Index mutual funds outperform actively managed mutual funds over long periods of time. Managers who attempt to beat the market just can't. Index mutual funds, for the most part, are also much less expensive to manage than actively managed funds. Index funds change their underlying investments less often than other funds, and those other funds quickly rack up transaction fees. Add that to compensation for the mutual fund managers - which they receive whether their funds perform well or not - and the total cost of these funds doesn't justify their performance or lack thereof.
CNN Money recently referred to a recent study that showed that some employers cost their employees $100,000 more than others for their average employee's retirement.
You can beat these averages by getting more involved in your retirement allocation. Choose the lowest cost index fund available. And if there isn't one, raise the issue with your human resources department. A few years into my first major job out of college, working for a non-profit organization, the company finally began offering enrollment in a 403(b) plan - the non-profit version of the 401(k). You would expect this type of fund to have better low-cost investment options than the average 401(k), but that wasn't the case. A small organization like the one I worked for didn't have many options for working with those third-party retirement plan administrators, and didn't have the standing to negotiate lower fees or better deals for employees.
For example, let's say Employee A works for FedEx, while Employee B works for Best Buy. The employees are the same age (25), have the same salary ($55,000), same annual wage growth (3%) and put the same chunk of their salary in their employer's 401(k) plan each year (10%).
After 40 years, Employee A would have a final account balance of nearly $830,000… Employee B, meanwhile, would start retirement at age 65 with a nest egg of roughly $743,000 - almost $100,000 less.