Scrutinize 401(k) Fees

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


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


Bump up your contributions

More money-related New Year’s resolutions