Retirement pop quiz: How much are you paying in 401(k) or IRA account fees?
If you’re completely stumped, you’re not alone. According to a survey by AARP, the majority of Americans are in the exact same boat.
In fact, when asked whether they pay any fees at all, 65% of 401(k) plan participants indicated they didn't. And once they were told that the majority of plan providers do charge fees, as many as 83% of survey respondents admitted they weren't sure exactly how much they were shelling out.
So what’s the big deal? Should people really care if they’re getting hit with a measly 1% in fees?
Actually, they should. According to an analysis produced earlier this year by the Center for American Progress, someone who invests in a low-fee fund (0.25% of assets) could wind up saving thousands of dollars more, and working several years less, than someone who invests in a high-fee fund of 1.3%.
The problem is, fund disclosures are often confusing and many people have trouble finding the fees on their retirement statements. Another issue is the fact that some companies don’t offer enough low-fee options.
If you’re (understandably) confused about what kind of fees you’re paying, start by checking out the numbers on your latest retirement statement, though you can also consult your human resources department or put in a call to your plan’s record keeper for more information.