What the experts say

Tallying up 401(k) fees

Here’s a sobering retirement statistic, said Walter Hamilton in the Los Angeles Times. The average American couple could lose more than 30 percent of their retirement savings to 401(k) fees, paying nearly $155,000 in investment costs over their lifetimes, according to a report by Demos, a think tank that calls for an overhaul of the 401(k) system. Demos’s hypothetical couple, earning the national median salary from age 25 to 65 and saving 5 to 8 percent of their combined income, could have saved $510,000 by retirement, according to the study. But they are left with only $355,000 after typical administrative, management, and trading fees are subtracted. Demos says inefficiency and lack of open competition in the 401(k) system have allowed fees to stay high. That could change soon: Plan providers have to start disclosing detailed 401(k) fee information to employers in July and to participants later in the year.

A British investing lesson

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The market’s wild ride over the past decade has made young people understandably wary of investing, said Bob Frick in Kiplinger’s Personal Finance. But they’ll only hurt themselves in the long run if they just leave their savings under their mattresses. The U.K. has come up with a smart approach to encourage the young to invest appropriately. The National Employment Savings Trust (NEST), a government-sponsored retirement savings plan, automatically enrolls “newbie investors into conservative funds” unless they opt out. The investments grow more aggressive over the next several years as investors get older and can handle more risk. “As the Brits would say, brilliant.”

Affordable ‘free’ tickets

“Free” flights are getting more expensive, said Kelli B. Grant in SmartMoney.com. Passengers who redeem miles for tickets are finding that airlines are hiking surcharges, which can now amount to hundreds of dollars. United Airlines charges as much as $600 for booking an international ticket with rewards. Travel experts say that booking early and on off-peak weekdays often helps lower surcharges, as can shopping for the best deals among partner airlines in a frequent-flyer program. British Airways, for example, charges fuel surcharges on reward tickets, but partner American Airlines does not. “On an August round-trip flight between New York and London, that amounts to $438 saved.”