You've probably seen the charts. Those jagged lines on social media claiming one guy is a financial genius while the other is a retirement-account assassin. It's the classic dinner-table debate: does the person in the White House actually control your 401(k) balance?
Honestly, it’s complicated.
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If you look at the raw numbers, the "which party is better" question doesn't have the slam-dumb answer most people expect. We’re sitting here in early 2026, and the data from the last few decades is a wild ride of tech bubbles, global lockdowns, and massive stimulus packages.
The scoreboard for 401k performance by president
If we’re just looking at the S&P 500—which is the engine for most 401(k) plans—the rankings might surprise you. Bill Clinton and Barack Obama actually sit at the top of the modern era for total returns. Under Clinton, the S&P 500 surged roughly 210%. Obama saw a massive 189% gain over his two terms.
Then you have Donald Trump’s first term. That saw a total return of about 81.4%. People often forget that despite the 2020 crash, the recovery was so fast it ended up being one of the best four-year runs for investors in recent history.
Joe Biden's term followed a different path. Between 2021 and 2024, the S&P 500 posted a total return of about 57.8%. It wasn't as explosive as the Trump or Clinton years, mostly because the market had to digest the highest inflation we've seen in forty years.
Why the "Best" president might just be the luckiest
Market timing is everything.
George W. Bush is a perfect example of how the "performance by president" metric can be kind of a lie. He left office with the S&P 500 down about 5.6% annualized. Does that mean he was bad for the economy? Maybe, but he also had the misfortune of his term being bookended by the Dot-com bubble burst and the 2008 Great Financial Crisis.
On the flip side, Obama took over in January 2009. The market was basically in the basement. There was nowhere to go but up. He inherited a "buy the dip" opportunity of a lifetime.
What’s happening right now in 2026?
As of January 2026, we’re seeing a familiar pattern. Donald Trump’s second term started with a bang. Since Election Day in November 2024, the S&P 500 has climbed about 21.5%.
But it hasn't been a straight line up.
Early 2025 was a mess of volatility. New tariffs and trade talk sent the S&P 500 sliding nearly 20% in just seven weeks during the spring of 2025. If you checked your 401(k) in April 2025, you probably felt like the world was ending. But by the end of the year, the market rebounded by 40% from those lows.
This is the "Year Two" curse. Historically, the second year of a presidential term is the most volatile. Voters get impatient. Policy "pain" happens early so the "gains" can show up before the next election.
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The hidden killers: inflation and the Fed
Presidents get the credit or the blame, but Jerome Powell and the Federal Reserve are usually the ones actually driving the bus.
- Interest Rates: When the Fed cut rates in late 2024 and through 2025, your 401(k) probably loved it.
- Bond Performance: This is the part people miss. 401(k)s aren't just stocks. Under Biden, bonds actually had negative annualized returns—the first time that’s happened in a long time because interest rates spiked so fast.
- The "One Big Beautiful Bill": Legislative actions, like the 2025 tax cut extensions, lift corporate earnings. That’s a direct shot of adrenaline to your retirement account.
Is there a "Winner" party?
If you go all the way back to 1947, Democratic presidents have averaged an annual return of about 10.8%. Republican presidents have averaged around 5.6%.
Wait.
Before you use that as a political "gotcha," look at the context. This data includes the 2008 crash (GOP term) and the 1929 crash (GOP term). If you strip out those generational "black swan" events, the gap narrows significantly.
Plus, the best setup for your 401(k) isn't necessarily a specific party. Historically, a Democratic President with a divided Congress (at least one house controlled by Republicans) has actually produced the highest average annual returns. Markets love gridlock. Gridlock means no radical new taxes or regulations can pass easily. Stability equals growth.
Real talk: Your 401(k) doesn't care about the West Wing
It sounds harsh, but your personal contribution rate matters way more than who is sitting in the Oval Office.
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A study from the Center for Retirement Research showed that 401(k) participation and contribution levels drop during recessions. That’s the real tragedy. People stop buying when stocks are "on sale" because they're scared of the headlines.
If you had $100,000 in your 401(k) and just left it alone from 2017 through 2026, you’d be sitting on a massive gain regardless of the handoffs between Trump and Biden. The "millionaire" count in 401(k) plans hit a record 595,000 people in mid-2025. They didn't get there by trading the news; they got there by staying in the game.
Actionable steps for your retirement plan
Don't let the 24-hour news cycle dictate your financial future. Use these steps to protect your gains:
- Check your "Year Two" exposure. Since 2026 is the second year of the cycle, expect more swings. Make sure you have enough "dry powder" (cash or stable value funds) so you don't have to sell stocks if the market dips.
- Rebalance, don't retreat. If your stocks surged in late 2025, your portfolio might be "overweight" in equities. Move some profit back into bonds or mid-caps to stay at your target risk level.
- Ignore the "Policy Noise." Tariffs and executive orders cause 401(k) volatility, but they rarely break the long-term trend of corporate earnings. Focus on the earnings reports of the companies you own, not the tweets from D.C.
- Look at fees. A Yale Law Journal study found that "excessive fees" in 401(k) menus hurt returns more than almost any political event. If your plan only offers high-cost actively managed funds, look for the cheapest index fund option.
The Bottom Line: Your 401(k) is a long-term vehicle. The president is a short-term tenant. Keep contributing, keep your costs low, and let the compounding work, no matter who is giving the State of the Union address.