High commissions and charges, like investment fees, are maddening, whether hidden or out in the open. These pesky charges also come with a financial cost. Anyone who’s ever bought a concert ticket or made a plane reservation knows that firsthand. But what retirement savers often overlook is how investment fees can add up over time and eat into their investment performance, shrink their account balance, and even delay retirement. In fact, higher investment management fees could potentially set your retirement back by four years, according to the 2022 Mercer Retirement Readiness Barometer. Mercer’s analysis found that an individual investor paying the median level of fees (in this case, 1.9%) would not be retirement-ready until age 70, well above the traditional retirement age of 65.
In today’s world, we all need every dime of our 401(k) or IRA account balance. So, paying attention to investment fees or commissions charged by mutual funds, wealth advisors who provide financial advice, or brokerages is crucial. It's as essential as getting your asset allocation right and building a diversified portfolio to grow your money over time without taking outsized risks.
