Only about 20% of managed 401(k) funds deliver better returns that those that are simply indexed to broader market performance, according to research conducted by the Vanguard mutual fund investment company.
The problem: Managed funds charge such hefty fees that they cancel out substantial investment gains. The typical managed-fund fee is 1.3%. The lowest-cost indexed funds charge fees of just 0.08%. That 1.22% annual difference can cost $159,000 in lifetime earnings for a worker who invests $3,000 per year in a managed 401(k) from age 25 to 65.
The take-away for HR: Work with your retirement benefits advisor to ensure 401(k) investment options include a variety of indexed funds.
- Do we wind up paying for unemployment comp benefits?
- Before canceling health insurance, beware FMLA trap that could cost big bucks
- Suggest FMLA if worker says illness causing work problems
- Florida Unemployment Compensation Law
- Can employee on workers' comp who has already changed doctors now pick out a specialist?