Each year, 401(k) savers have to pay a part of their savings for administrative and investment-management fees, which are usually counted in fund expense ratios. As time passes by, an individual have to pay higher fees because their account balance grows.
According to FutureAdvisor, when a someone starts saving for retirement, they usually pay not more than $100 in fees a year since their balance is low. However, when their account balance approaches $50,000, annual fees get as high as an average of $355, more than triple the starting amount. And by the time a person is ready to retire, the fees can add up to several thousand dollars a year.
Generally, after a 40-year career, some workers can lose up to tens of thousands of dollars in 401(k) fees.
http://money.cnn.com/2013/03/27/retirement/401k-fees/index.html?iid=HP_Highlight
Even though these fees exist in the 401(k) plan, in order to be ready for retirement have such a plan is the way to go. It is true that these fees will take your money, but the positives beat the negatives in this plan. It is interesting however that many people don't know about these fees.
ReplyDeleteHere's a solution, go IRA. They, typically, do not carry hefty fees, but carry the upside of tax-deductible deposits. The only downside is a deposit limit but, they hold a lot less risk than some of these pension funds that can go bankrupt. Then you would be seriously losing thousands and thousands of dollars.
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