Scrutinize 401(k) Fees

Here is how to get your retirement plan back on track in 2009

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All sorts of fees—including administrative, transaction, and investment management charges—can whittle away your nest egg over time. If a worker invests $5,000 annually in a 401(k) over a 35-year period and pays 1.5 percent of the account balance in fees (using constant 2008 dollars and assuming an after-inflation return of 4.9 percent annually), he will have $345,000 at retirement. If the same worker can cut expenses to 0.5 percent of the account balance, his nest egg will be $423,000 at retirement—$78,000 more. But keeping costs low can be difficult because not all 401(k) fees are fully disclosed. Many financial advisers think a reasonable rate to aim for is an expense ratio of 1 percent or less. Low-cost index funds are typically a good way to invest in stocks at rock-bottom prices.

More New Year's resolutions for retirement:

Delay retirement

Put off claiming Social Security

Get your 401(k) match

Avoid early withdrawals

Determine your risk tolerance

Rebalance your portfolio

Evaluate your target-date fund

Pay off your mortgage

Get a pension

Downsize

Bump up your contributions

More money-related New Year’s resolutions