Yikes! The advocacy group Demos reports that a two-income couple — earning a median income over their careers — spends an average of $154,794 during their working lives on 401(k) fees. Fees, Demos says, eats up nearly one-third of their investment returns.
A higher income couple pays even more in fees: $277,969.
401(k) fees for too long have been shrouded in mystery. The Labor Department is finally forcing investment companies to make it clear to employers and employees what's the true cost of the 401(k). These companies have tried to drag out disclosure as long as possible. Disclosure is supposed to start in July.
Some financial professionals expect that workers will ignore these disclosures once they get them. But as Demos shows, fees aren't cheap and the spread between a high-priced and low-cost plan could make a huge difference in your lifestsyle during retirement.
So once you start getting these disclosures, make sure you look at them. And lobby your employer for a cheaper plan if you're paying high fees.