k) balance: $728,839.21
Of course, this is for illustrative purposes only and
does not include pesky items like fees, taxes and
What Else can We Expect in a 20-Year Bull Market?
Let’s examine the most recent 10-year bull so that we
remember that even if it grows into a 20-year bull, it
won’t be a straight line up. Consider that this bull:
Has delivered six 10% corrections, with the
largest coming late last year (down 19.8%)
and in 2011 (down 9.4%)
It went nearly four years without a 10%
correction (2011-2015) and 2017's largest
intra-year decline was a paltry 2.8%
Generally speaking, drops of 10% in the S&P
500 occur about once per calendar year
Is a 20-year Bull Realistic?
The short answer is: no one knows. Repeat that out
loud: nobody knows.
But, history does consistently show us that bull
markets are fueled by the fundamental combination of
economic growth, rising corporate profits, and
favorable interest rates – all of which mostly exist in
the current environment.
Corporate earnings are slowing, but are still strong,
consumer optimism is solid, interest rates are
favorable, and unemployment numbers are at 50-year
lows. That doesn’t mean everything is rosy, however.
In fact, there are still plenty of global and political risks
to worry about.
This is why we look at your asset allocation every
year (or when you have had a significant life change).
With advances in certain asset classes and declines
in others, we need to make sure your asset allocation
is aligned with your goals and risk tolerance.
And no matter where your current 401(k) balance
resides today, make sure you and your financial
advisor explore what a 20-year bull market might do
for your goals.
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