Case study summary:
The added money in your pocket for choosing low cost investment products:
+ $48,278 over 10 years
+ $155,694 over 20 years
Do I have your attention yet?
So, let’s say you retire in June and invest your $200,000 PSERS lump-sum rollover money in an investment product and the annual product fees are 2%/yr – a common low average for many annuity and mutual fund wrap products sold by 403(b) reps in the schools. At a modest 6% gross return (4% net of fees), you would have $298,358 at the end of 10 years. At the end of 20 years, you would have $445,089.
Or, let’s say you invest in low cost ETF’s (index funds) through a fee-only advisor and the annual operating expense charges are .50%/yr. At the end of 10 years at a 6% gross return (5.5%% net of fees) your lump-sum would be worth $346,636. At the end of 20 years, you would have $600,783.
Wouldn’t you rather have the $48,278 (additional over 10 years) or $155,694 (additional over 20 years) in your pocket rather than in the pockets of the insurance company selling you that annuity or expensive wrap product? You can take a $7,784 trip each year for the next 20 years with that money!
You have a choice in the matter at retirement about where you put your money! Be sure to look outside the “system” for a fee-only advisor – we have your back!
Plan to attend one of our upcoming retirement planning workshops for more insightful information – click here for more information.