Welcome back to the third article in our Retirement Planning Series, “These Can Be Fatal To Your Retirement!”

In the first article, we discussed how ignoring the “Sequence Of Returns” (SOR) during your retirement planning can be fatal to your portfolio.
SOR is the understanding that, if you suffer portfolio losses early in your retirement, your risk of running out of money is increased dramatically. So, if markets are high at the beginning of your retirement, be sure to position your portfolio as to avoid early losses.

In the second article, we discussed the impact of unnecessary portfolio losses, how unnecessary losses can reduce the future value of your portfolio by $100,000’s of dollars and a strategy you can use in your portfolio to avoid them. Replace losses with 0%, earn a portion of the market’s positive returns, lock in gains annually, and eliminate unnecessary fees.

This quarter, we are going to discuss the impact of unnecessary fees and how they are the silent killer of many retirement portfolios.

First, not all fees are bad. I like to say, “Be willing to pay a fee when you want, need, and receive a guarantee.”

However, so many of you are paying fees, yet take all the risk and have holdings that are underperforming the markets, which is basically giving your money away and reducing the quality of your current and future lifestyle.

Look at the table below. In this example, we are going to compare what happens to $500,000 over a 25-year period when the returns are 6.00% with annual fees of 1.00% vs. the same 6.00% return with annual fees of 0.00%.

Example of fees paid for retirement portfolio management and how they impact returns.

When you take the time to look at the numbers, its mind-blowing!

The fees paid over the 25 years are $238,635! The values are $1,693,177 vs. $2,145,935 for a difference of $452,758!

Let that sink in for a minute! If you did nothing else to your portfolio, but simply reduce fees by 1.00%, you could have an additional $452,758 in your portfolio!

What would that look like for you and your retirement?

If you’re nearing or already in retirement, unnecessary fees are a silent portfolio killer. They will dramatically reduce the future values of your portfolio which can be fatal to the retirement lifestyle that you planned and saved for.

However, by following these six steps, you will have a healthy and vibrant retirement portfolio where you get to keep more of your money! Retire With Certainty!

Follow These Six Steps To Find And Eliminate Unnecessary Fees From Your Retirement Portfolio:

  1. Confirm the annual percentage rate of fees that you’re paying on your portfolio as well as the annual percentage rate of fees on your individual holdings.
  2. Calculate the actual dollar amount of fees that you are paying annually and how much you’ve paid since your initial investment date.
  3. Confirm your average annual returns over the past 10 years on your portfolio and on your individual holdings.
  4. Compare your portfolio returns and the returns on your individual holdings to that of the benchmark like the S & P 500 Index.
  5. Identify the portions of your portfolio that you are paying fees on that have underperformed the S & P 500.
  6. Replace the fee costing and underperforming portions of your portfolio with vehicles that don’t charge fees that offer competitive returns. This will dramatically improve the quality your retirement!

About the author

Richard Kelly - Certified Senior Advisor in Monument, Colorado
Rick Kelly
Certified Senior Advisor at 800-975-1064

Rick Kelly, CSA is an Independent Certified Senior Advisor with offices in Monument and Littleton, CO.  He helps Boomers and Retirees live healthier retirements by designing safer and more optimal portfolios along with secure retirement income streams.

Rick Kelly, CSA
325 2nd Street, Suite I
Monument, CO 80132