I’ve heard that some people think the 401 (k) plan is free. You are not one of them. You know where to look for those “hidden” rates. We also know what you can and cannot do if you think you are paying a lot.
In addition, you know that it takes a lot of effort to move from a lack of awareness of 401 (k) pricing to accurately investigating and implementing what your options are.
But you knew that effort might not be worth it. There may be better options. They represent a more reliable and easier way in giving you what you want.
Conclusion: Fees measure only one thing, which may not be what you want most.
“Price is what you pay, value is what you get,” said Thomas J. Scalici, CEO of Cornerstone Advisors Asset Management in Bethlehem, PA.
When you think about it, there is only one thing that matters. Fees are just one aspect of your journey to accomplish that one thing. In fact, fees may even suggest that you are doing exactly what you need to do to reach your intended destination.
Hannah Whatley, financial adviser to Rather & Kittrell Capital Management in Knoxville, Tennessee, said: “Therefore, the fees you pay within your 401 (k) plan should drive progress toward that goal. If you are a participant in your plan and need access to a financial plan that is not available in your 401 (k) plan. Makes sense to pay extra for additional levels of service. Similarly, if you are a plan sponsor, the fee you pay for your plan determines the level of service available to your participants. “
If you are interested in getting the most value for your money, you think not only what others can do, but what you can do to increase your chances of successful retirement. Should be. This starts with the most basic behavior you can show for a 401 (k) plan (or IRA).
“So far, the most important decision that plan participants can make to influence their retirement income is how much they contribute,” says Scalici.
From the time you start to how much you save, no one can prevent you from contributing. This is the greatest key to success and it’s all in your hands. And it has nothing to do with the price.
Mark Fonville, CEO and President of Covenant Wealth Advisors in Richmond, Virginia, said: “Participants pay for plan fees regardless. Their focus is on creating good financial habits and automating savings. I always tell people to” pay for themselves first. ” And tell them to automate it. This means that you need to save for retirement before you have the opportunity to spend your money. Automation increases the chances of a successful retirement index, regardless of fees. “
Part of the automatic is free money. Yes, most 401 (k) plan sponsors offer immediate monetary rewards that match at least a portion of your donation. Do not underestimate the power of this. And it doesn’t depend on the price.
Stuart Robertson, CEO of ShareBuilder 401k in Seattle, Washington, said: Make sure you are well invested and at least receive company matches if offered. It’s free money. “
Nowhere is the fee misunderstood as in the investment arena. Indeed, this is perfectly understandable given that prices are offered in different ways in this area. Who can blame you if you can’t make a head or tail from them?
The good news is that, according to one study, investment decisions are only the fourth of the means to guide your retirement fate. (The top three are when you start saving, how much you want to save, and how long you want to save.)
In fact, when it comes to investing, many experts see one important factor that can beat the price.
“If plan participants focus on only one aspect of their 401 (k) investment, that one aspect should be asset allocation each time,” says Whatley. “The asset allocation of your account determines the risk you are taking and thus the growth and volatility you experience. Most plans offer a target date fund. This is the time to retirement. It’s a way of automating that the longer you go, the more risk you have, and the closer you get to your retirement date, the less risk you have. “
After all, you have to focus primarily on where you want to be. Are you going to pay 10 times more to virtually guarantee that you’re in the right place, or if you only have half the chance to get there, are you going to pay only half?
“There’s little you can do about the fees paid by participants, so more importantly, focus on the revenue generated in the past for the various plans offered,” said Josh Simpson, Vice President of Operations. increase. Investment Adviser for Lake Advisory Group in Lady Lake, Florida. “But again, to get this information, you may need more information than just the websites your employees visit to do their research. On average. Employees need to be educated because they may not know what to look for when they visit a website and do a survey. “
You really can’t do much about the price. Focus on what you can do. However, always keep your destination in mind.