On Tuesday, April 23, 2013, the PBS program Frontline aired "The Retirement Gamble," a news investigation into how the financialization of retirement savings via 401(k)-type accounts has eroded individuals' ability to retire. SCEPA Director Teresa Ghilarducci and Robert Hiltonsmith, a policy analyst at Demos, were interviewed on their work documenting the structural failure and high fees of the 401(k).
Frontline's investigation reveals:
- On any given street, one household may be paying 10 times as much to invest in a 401(k) as the household next door;
- Over the course of a lifetime, a seemingly low annual fee of 2 percent can reduce what your balance would have been by more than 60 percent—potentially adding years to your working life;
- Popular 401(k) providers often charge a plethora of hidden fees, burying them under opaque names like "Expense Ratio";
- Many financial advisers are not required to provide advice that is in their clients' best interest; they are only obligated to give advice that is "suitable"; and
- The best way to maximize your return might be to cut Wall Street out of the equation and invest in low-cost, unmanaged index funds.