PBS recently aired the results of its study into the issue of Americans use of 401(k) accounts as a vehicle to accumulate savings for retirement. PBS’ study determined that with the cost of living rising and life expectancy increasing, figuring out how much to save for retirement is extremely challenging. Even more challenging is attempting to determine how to invest money into your 401(k). PBS’ study indicated that retirees utilizing a 401(k) account should take the following subjects under consideration. If you are one of the 60 million Americans who currently invest in a 401(k) plan here is what you should consider:

1. Investment Fees: PBS’ study found that the average Mutual Fund brings with it a fee of 1.3 – 2%, with some being as high as 5%, for administration, asset management and other fees. While the percentage may see low, the average person spends $155,000 in fees over the lifetime of their 401(k) plan;
2. Fiduciary Duty: PBS defined fiduciary relationship to be when one person has an obligation to act for another’s benefit. Investors should confirm the financial advisor’s agreement to be a fiduciary and act in your best interests;
3. Kickbacks: PBS’ study found that kickbacks occur when a company pays a broker a portion of revenue to sell that company’s funds. The kickback is eventually paid by the consumer in the form of fees. Make sure that your investor is not obtaining a kickback from the fund he or she is proposing you invest in; and
4. Index Funds: Index funds are a type of mutual fund that is designed to match or track the components of a market index such as the Russell 2000 or S&P 500. The PBS study found that Index Funds may be more appropriate for some retirees because they funds have low fees, no manager and hold broadly diversified funds, and index funds tend to outperform even the best mutual funds over the long term.

For more regarding the PBS study please visit:

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/