How to Grow Your Savings
Are you paying too much in 401(k) fees? Until recently, it was difficult to know. But as of last year, 401(k) plan sponsors are required to send participants annual disclosures outlining fund fees and their effects on savings over time. [...]
In this report, we’ll discuss how high fees can dramatically affect what you have available in retirement. We’ll outline what you can do within your own account to improve your returns. And if you have a bad 401(k) plan to start with, you’ll also learn how to push your employer to make changes to the funds within the plan—or even to dump the company that administers the plan—to improve your odds for retirement security. [...]
With a 401(k), you invest now and defer your taxes until you withdraw the money, presumably when you are in a lower tax bracket. But employees who make poor 401(k) fund choices, with high, built-in investment fees, can lose out on tens or even hundreds of thousands of dollars in returns over their working lives without even knowing it. Last year, the progressive think tank Demos estimated that two median-income earners will pay, on average, almost $155,000 in 401(k) fees over a lifetime. IRA plans that individuals set up themselves were included in that figure. [...]
Policy analyst Robert Hiltonsmith, author of the Demos study on 401(k) fees, estimates that about 40 percent of 401(k) participants pay excessive overall fees. “And we have a conservative bar—1 percent of assets—for what’s considered excessive,” Hiltonsmith says.
Read the full report: The Retirement Savings Drain: Hidden & Excessive Costs of 401(k)s
Sign up for our emails to stay updated on what we're doing and how you can help.