Plan sponsors are now required, by law, to monitor fees and expenses to assure that they're reasonable. Here's why: just a 1 percentage point reduction in fees and expenses per year can increase a plan participant's portfolio value by a staggering $163,270.00 after 30 years. That produces an additional 6.8 years of retirement income (assuming that he/she pulls out $24,000.00 per year to supplement his/her social security income.)
Beginning account balance: $5,000.00
Annual contributions: $5,000.00
Employer contribution match rate: 50%
Number of years to save: 29
Annual net rate of return (lower cost provider): 8%
Annual net rate of return (higher cost provider): 7%
Annual contributions: $5,000.00
Employer contribution match rate: 50%
Number of years to save: 29
Annual net rate of return (lower cost provider): 8%
Annual net rate of return (higher cost provider): 7%