TIL my 401k fees are eating 0.8% more than I thought

I was looking at my quarterly statement from Fidelity last night and noticed a line item for administrative fees. I always assumed my target date fund was charging around 0.2%, but when I dug into the prospectus it's actually 0.97%. That extra 0.77% over 30 years adds up to like $40,000 in lost growth. Has anyone else found hidden fees in their retirement accounts, and did you switch funds or just eat the cost?

2 comments

2 Comments

jadep4111d ago

Whoa, that's a rough surprise. I actually read an article in the Wall Street Journal last year that said a lot of people don't realize how much those tiny fee differences really add up over time. They used an example comparing a 0.5% fee to a 1.5% fee, and the difference over a career was like six figures lost. I would definitely switch funds if I were you. The target date index funds usually have way lower fees, like 0.08% or something, and they do basically the same thing.

caseyclark11d ago

Wait... 0.5% versus 1.5% and that comes out to six figures lost? That can't be right... let me do the math in my head. So if you're putting away say $500 a month for 30 years, that 1% extra fee would eat up like... man, I'm getting like $200,000 or something crazy. That's horrifying actually. No wonder the big firms push those expensive funds so hard, they're making a killing off people who don't know any better. Makes me wanna go double check all my own accounts right now.