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$300,000 Fees Over a 30 Year Period: Hypothetical Simplified Case Study

| April 21, 2016
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Fees

Case Study: Simplified and Hypothetical

  • $1,000,000 – in a retirement account
  • 1% total annual fees, expenses and costs – ($10,000 per year on the $1,000,000)
  • 5% total return (exactly!) every single year for 30 years. ($50,000)
  • 4% withdrawal -- $40,000 (exactly) every single year for 30 years.

 

In this hypothetical world, there is

  • Zero inflation
  • Zero other costs e.g. Turnover
  • Levelized RMD's (again, oversimplified)

Conclusions

  • $1,500,000 total return ($50,000 x 30 years)
  • $1.200,000 total withdrawals -- $40,000 X 30 years
  • $300,000 total fees  -- $10,000 X 30 years
  • $1,000,000 (exactly) left at the end of the 30 years
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