But if he had opted for a DC workplace and savings plan with a fee of just 0.6%, he would have been ready for retirement at 66.
transitional effect
As many people choose to convert their retirement savings from their workplace plan to an individual account before they retire, this analysis shows how moving too soon can lead to high costs.
For someone retiring at the age of 65 and paying the fee at the rate of 1.9%, if they were paying the rate of 0.6%, they would have run out of money 5 years earlier.
Because the effect of fees compound when considered together before retirement and after retirement, a person pays fewer fees throughout their career and then invests their nest egg in one account at the same rate, which pays off. 12 years of retirement income than those who do. high rate.
“Individuals can make all the right investment decisions, but a workplace DC and savings plan can provide a level of unavailability to the individual going it alone,” says Jillian Kennedy, partner and leader of Defined Contribution and Financial Wellness at Mercer Canada. “Participating in a workplace program and maximizing benefits can leave a fairly large nest egg for you — and take years away from your working life.”
