8 on Your Side: How Fees Can Sap Your 401k Savings

LAS VEGAS - A penny here, a penny there may not seem like much, but when talking about your retirement, those pennies can add up. For example, seemingly insignificant fees to your 401k can, over time, sap nearly 30 percent of your savings.

Les and Roz Simms discovered how fees diminished their retirement savings.

"I figure, maybe, it's about twenty to thirty thousand (dollars) easily over the years," Les said.

Look closely at your statements. In the fine print, you'll see the fees associated with your 401k. The plethora of charges includes annual fees, trading fees, marketing fees, management fees and many others.

If your 401k gained 10 percent in one year, for example, it also had 3 percent in hidden fees. That leaves you with only a 7 percent gain, which isn't bad.

If your 401k experiences a bad year, however, and you lost 10 percent, your loss totals 13 percent because of those fees.

"You need two good years to make up for one bad," said retirement specialist Adam Goodman with Lifetime Income Services. "If you are sixty, and you have your money in the market, twice over the last ten years within a two-year period, there was a forty to fifty percent drop."

He says not watching your retirement is like gambling.

"People don't think they are gambling with their retirement having it in the market, but they are. It happens," Goodman said.

He says fees, combined with lack of attention, is akin to playing a game of roulette and putting all your money on red or black. "A lot of people are taking a bigger gamble than they think," he said.

Protecting yourself from a big loss isn't difficult. The Simms did it with a few changes, such as moving their 401k's to annuities. The change worked out so well, they've already retired, and they are only in their late 50's.

"We planned. That's the main thing. You have to plan," said Roz.

If you have a problem you want investigated, contact 8 on Your Side at 702-650-1907.


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