How are you saving money for retirement?
If you're maximizing everything, that's $18,000 a year to your 401(k) and perhaps $5,500 to a Roth IRA.
If you're doing everything right, you can retire comfortably when you want to.
But what if I told you that you could secretly be costing yourself three years of retirement with a simple error?
Let's take two people – Jack and Jill.
- Are 25 years old
- Contribute $12,000 dollars a year to retirement ($1,000 a month)
- They put their investments in a total market fund, earning 7% each year.
- Want to retire at 65 (40 years of returns).
Jack just picks a Total Market Fund that charges him an expense ratio of 1.00%.
Jill picks a Vanguard Total Market ETF that charges her an expense ratio of 0.04%.
In the first few years, the difference isn't too significant. By year 10, Jill has amassed $171,659 while Jack lags behind with $163,264 (-$8395).
At retirement though, after forty years of compounding, Jill will have $2,459,533 and Jack will have a “mere” $1,916,964.
That's a difference of $542,569.
Jack is THREE YEARS behind Jill just because he picked a more expensive investment fund. One decision has cost Jack three years of his life. If only they talked!
Fortunately, there's a super easy way to find out if you're making the same mistake.
Blooom is offering to review your 401(k) for free. And it could save your retirement.
Blooom is a startup that wants to do for your 401(k) what Betterment and other robo-advisors do taxable investing. They will analyze your 401(k) plan so you don't get hosed by fees or poor asset allocations.
They were developed by financial advisors who were tired of seeing only the rich get the best advice.
With their help, you can find out if your 401(k) is on track or if there are hidden dangers you missed.
Get a free 401(k) analysis by blooom