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Building 401(k) Wealth One Percent at a Time: Fees Chip Away at People’s Retirement Nest Eggs

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Abstract:

People are often not fully aware of the fees that they are charged and of the potential impact of these fees on their retirement income security. The disclosure of 401(k) fees is increasingly the subject of review by the U.S. Department of Labor, which polices private employer pension plans and state authorities, who watch over state pension plans. So far, these actions have not translated into more comprehensive and more easily understandable fee disclosure. How that should be done is one key focus of this paper.

The bottom line: If all Americans are given the opportunity to save for their retirement free of excessive 401(k) fees, everybody—employers and employees—can more effectively do their part to provide for a secure middle-class retirement as a reward for a lifetime of hard work. Achieving this goal should be a shared responsibility. Public policy can do its part to foster the common good of a secure middle-class retirement.