Saving enough money for retirement can be a tricky proposition even under the best circumstances.

But when some of those dollars are being siphoned away by hidden – and perhaps unnecessary – fees, then the path to a secure retirement becomes even more difficult to navigate.

Even small fees can have a major impact over time, which is why people need to be aware of what they are being charged, and whether other options exist that make for a better and smarter investment, says Casey B. Weade, a retirement-planning professional and author of the book “The Purpose-Based Retirement” (www.purposebasedretirement.com).

“Probably 99 percent of people have no clue what they are really paying in fees and expenses,” he says. “They are bleeding out their life savings.”
Weade says those hidden fees, which are abundant in the financial industry, are his No. 1 frustration with the profession.

“There are a couple of products that consistently illustrate the problem with hidden fees – mutual funds and variable annuities,” he says. “Many people believe their retirement advisor only makes money when something is bought or sold. But that’s not always the case.

“With mutual funds, for example, some fees are disclosed in the prospectus for the funds, but often there are additional ongoing fees that are not consistently or adequately disclosed.”

Some of those mutual fund fees and costs include:

•  Stated Expenses:

o  Loads. Different classes of mutual funds have different types of loads or charges that are similar to commissions in that they compensate the financial professional for selling the fund to you. Some are front-end and you are charged at the time you make your initial investment. That charge usually is about 5 percent. Others are back-end, meaning you are assessed the charge if you sell the mutual fund, usually within a specified timeframe.

o  Expense ratios. Other than loads, this is the only cost many retirees and pre-retirees are aware of, Weade says. The expense ratio is used to pay distribution costs, administration fees, management fees and marketing costs. The expense ratio can be 1 percent or more, depending on the mutual fund. According to the Investment Company Institute, the average expense ratio in an equity mutual fund is 1.4 percent per year.

o  Advisory fees. In addition to the internal costs of owning a mutual fund, you may be paying a management fee to your advisor, Weade says. This fee can range anywhere form 0.25 percent up to 2.5 percent. Even if you aren’t aware of it, you should be able to determine how much this one is costing you because it is required to be disclosed on investor documents. 

•  Unstated Expenses:

o  Soft dollar costs. One of the most difficult mutual fund expenses to uncover is soft dollar costs, Weade says. Often, mutual fund managers are provided software, education, research or other services by brokerage firms. In exchange for these benefits, the brokerage house gets the brokerage business and may charge a higher commission for the trading of stocks within the fund. That commission is paid by the investor.

o  Tax Impact.  Mutual funds are pass-through entities, meaning you pay tax on every transaction inside the mutual fund whether you benefited or not.  The average tax cost ratio for stock mutual funds is 1 percent to 1.2 percent per year, according to a Forbes magazine article.

o  Trading Commissions.  Potentially one of the largest undisclosed expenses inside a mutual fund is trading commissions.  “Every time something is bought or sold within a mutual fund there is a commission charged and, believe it or not, these costs legally do not need to be disclosed,” Weade says. A Wall Street Journal article noted that a 2009 study of thousands of U.S. equity mutual funds showed that the trading costs investors, on average, 1.44 percent.

Once you know about the fees and charges attached to mutual funds, you may be able to negotiate to lower some of them, Weade says.  “I regularly audit investors’ portfolios and find expenses in excess of 3 percent annually,” he says.

But he also often recommends “separately managed accounts” as an alternative to mutual funds because there are no loads and there is more transparency. Separately managed accounts are somewhat similar to mutual funds, but can be tailored specifically to the individual needs of the investor. 

“Regardless of the investment, it is vitally important to understand how valuable it is to avoid hidden fees and charges that can add up and prove costly, especially over decades,” Weade says. “You want to keep as many of your hard-earned dollars in your account and working for you as possible.”

Many kids love the prospect of learning, while others may need a bit of motivation. But parents can get kids on board with a little encouragement and creativity to make learning fun. Here are some ideas to get kids excited to learn.

Library Visits

By making a run-of-the-mill trip to the library seem like a true adventure, kids will associate books with intrigue at an impressionable age. The librarian can point out the best titles for inspiring learning and fun.

Time visits to occur during your local branch’s storytelling hour or other early childhood programming. Also, be sure to sign your child up for a personal library card, which will be a source of pride at the circulation desk and put them on the path of reading enrichment.

Learning Tablets

To give kids an extra edge in learning, consider a fun yet educational tablet, such as the InnoTab MAX. Durable enough for kids, this device has a 7-inch multi-touch screen, and features progressive learning content that adapts to a child’s age.

Web access and communication apps, which kids can use to exchange messages with friends and family, are limited to protect children, and parents are free to manage these controls. The tablet comes with Movie Maker and Art Studio, amongst other apps, and additional content can be found at the Learning Lodge app store.

“The tablet has proven to be a welcome way for kids to interact with digital media,” says Dr. Eric Klopfer, Platform Learning Expert and member of the Expert Panel at VTech, a world leader in age-appropriate and developmental stage-based electronic learning products for children. “Touch interfaces and well-crafted content have meant an easy-on ramp for many children who learn through this technology.”

Board Game Night

After dinner, gather round the table a second time. From classic word games that challenge one to stretch the limits of his or her vocabulary, to trivia games testing science and world history knowledge, board games have the potential to bring the family together and also to educate. Be sure to check the box for age-appropriate guidance.

Wearable Tech

Wearable technology can inspire kids to learn and be creative while staying active. For example, the VTech Kidizoom Smartwatch DX offers motion-activated games, a stopwatch, calendar, 3D clock face and calculator so kids can work out simple math problems. It also includes a time-telling app featuring a friendly owl that helps kids learn to tell time, and additional apps are available for download on the Learning Lodge. The internal memory offers ample storage for budding photographers and videographers documenting the world around them.

Sweeten the Deal

Consider creating a rewards chart where children can track their progress as they meet learning goals. It can be an effective way to motivate kids to try new ways of learning and work hard to reach a goal. You can find many free downloadable charts online.

More ideas can be found at www.vtechkids.com/parenting.

To make learning a priority in your home, get kids on board. They’ll be inspired when they see that learning can be fun.