The Retirement Gamble We're All Making

Martin Smith, an Emmy-winning correspondent for PBS’Frontline, is worried about his retirement — and yours.
 
In his excellent Frontlinedocumentary airing Tuesday, April 23, on PBS, The Retirement Gamble (check local listings), Smith, 64, says: “I started saving for my retirement in my late 20s. But along the way I dipped into my nest egg … not once, but several times. And now, like millions of other baby boomers, I, too, don’t have enough. Most of my savings went to pay for my kids’ educations. A divorce and the crash of 2008 didn’t help either. I’m now planning to work for as long as I possibly can.” 

It doesn’t help that the typical 401(k) plan offers 19 funds, according to the latest survey by the Plan Sponsor Council of America. Or that employers have done a spectacular job of obfuscating 401(k) fees, making it nearly impossible for employees to compare the costs of the various funds they’re offered. “Fees have tremendous consequences,” Smith said.

On average, 401(k) fees reduce investment returns by 1 to 2 percent a year. The Demos think tank published a report last year estimating that a median-income, two-earner household will pay nearly $155,000 in 401(k) fees over the course of the two workers' lifetimes.