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| Fees Are An Important Consideration Of Retirement Assets
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COMMENTARY BY THE PATENAUDE SCHAFER GROUP
Each year, investors in self-directed retirement plans get an annual bill for simply having an RRSP or RRIF with their financial institution. For the privilege of giving them your savings to hold, you typically pay anywhere from $53.50 per year to $123.75 (gst included).
Each year when clients are billed, they must pay the fee or it is collected from cash sitting the account or existing investments are sold. So what are consequences of this? Not much in any given year. What’s $53.50 or $133.75 coming out of your account, considering you wrote it off as an RRSP contribution? It may seem like an insignificant fee to pay.
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However, take into account that you may be paying that fee for both you and your spouse. Also consider that between saving in an RRSP and then taking income from a RRIF, you will most likely have those accounts for many years. If you pay that fee every year while saving within an RRSP from age 35 – 55 and then pay again during retirement from 55 – 85, that would be 50 years of paying fees. Those are very realistic numbers considering today’s long life expectancy.
Let's do that math.
Consider that the typical couple is paying the fee for both spouses. That annual bill could be around $267.00 per year.
Suppose the couple invests the fee amount for fifty years, earning an annualized return of 8% What would it grow to by age 85? That little annual insignificant fee would grow to over $150,000.00.
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Remember it's your money know what you're paying.
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Not so insignificant.
If you were able to invest those dollars rather than pay them as an administration fee, you could have a much bigger nest egg. Even using the same illustration over a 30 year period, it would still add up to $30,000.00 in additional savings. That kind of money could be used for trips to Arizona or other sunny destinations.
This year, check your statement, ask your advisor and know what you are paying.
Most investment firms will offer different rates. For example, the Patenaude Schafer Group at Wellington West Capital Inc. waives the fee entirely for families with a minimum $100,000 of investable assets. This applies whether the minimum is in one account or split between five accounts.
The key is to know what you are paying, know your options and get more of your money working for you.
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If you have any thoughts about this article or would like to make a suggestion on future articles contact;
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