House Committee Unanimously Approves Bill to Address "Retirement Income Crisis"
In rare showing of bipartisanship, this past Tuesday April 2, a key Committee of the House of Representatives, the House "Ways and Means committee," unanimously approved a bill designed to address the "retirement income crisis" faced by so many Americans. After the "the Secure Act" was approved, Richard Neal, D-Mass, the Chair of the committee said: "Americans currently face a retirement income crisis, with too many people in danger of not having enough in retirement to maintain their standard of living and avoid sliding into poverty."
One big reason why retirement incomes fall short is the often-hidden fees that are charged on 401k and other retirement accounts. A study by the firm NerdWallet looked at the effect of investment fees on retirement accounts and found "staggering numbers." "Just like the accelerating effect compound interest has on the growth of savings, the same thing happens - only in the opposite direction - when investment fees compound." See How a 1% Fee Could Cost Millennials $590,000 in Retirement Savings, by Dayana Yochim and Jonathan Todd.
Retire Early or Work 3 More Years to Pay Your broker's Fees?
Another study concluded that:
"Fees charged on 401(k) plans can often appear to be deceptively low .... Although these fees as a percent of assets may appear small, over the course of a full working career, typical fees in 401(k) plans can reduce employee savings by 20 percent to 30 percent .... Calculated another way, employees would need to postpone retirement for up to three years to compensate for the lost investment income to 401(k) fees over a course of a full career." Building 401(k) Wealth One Percent at a Time - Fees Chip Away at People's Retirement Nest Eggs.
Rodriguez Tramont & Nuñez, P.A. has collected millions of dollars for 401k retirement plan investors and other investors who were charged excessive mutual fund fees by their brokers.