Americans are paying fees they don’t know about, and it could have a bigger impact than they think on their retirement, according to a recent article from CNBC
The article points to a recent survey that found 67 percent of Americans believe they pay no fees on their 401(k) plan. If they look closer at their employer-sponsored plan, they may find that’s not the case.
Fees based on a small percentage of the total value of the account might not seem very significant, but it adds up, as the article describes:
“A 1 percent reduction in fees can add an additional 10 years to your retirement income. If two people have the same 7 percent return over time but one pays 1 percent in fees while the other pays 2 percent, the latter will run out of money 10 years earlier.”
Fees could be charged in layers, in the form of commissions or with labels such as “asset-management charges.” Sometimes it’s difficult to grasp all the fees charged because they’re buried in the fine print.
Knowing how much you’re being charged is an important part of your due diligence process when shopping retirement plan providers. Some providers, such as Equity Trust (a self-directed IRA custodian), publish a fee schedule
that doesn’t hide or bury the true cost of maintaining an account.
Here are some other factors to consider
if you’re researching custodians at which you could open or roll over a self-directed IRA.