On 6/19/2008 Bloomberg TV aired a three part series revealing “The Truth Behind Hidden Fees in 401k Plans.”
According to a survey conducted in 2007, 8 out of 10 people who have 401k accounts are completely unaware of the management costs for their 401k fees. The fees are buried in fine print and so confusing they may as well be in a foreign language.
As many a 17 different kinds of fees, according to the U.S.Department of Labor, can be charged to your account by plan managers. Shelf Space fees, Soft Dollars, 12b-1 fees, Finder fees, Surrender Charges, Wrap fees, and Revenue Sharing are fees that you may not have heard of, charged to your account.
These are just a few of the fees charged by brokers or management to 401k retirement accounts. What you don’t know can and does hurt you!
401k account savings should compound over a period of time to make a comfortable retirement nest egg. Most of us are unaware how much of our savings is offset by management fees. At 2%, over a period of time, as much as half of your savings can be eroded according to Ted Benna of Malvern Benefits Corporation.
Fees as high as 3%-5% can “kill a retirement nest egg!” Edward Siedel of SEC Investment Management Division has seen them and says excessive fees have become epidemic.
More and more Americans will have to work in their Golden Years to make ends meet if 401k balances don’t start climbing higher. As he so eloquently put it “pension plans are going the way of the 8 track tape.”
Burton G. Malkiel PhD of Princeton University tells us that financial institutions and insurance companies are not obligated to tell us about management fees and when they do, it is in such an obscure way that it is very hard to understand. With about 3 trillion dollars in 401k plans in America, people should take notice and start asking questions.
People should be aware of the fact that 401k fees can make the difference between eating cat food or cordon blue in their retirement years. Unless laws governing disclosure rates change in the near future, there is not much you can do except ask questions.
One thing to consider is to not put all your eggs in one basket. Think about starting a small online business by building a blog and doing the necessary things over time to draw traffic to your site. Pick something that you have experience and an interest in. In this way you can make a niche and grow your small business over time.
The actual start up costs for an online business can be minimal and it’s enjoyable and offers the standard tax advantages that are associated with supporting a home business.
Ask your broker about your 401k fees. Don’t put all your nest eggs in one basket. Having a 401k, with social security and a small business can help you hedge your bet against receding assets in what should be your “Golden Years”.
Here’s where you can learn about a simple, proven, step-by-step system that can provide you with full a secure retirement income and success in a work at part-time at home internet marketing business.
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