It always seems that the costs associated with managing a 401k are hard to figure out. Most large companies now send out reports that are clear about the 3-month performance of your funds, but they rarely tell you the actual dollar amount you are losing to plan fees. The Center for Retirement Research at Boston College estimates that "an annual fee of 0.5% of assets can reduce your savings by 12.5% over 30 years." If you work for a smaller company, your fees might be even higher.
It is possible however to find out how much you are paying in plan fees. BrightScope.com has an extensive list of employer managed fund fees. For fun, I looked up one employer, the Allstate Corporation, and learned that employees investing in their 401k plan may lose more than $300,000 in savings over the course of their career. This can equate to up to 11 years of extra work to make up the money lost to fund fees.
Take a look and let me know what you found out about your employer.
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Showing posts with label fees. Show all posts
Showing posts with label fees. Show all posts
Tuesday, June 15, 2010
Monday, June 14, 2010
What are annuity fees?
Picking up the discussion on fees from last week, let's discuss annuity fees. What exactly are annuity fees?
Simply, they are the fees associated with periodic income for a specified length of time, for life, or a combination of the two. Like anything else in finance, there are fees associated with the purchase of an annuity. Depending on the annuity type you buy, you may pay contract fees, administration fees, withdrawal fees, or mortality fees(!).
Annuity fees are expensive (up to 10% in some cases) and may even be born by those who survive you. That is not much of a legacy to leave, is it? It might be hard to figure out what your annuity fees even are because they are often buried in hundreds of pages of prospectus.
Honestly, variable annuities do not make sense in most circumstances precisely because of these high fees. A better alternative for your retirement income is an immediate annuity. There are fewer fees which mean you have more to invest.
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Simply, they are the fees associated with periodic income for a specified length of time, for life, or a combination of the two. Like anything else in finance, there are fees associated with the purchase of an annuity. Depending on the annuity type you buy, you may pay contract fees, administration fees, withdrawal fees, or mortality fees(!).
Annuity fees are expensive (up to 10% in some cases) and may even be born by those who survive you. That is not much of a legacy to leave, is it? It might be hard to figure out what your annuity fees even are because they are often buried in hundreds of pages of prospectus.
Honestly, variable annuities do not make sense in most circumstances precisely because of these high fees. A better alternative for your retirement income is an immediate annuity. There are fewer fees which mean you have more to invest.
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Saturday, June 12, 2010
Brokerage Fees
We all know that our brokerage firms are going to charge us fees. The most savvy of consumers tries to get a clear understanding of what those are before they sign over a single penny to a new brokerage firm. While Protect My Retirement Funds is not in the business of recommending stocks, funds, or brokerage firms, we thought it would be good to give you a heads up about one fee that is becoming more and more common - transfer fees.
More and more often, firms such as Wells Fargo and Schwab, are charging any where from $50 - $200 just to transfer your money to another firm. Benjamin Poor, of Cerulli Associates, a researcher in the financial services market likens it to "having a bad meal at a restaurant, then being charged to leave the building."
A potential way to avoid the fee is to ask for it to be waived before you even create an account. The new firm might be willing to do this to earn your business. Also, clients transferring six figures may have the leverage to ask the new firm if they will reimburse the client the fee charged by the old firm.
Are there any fees that have given you a financial headache? What do you do about them?
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More and more often, firms such as Wells Fargo and Schwab, are charging any where from $50 - $200 just to transfer your money to another firm. Benjamin Poor, of Cerulli Associates, a researcher in the financial services market likens it to "having a bad meal at a restaurant, then being charged to leave the building."
A potential way to avoid the fee is to ask for it to be waived before you even create an account. The new firm might be willing to do this to earn your business. Also, clients transferring six figures may have the leverage to ask the new firm if they will reimburse the client the fee charged by the old firm.
Are there any fees that have given you a financial headache? What do you do about them?
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