What is a 401(k) and how do they really work? In this video, I explore many of the hidden fees and expenses most people miss when investing in their 401(k) retirement plans.
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106 million Americans have a 401(k), or about 32% of the US population according to the U.S. Census Bureau. But did you know that nearly 71% of those people think that they’re paying no fees? In other words, a vast majority of people with 401(k) plans have no idea that they are losing hundreds of thousands of dollars in fees that can actually be avoided.
Let’s talk about what exactly those fees are, and then we’ll talk about how you can avoid paying them. Or, at least some of them. Doing so could save you hundreds of thousands of dollars, and I promise you it’s a lot easier than you think.
Now, perhaps you aren’t concerned, or you don’t care. In the long run, the fees won’t make that much of a difference in my retirement savings, right? Wrong.
In fact, according to Robert Hiltonsmith, on average a worker that earns about $30,000 per year and saves 5% of their annual income would lose about $154,000 in fees. That’s over 5 years of income lost in fees alone.
The problem got so bad, that in 2012, the US Department of Labor passed a law that required providers to disclose all fees in a prospectus.
Fortunately, there are many 401(k) providers nowadays that are much more transparent about their pricing and fees such as America’s Best 401(k)s and Betterment both of which offer employee 401(k) plans at competitively low rates. And even large brokers such as Fidelity are becoming very competitive and offering 401(k) fees as low as .71% and zero-fee mutual funds.
That said, your employer has plenty of options. There’s absolutely no reason you should be losing hundreds of thousands of dollars in fees when it’s 100% avoidable.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. The links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partner websites. The video is accurate as of the posting date but may not be accurate in the future.
#401k #retirementaccount #investing…(read more)
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All this country is is a way to scam people out of their money.
And then taxing the life out of them in the meantime oh I mean just the working class not the wealthy
@Joshua Mayo how to fix this problem?
Love watching your videos! I’m slowly Educating myself, hoping to get out of debt. I’m now digging into my 401K plan. I work for a large company (226,00 + employees) and we use vanguard. I noticed the quarterly fee varies. Last statement shows about 4k. ( I know not a lot Im gonna work to fix that.) Anyways it also says down $225 with a 8% fee. Im confused on it being a percentage % and not a set amount. Last statement was 9% with $100 loss my guess is the more I make the larger the fee?
Joshua I am new subscriber here. I love your channel, thank you for educating us about how to manage our money. I just Rollover my 403B to fidelity so I can manage it myself. I think I’ll do a better job. Blessings from Miami!
This is stressful as hell. My company matches total 6% so 3% @ 100% & 3% @ 50%. I'm putting in 17% in my 401k. Didn't know the fees were this bad. My company just moved from Prudential to Empower. Literally this happened today 4/4/22. I knew it was happening but I've never heard of this company but that's not saying much. I recently opened a Roth IRA but the max is $6,000. On the 401k, should I put in 10% & put must of my money into investment? A lot to think about. Will do some research on Empower.
Lol “daddy Joshua” saves the day again. Thanks for all this amazing information
I’ve been binge watching all your videos ! Very informative ! Thanks Joshua!
What can be done if you have an employer 401k? I work for a large private health ins co.
So should i open 401k like amazon 401k?
This is why I do the minimum matching and then invest myself in an IRA.
This is ridiculously true. The past month I dug into my 401k and seen some things that P’d me off. Hidden fees out the a**. Im transferring everything to my fidelity
When 401(k)s were first introduced, I was all over it.
Now I'm older. It's past time for me to handle this myself. So I'm going to.
Should we take our company’s 401k?
More great information thanks!
Subscribed! 3rd video on this channel and I’ve learned so much in each one!
Keep up the great work!! The followers are views are coming!
This stuff is so so crazy… Thank you for making us aware!
Wow. And now companies are making it mandatory for new employees to invest a certain percentage into their 401k and not offering matching. So sad.