How fees impact your retirement

You work hard for your savings and sacrifice to achieve your financial goals. It can be very frustrating to realize that these fees are slowly eroding your wealth.

1 + 1 = 34

This certainly seems like strange math, but it does illustrate a point. If you pay a common advisor fee of 1%, plus a common mutual fund expense ratio of 1%, this can erode over 34% of your wealth accumulation. To understand how this is possible, consider a typical portfolio earning 7-8% over someone’s lifetime. If they are paying typical fees of 2% annually, that is at least 25% of average earnings, every year, whether the market is up or down. So the real return after fees is closer to 5-6%, you can see how after 30 years this can be a huge reduction in your retirement savings.

Over a lifetime small fees can erode up to 34% of your wealth. Learn how you can reduce these fees and enjoy the retirement lifestyle you earned.

How fees could impact your lifestyle

  • Coming up short on critical financial goals, like college or retirement.
  • Having to work past retirement age.
  • Not living the retirement lifestyle you expected.
  • Outliving your retirement savings (moving in with the children)

Coming Up Short

Not meeting our financial goals can be frustrating. They often have real impacts on our lives. Whether it is saving for your children's college, paying for a wedding, a European vacation, these are not just dollars, they are memories. Of course, the biggest financial goal of all is retirement and many of us sacrifice our whole lives to try to make retirement a peaceful and relaxing time.

Working Longer

So you might have to work a few more years to offset the excessive fees, what is the big deal? Well, for one thing it is your hard earned savings. You have to decide if retiring at 62 sounds better than say, 68.

Altering Your Lifestyle

You may find that to make your savings last you cannot afford the retirement lifestyle you had planned. You may not be able to buy that convertible sportscar or travel often. It's not the end of the world, but it can be hard to swallow if it all went to fees.


After you retire your savings start to drain. Many people find, even with the help of social security, a safe withdrawal rate of 3-4% is difficult. Add to this you will likely pay income tax on at least part of your withdrawal. Now, if you are paying advisor and fund fees of 2%, that is more than 50% HALF your annual withdrawal.

Outliving Your Savings

One thing that most people worry about is outliving your life savings. What will you do if you run out of money? Move in with the grandchildren? Perhaps a Medicaid funded nursing home? These are probably not how you wanted to spend your retirement.