Retirement and Financial Independence

Destroy 401k Fees – Use a 401k Fee Analyzer

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Table of Contents  
  1. Detect 401k Fees
  2. Destroy 401k Fees
  3. Retire With More For Less

If you’re not careful you can lose more than 25% of your 401k to fees. Destroy 401k fees quickly with little effort and retire a lot richer (and sooner).

Most people don’t realize it but every year fees are slowly destroying their retirement. These fees seem tiny and are often ignored.  However, over the course of time they can cause serious damage.  If you’re contributing regularly to your 401k (and I really hope you are!), you should be very concerned.  To protect your retirement you need to destroy 401k fees.

Fortunately, destroying 401k fees is easy and not very time consuming at all.  You can definitely look at the prospectus of each 401k fund you have by hand but I never really want to spend so much time tweaking my 401k.  So, for the sake of this post I’m going to walk you though the awesome tool I use.

Detect 401k Fees

401k Fee Graph

Personal Capital is a new tool that sits in the space.  They don’t do budgeting but they have a bunch of cool graphs and pictures to explain your money situation.  I think they still have a ways to go with their money tracking tools but their 401k Fee Analyzer is top notch.

You can visit their site, register your account and add in financial institutions much like Mint.  From there you’ll go to the Investments header in the top right, and click 401k Fee Analyzer.  On the page you’ll be greeted with an awesome graph of your potential 401k earnings.

I’ve put my sample data contribution rates in there along with my age and I selected 1% as an even number to evaluate the impact of fees.  If I paid only 1% to fees in my 401k portfolio, fees would consume a whopping 28% of my future earnings, basically

401k Fee Assumptions

shaving off a cool $1 million from my retirement account!  That is not ok.  If you want to check out your own situation, you can easily adjust the numbers with their Edit Assumptions section.

Using this tool has been eye opening for me.  Until last week I had no idea I was basically giving away so much of my hard earned money for no reason.  Beyond the cool graphs, the best part of the tool is how it aggregates all of your funds, charts each out with its fees as well as finds out your overall fee percent.  From there it is pretty easy to see who the culprits are.

Now that we’ve found the funds that are stealing our retirement money we need to do something about it!

Destroy 401k Fees

401k Fee Rate

Remember, the fees will sink you and any fee is too much.  Even the Personal Capital bench mark at 0.50% would still be a lot.  Based on my same base numbers, I would still lose roughly 13% to fees… not acceptable.

From the research I’ve done, there are plenty of popular funds that have near zero fees.  For example, my personal favorite, Vanguard, has plenty of mutual funds at 0.20%.  Not only are Vanguard’s fees very low but their performance is excellent.

I  think you can do even better.  For example, in my portfolio I have a fund called Blackrock Equity Index Fund H and it only has 0.07% fees.  Now that’s a good deal!  Better yet, it’s returned over 8% over the course of it’s life and 16% just last year.

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Retire With More For Less

Most people set their 401k up once and hardly look at fund returns before they set their allocations.  After that, they never log back in and check again.  If you did that, just take five minutes and optimize your retirement savings.  There is a huge difference between 1% and 0.50%.  For me that difference is $500,000 and for you it may be even more.  Don’t throw your retirement savings away, destroy 401k fees!

Have you tried Personal Capital?  Share your experience with us in the comments!

Andrew Fiebert - Chief Nerd
Andrew Fiebert is a thirty-something soon-to-be father of twins, a self-professed data nerd, and has worked as a Data Engineer for Barclays Capital and iHeartRadio. He's spent the past six years growing LMM into a multi-six-figure business with over 500 hours of free personal finance education that reaches over 1 million people every month. Andrew has a B.S. in Computer Science and has been featured in Quartz, Forbes, Business Insider, and The Telegraph.
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