In my first blog about costly retirement planning traps, I explained how conventional retirement plans put you in jeopardy of losing money you absolutely cannot afford to lose. Just because all the other lemmings choose to dive over the cliff, doesn’t mean you have to!
Now let’s look at the gremlins of conventional retirement plans that are decimating the nest egg you’re trying to build: FEES.
Do you even know how much you’re paying in fees each year for your retirement account? If you’re like most Americans, you don’t have a clue. The Employee Benefit Research Institute found that only half of 401(k) plan participants even noticed the fee information stuffed in the 14-page disclosure (that requires a magnifying glass to read and 3 years of law school to understand).
And almost no one makes any changes to their plan if they do read the fee disclosures.
Most folks just don’t think fees are all that important. Or, they think they’re unavoidable – sort of like death and taxes.
Wrong on both counts!
[Read more…] “How Hidden Fees Are Sabotaging Your Retirement Plan”
If you’ve been a subscriber for a while or you’ve read my new best-selling book, The Bank On Yourself Revolution, it’s no secret that at the end of the day, I’m not a big fan of the 401(k).
Or the IRA, 403(b), or any other government “blessed” and controlled retirement account. There are many reasons for that. This recent blog post I wrote reveals one big problem – mutual fund fees, which are likely devouring far more of your savings than you realize.
But in the last couple of weeks, there have been new studies revealing just how devastating to your financial health a 401(k) can be:
Recent 401(k) Wealth-Killing Revelation #1:
A new academic study by two Yale and University of Virginia professors argues that millions of workers have been ripped off by excessive fees charged by plan sponsors and financial representatives to these plans.
The study concluded that…
[Read more…] “Two New 401k Revelations”
While doing my research for my new book (The Bank On Yourself Revolution, to be published on February 11), I came across four stunning new wealth-killing revelations about 401(k)’s and IRA’s.
If you have money in one of these plans, I urge you to read this advice about your 401K and/or IRA today to find out how to protect yourself from making costly mistakes:
Wealth-Killer #1: The fees you’re paying may be much higher than you think
I’ve written in the past about how Congress passed a law in 2006 protecting employers from liability as long as they automatically put employees’ contributions into certain types of mutual funds, known as “default” investments.
Target-date funds (TDF’s) have emerged as the default investment of choice. Unfortunately, they’ve also proven to be very risky AND they’re among the most costly mutual funds you can buy. (Would it surprise you to learn the mutual-fund industry lobbied Congress to get that law passed and make sure their interests were protected? Didn’t think so.)
So last month, an article in Forbes (“The Trouble With Target Funds”) revealed that, according to the prospectus of one popular target-date fund, your projected fees and expenses for each $10,000 invested is $2,478 over a ten-year period (assuming it grows at 5% a year).
That’s 25% of your savings!
So, if you had $300,000 in that fund for ten years, you’d get soaked for – are you sitting down? – $74,340! (And that’s just over a ten-year period!) It also doesn’t take into account all the other fees you’re charged in a 401(k).
The author of this article concluded…
[Read more…] “Important 401K and IRA Advice”