How Retirement Fees Cost You.
Today in America your main road to retirement is your 401(k), or 403(b), etc.
But do you know how much your plan is costing you?
For 6 in 10 Americans the answer is No.
Over the course of a lifetime and ordinary American can pay as much as $109,407 in retirement fees to their mutual fund providers.
Here’s how 401(k) fees fall into 3 main groups.
These costs are tallied up and expressed as a number called the expense ratio.
It sounds simple but when it comes to the expense ratio things aren't always as they seem.
Let’s do some math.
Imagine you have $50,000 invested in a mutual fund.
Which in turn earns 5.88% gross return with an expense ratio of 1.23%.
Investors might assume their fees are calculated by applying the expense ratio to the amount that’s been earned on their investment. (Gross return)
Assumption: $50,000 +5.88% gross return -1.23% = $36.16 in expenses.
So after one year your retirement money earns $2,940, and cost you only $36.16.
In reality the expense ratio is applied to the Full balance of your account.
So instead of paying $36.16 in fees you are actually paying $615.
And there is one more charge that is not factored into the expense ratio. Trading Fees.
These additional layers of cost can effectively double the amount you are paying in fees. Of course that may not seem like much compared against your new balance but over time those fees compound.
At 10 years you’ve paid $20,603 in fees. After 20 years your retirement savings stand at $124,095 .........but that has cost you as much as $73,406 in fees!
Would You like to Find out How You Can Eliminate Fees?
Contact us Today to get your free analysis.
Today in America your main road to retirement is your 401(k), or 403(b), etc.
But do you know how much your plan is costing you?
For 6 in 10 Americans the answer is No.
Over the course of a lifetime and ordinary American can pay as much as $109,407 in retirement fees to their mutual fund providers.
Here’s how 401(k) fees fall into 3 main groups.
- Administrative fees.
- Asset management fees.
- Marketing fees.
These costs are tallied up and expressed as a number called the expense ratio.
It sounds simple but when it comes to the expense ratio things aren't always as they seem.
Let’s do some math.
Imagine you have $50,000 invested in a mutual fund.
Which in turn earns 5.88% gross return with an expense ratio of 1.23%.
Investors might assume their fees are calculated by applying the expense ratio to the amount that’s been earned on their investment. (Gross return)
Assumption: $50,000 +5.88% gross return -1.23% = $36.16 in expenses.
So after one year your retirement money earns $2,940, and cost you only $36.16.
In reality the expense ratio is applied to the Full balance of your account.
So instead of paying $36.16 in fees you are actually paying $615.
And there is one more charge that is not factored into the expense ratio. Trading Fees.
These additional layers of cost can effectively double the amount you are paying in fees. Of course that may not seem like much compared against your new balance but over time those fees compound.
At 10 years you’ve paid $20,603 in fees. After 20 years your retirement savings stand at $124,095 .........but that has cost you as much as $73,406 in fees!
Would You like to Find out How You Can Eliminate Fees?
Contact us Today to get your free analysis.