Daily Money - How High Are Your 401(k) Fees?

As savvy savers know, there’s no such thing as a free 401(k). While the fees associated with your retirement account may not be high, it’s still smart to know what you’re paying. This goes for all the investment accounts you own. Fees eat into your returns, and what might seem like a tiny nibble can turn into a big bite over the decades. That doesn’t mean you should forgo your 401(k) if your fees are high — saving for retirement is always a good idea. But if you find your company’s costs are above average, there are some steps you can take. Learn more about them in today’s edition.

Best wishes,
Elizabeth

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What are you up to these days?
Linda & I are happily retired. We still own and manage a large duplex rental property, which we paid off a few years ago. Our retirement was ahead of the pandemic, and, because we enjoy each other's company, even after nearly 43 years of marriage, we weren't at all freaked out by our many months of being tightly locked down. In fact, being forcibly cocooned gave us a chance to take on some major house projects. Linda and I are both long-time engineering managers, so we always have a "to-do" list, for whenever we have some spare time.

Sounds productive! Do you have any advice you’d like to share for others about preparing for retirement?
I spent nearly the first half of my 52-year career making other people wealthy, but eventually reached a point when I wanted more control over my time, and income. So, with Linda's full support, I started up an engineering consulting company back in July 1986, and when we hit our first million in sales by the New Year, we knew that we were on the right track. Linda stayed in her professional positions, and maxed out her 401(k) for the next 33 years.

We flew out here to Oahu and bought the large duplex back in 1988, three years before we actually moved our headquarters to Hawaii from New Orleans.

What's your savings/investing philosophy? 
Not everyone has the opportunity to start a business that can totally replace working for others, but if you have the education and the mindset, go for it! But, even if you can't go full-speed-ahead, start up a side-gig, and put every penny into an IRA. Start right now, because time is your best friend.

Once we paid off the rental property, we got the instant equivalent of a $4,000/month raise, which is about a third of our retirement income. The property has also increased in value, by almost $1 million over what we paid for it. Our home is also paid off, adding another $4,000 "raise" to our retirement cash-flow, and about a million dollars in equity. So, real estate has been a very large part of our retirement planning. What's sad is that none of our three kids or three grandkids is the least bit interested in our estate. Estate planning isn't a lot of fun.

Linda has been our money manager. She has identified "buckets" for our spending for the next 32 years, and although she has been pulling out a nominal 4% from our investment fund, for the past three years, we now have a quarter million dollars more than when she retired, thanks to the stock market. And that is with 60% in stable funds. It definitely takes money to make money, so start early, and take every opportunity to save.

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