Products April 28, 2011

AARP Offers 401(k) Fee Calculator

A free 401(k) fee calculator on AARP’s Web site aims to help investors better understand 401(k) fees and their potential impact on retirement savings.
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The AARP 401(k) Fee Calculator, powered by BrightScope, Inc., can estimate the fees associated with individual plans and compare them to the average for a low-cost 401(k) investor. It also approximates in dollars the potential impact of the fees on the investor’s balance at retirement age, the AARP announced.

After completing the calculations, the AARP 401(k) Fee Calculator suggests additional resources and action steps investors might consider if they find their fees are higher than the average low-cost 401(k) investor.   

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In a recent survey by AARP, more than seven in ten (71%) 401(k) plan participants incorrectly reported that they do not pay any fees to plan providers (see “Most 401(k) Participants not Aware of Fees They Pay“).  

The calculator can be found at http://www.aarp.org/401kfees. A free registration is required.
Data & Research April 28, 2011

Most 401(k) Participants not Aware of Fees

More than seven in ten 401(k) plan participants said they do not pay fees to plan providers in a recent AARP survey.
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Less than a quarter (23%) said they do pay fees, and less than one in ten (6%) said they do not know whether or not they pay fees, according to AARP’s findings.

About three in five (62%) are unaware of how much they are paying in fees for their plans, and almost one-third (32%) report that they do not feel knowledgeable about the impact that fees could have on their retirement savings. However, about four in five (81%) believe that the fees charged for investments are very important or somewhat important in decisions about their 401(k) investments.  

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Other findings include: 

  • While most plan participants (63%) say they have contributed money to their 401(k) plan, about one-fifth (22%) have withdrawn money or received payments from their 401(k) plan.  
  • Almost two-thirds (64%) stated that they prefer to make their own decisions about saving and investing.  Some respondents reveal that they have taken steps to learn more about their investments such as using the summary information or prospectuses about mutual funds or consulting with a personal financial adviser.  
  • When respondents were asked how confident they are about having enough money to live comfortably throughout their retirement years, almost three-quarters (74%) stated that they are very confident or somewhat confident.   
  • Most respondents (64%) report that they have tried to calculate how much money they will need to have saved by the time they decide to retire so that they may live comfortably in retirement.  

The survey was conducted from December 14-30, 2010 by Woelfel Research, Inc. among a sample of 803 U.S. residents ages 25 and over who are 401(k) plan participants.  

A full survey report can be downloaded here.

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