Tuesday, August 28, 2012

Well-known columnist warns consumers about 401(k) fees


Michelle Singletary, whose column appears in the Washington Post Sundays, has also warned seniors about 401(k) fees, in her piece Aug. 26, “Retirement fund fees, if ignored, will eat into your nest egg”, link (wesbite url) here. 

She gives some mathematical examples, based on compound interest concepts (well known from Algebra I), where a nest egg, where a 1% increase in fund fees reduces a final nest egg by about 25% (out of about $225000). 

Here is the three-minute AARP short film, “Understanding 401(k) Fees”:


You can do sample calculations at this link

 Another good site is BrightScope, link  

My own fee from Merrill Lynch was around $125 a year for about a decade (out of $60000 balance, about 0.25%).

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