What is 1% of nothing?

This is obviously a rhetorical question. One of the things we frequently see discussed in the financial news is the discussion of exhorbitant fees in retirement plans. While there are some truly awful retirement plan set-ups that charge significant fees to employees, there are roughly half of Americans that don’t have the benefit of a retirement plan at work. While everyone with earned income can contribute to an IRA (individual retirement account), few have the discipline to do this after that income is in hand.

Fees are very important when saving for retirement but only if you are saving at an appropriate rate. We frequently have employees ask us after a down turn (and frequently a negative quarterly statement) if they should get conservative until things blow over. The solution is frequently for them to save at a higher rate. Yes, we absolutely want low fees and we work daily to achieve efficiencies within a plan. But, if you aren’t contributing, what is 1% of nothing?