“The Retirement Gamble”

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Last night I saw Frontline’s “the Retirement Gamble”. It pointed out the hazards and risks in various 401 accounts. The companies that offer them are taking very high fees and seriously diminishing the value of the accounts leaving retirees with insufficient funds to retire with. John Bogle formerly of Vanguard made a strong point of investing in only Index funds and holding. Do not give the investment firms the opportunity to impose fees that seriously reduce the value of your hard earned money. However even if you do this there are some hazards.

In the mid 90’s Leon Winer, PhD made a study of the lowest expense ration index funds available to educators. These included Fidelity, Vanguard and TIAA-CREF. There should be very little expense in providing an index fund for clients. However he found that even in this simple investment instrument there was a difference in what these companies charged. TIAA-CREF’s fees were higher that those of Vanguard and Fidelity. And in the end would cost retirees many thousands of dollars in their retirement accounts. He got his employer, Pace University to offer Vanguard to its employees as an alternative to TIAA-CREF.
So one must be very wary about who manages our monies, especially retirement funds.

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