Can I Retire? How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less by Mike Piper

Author:Mike Piper [Piper, Mike]
Language: eng
Format: epub
Publisher: Simple Subjects, LLC
Published: 2013-05-16T18:30:00+00:00

In addition to limiting you to high-cost funds, most 401(k) plans include administrative fees. A 2009 study by Deloitte and the Investment Company Institute found the median administrative fee to be 0.72% of assets annually. In contrast, many brokerage firms charge no annual IRA fees at all.

Between less expensive investment options and lower administrative costs, it’s likely that you can reduce your total investment costs by 1% per year simply by moving your money from a 401(k) to an IRA. That might not sound like much, but when compounded over your whole retirement, improving your investment return by 1% can have a dramatic impact on how long your money lasts.

Try thinking of it this way: If you plan to use a 4% withdrawal rate, paying investment costs of 1% per year would mean that you can only actually spend 3% of your portfolio value—that’s a 25% reduction in your ability to spend!

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