Don’t Lose Sight of the Forest for the Trees

The financial media has spent a lot of ink (well, maybe more keystrokes these days) on the upcoming fee disclosure statements that retirement plan participants will be receiving before the summer is over. A myriad of surveys have demonstrated that many retirement plan participants are unaware that they are paying ANY fees associated with their plan. The intent of these fee disclosure statements is to make the fees and corresponding services for all of the service providers more transparent to the plan participants. While we at All Star Financial have been clamoring for more transparency in our industry for years, we also do not want participants to forget about the main purpose of these retirement plans. Fees play an important role in one’s retirement planning, but one must not forget that it’s not the top variable when it comes to increasing the probability that an employee can retire comfortably. When a person retires, how much they save throughout their working years, and how much they spend in retirement all play a larger role in the probability of a reasonable retirement lifestyle than one’s investment fees.

The Employee Benefit Research Institute (EBRI) conducted a ‘Retirement Confidence Survey’ earlier this year and some of the results were eye-opening:
*Only 14% of Americans were very confident that they would retire comfortably
*42% stated job uncertainty as the most pressing financial issue today
*60% of those currently employed have less than $25,000 in household savings & investments excluding the value of their primary home and any defined benefit plans
*56% report that they and/or their spouse have not tried to calculate how much money they will need to have saved for a comfortable retirement
*37% of workers now plan on retiring after the age of 65

In addition to the survey results above, the Stanford Center on Longevity lists out what they believe are the major pitfalls to a successful retirement:
1) Failing to Plan
2) Underestimating Expenses
3) Underestimating Years in Retirement
4) Retiring Prematurely
5) Failing to Save

While there will always be gyrations in the stock market, it is critical to focus on the controllable factors in retirement planning. While fees remain an important piece to the retirement plan puzzle do not get hung up on the investments that are available inside your company’s retirement plan while ignoring the broader picture. We believe planning early, being honest and accurate with how you spend money today and what you will need in the future, and making sacrifices to accomplish your goals are much more important than if you pay a fee that seems higher than normal. DON’T LOSE SIGHT OF THE FOREST FOR THE TREES!

Please call us with any questions or concerns. Feel free to forward this to others who might be interested.

Have a great day!

The All Star Team