We all know how hard it is to be rich. After all, it takes a lot of money to keep up multiple homes, pay for first class air travel, expensive cars and the like. For this reason, most people would naturally support a Republican plan to make workers pay higher fees on their retirement accounts so that the Wall Street crew is better able to maintain their standard of living.
Unfortunately, this is not a joke. One of the major problems facing workers today is the inability to save for retirement. Traditional defined benefit pensions are rapidly disappearing. Roughly half the workforce now has access to a 401(k) defined contribution plan at their workplace, but we know that these generally are not providing much support in retirement.
Most workers manage to accumulate little money in these accounts over the span of their working career. Part of this is due to the fact that they often change jobs. They may go several years without being able to contribute to a 401(k) plan at their workplace. And they often cash out the money that they saved in a plan when they leave a job.
In addition, many of these plans charge high fees. This is often overlooked by workers since the financial companies operating the plans usually don’t like to advertise their fees. The average fee is close to 1.0 percent of the money saved, with many charging fees of 1.5 percent of higher.
If this sounds like a small matter, imagine that you were able to save $100,000 in a 401(k). That would put you way ahead of most workers, since the median accumulation among the 60 percent of the workforce who have 401(k)s was just $26,000 in 2015, but $100,000 is certainly a plausible amount for a worker earning $60,000 a year.
A fee of 1 percent means…