Almost every other country in the world calculates sales tax into the total value of a purchase.
How does it make sense that the U.S. chooses to exclude these additional charges until the item is scanned at the register? Wouldn’t it be nice to know the exact amount that’s due before you walk through the checkout line?
Believe it or not, these taxes aren’t the only out-of-pocket payments that are “hidden” from people like you and I.
Popular retirement plans, like 401(k)s, include expenses that tend to go unnoticed, which can take as much as $590,000 from your savings!
That’s why I’m here to tell you more about these charges and how you can cut the overall cost of the fees that are sneakily tacked on to your retirement plan.
Whether you realize it or not, no retirement plan is 100% free and the kind of “behind the scenes” money management that goes hand-in-hand with 401(k)s comes at a cost.
The thing is, the majority of these fees often fly under the radar, since they’re usually somewhere in the 1% range.
What most people don’t understand is that paying just 1% in these fees would cost more than half a million dollars in sacrificed returns over 40 years of saving!
But reducing this fee percentage even the slightest amount could make a world of difference. Dropping this 1% to 0.5% may not seem like much over the course of a year, but it could mean retiring at age of 70 versus 73.
That’s three years you could’ve spent enjoying your work free existence, instead of sitting behind a desk at the office…
As you can see, these charges add up over time and are counterproductive toward the way you finance your retirement.
Lucky for you, some of these fees are completely avoidable!
The 401(k) business has never been more competitive than it is now, which presents a great opportunity for you to bargain for a lower price tag; however, it’s hard to make this happen if you don’t necessarily know what to ask for.
The trick is to know where to look so you don’t show up empty-handed when the time comes to ask for a fee reduction from your current plan.
Generally speaking, you should keep an eye out for administration, investment management and brokerage or advisory costs. The numbers show that there’s a 50% probability that your 401(k) may be subject to 12(b)-1 fees as well.
Please, don’t let all this financial jargon overwhelm you. I’m simply pointing out common areas where these charges tend to add up the most.
No, you don’t have to sift through endless pages of financial documents just to find proof of these hidden fees. Simply contact your 401(k) plan administrator and ask how they can help reduce the total cost for you.
As the saying goes, it never hurts to ask. Especially when doing so has the potential to put extra retirement savings back in your pocket.
Don’t continue to be blindsided by the fees that frequently come paired with your retirement plan. Make an effort to reduce the cost of these hidden expenses before they eat away at your savings even more than they already have.
You’ll thank yourself later when you’re able to retire sooner AND richer.