First, the Good News—The good news is that today there are more “401k millionaires” than at any other time in US history. The two factors behind this increase in 401k accounts worth $1 million or more are: (1) the significant run-up of the stock market, and (2) because of Covid, people stayed home and ended up saving money. Now that Covid is receding in the rearview mirror, the 401k saving rate will probably fall back to normal levels.
Now the Bad News—–The bad news is there would probably be 50% more 401k millionaires today except for the proven fact that many millions of US workers did not cross the $1 million mark for one reason, and one reason only. 401k savers are constantly being hit by 401k fees skimmed from their accounts by financial advisors and most 401k providers. The skimming of 401k fees had the effect of stunting the potential growth of employees’ 401k balances. According to AAPR, approximately $150,000 is skimmed from the average 401k saver’s retirement account during the life of his or her 401k. If that skimmed $150,000 was added back, millions more people would have 401k balances today that would exceed $1 million.
We believe 401k fees are unethical, unfair, and plain wrong. We hope that when you evaluate your 401k, you consider the impact these 401k fees are having on your retirement security.