Many Americans unaware of retirement investment fees

Nearly half (46%) of full-time employed U.S. baby boomers mistakenly believe that they don’t pay any fees in their retirement accounts.

That’s according to a new survey commissioned by Rebalance IRA, a retirement investment firm.

Another 19% of boomers believe that their fees are less than 0.5%. Only 4% of respondents believe they pay over 2% in retirement account fees.

But the reality is that everyone who has a retirement savings account in the U.S., such as 401(k), does pay fees. Those fees typically range anywhere from 1.5% a year to 3.86%.

The confusion among U.S. employees persists despite a rule by the Department of Labor that went into effect in 2012. It requires plan sponsors to provide greater transparency about fees.

“Over time, these seemingly small fees will compound and can easily consume one-third of investment returns. Yet a lot of people don’t believe that this problem applies to them,” says Mitch Tuchman, managing director of Rebalance IRA.

“Fee obfuscation has been around as long as there have been fees, and this survey is proof that the industry is still winning the battle,” says Burton Malkiel, author of the investing book A Random Walk Down Wall Street and member of Rebalance IRA’s investment committee.

Rebalance IRA’s survey polled 1,165 full-time employed boomers in the U.S. this fall.

Related articles: