Fee analysis is an important part of your retirement income projection and here’s what you need to know.

Your Retirement Income Projection Part 3: Fee Analysis

Do You Know How Much You’re Shelling Out in Fees?

This article is part three of a three-part series in which we dig deeper into the first aspect of preparing your comprehensive written retirement income plan: the retirement income projection. This series is based on content that originally appeared in our book, Momma’s Secret Recipe for Retirement Success, and you can grab your copy here.

If you need to start at the beginning of this three-part series, click here now.

In our second installment, we shared details on the second step in developing your comprehensive written retirement income plan, which is a risk analysis. As a reminder, this series is all about completing the three aspects that makeup step one in our four-part process of completing your Retirement Income Projection:

  1. Income analysis
  2. Risk analysis
  3. Fee analysis

In this article, we’ll walk you through the fee analysis step.

We’re revisiting the completely hypothetical example of Bob and Carol:

Bob and Carol’s broker of 22 years had never provided them with the total fees they were paying in writing. Bob and Carol thought they were paying 1% in total fees because when they asked about fees, their broker would say something like they were “paying around 1% in fees.” They eventually completed a comprehensive fee analysis and found this wasn’t true, not even close to the truth when you take into consideration the total fees they were paying.

What Bob and Carol’s Fees Revealed

The fee analysis revealed Bob and Carol were paying 3.08% per year in total fees!

Here are the fees we calculated for each part of their portfolio:

  • The bank funds of $20,000 had a 0.00% annual fee so total annual cost is $0.
  • Their variable annuity of $380,000 had the following fees: M&E (mortality and expenses) fees of 1.5% on $380,000, equaling annual costs of: $5,700
    • + Sub-accounts fees of 1.05% on $380,000, equaling annual costs of: $3,990
    • + Annuity rider fees of 1.25%, equaling annual costs of: $4,750
    • + Estimated trading fees at the sub-account level of 0.81%, equaling annual costs of: $3,078
    • = Total annual variable annuity fees of 4.61%, equaling total annual costs of: $17,518
  • Their stock portfolio of $200,000 had the following fees: Advisory fees of 1.2% on $200,000, equaling total annual costs of: $ 2,400
    • + Estimated trading fees of 0.05% on $200,000, equaling total annual costs of: $100
    • = Total stock portfolio annual fees of 1.25%, equaling total annual costs of: $ 2,500
  • Their mutual fund portfolio of $1,000,000 had the following fees: Advisory fees of 1.5% on $1,000,000, equaling total annual costs of: $ 15,000
    • + Mutual fund fees of 0.61% on $1,000,000, equaling total annual costs of: $ 6,100
    • + Est. mutual fund trading fees of 0.81% on $1,000,000, equaling total annual costs of: $8,100
    • = Total mutual fund portfolio annual fees of 2.92%, equaling total annual costs of: $29,200

They were paying 3.08% in fees on their $1,600,000 portfolio, equaling total annual costs of $49,218.

Over the next 20 years to age 85, they were projected to pay total fees of $984,360.

SEE ALSO: Why Should Retirees Avoid Market Volatility?

New Portfolio Fee Reduction

Bob and Carol’s new plan allocated their $1,600,000 portfolio into the following asset categories:

  • Their self-managed stocks had a 0.00% annual fee, so total annual cost was: $0
  • Their Bucket #1 fixed index annuity annuities of $800,000 had 1.00% in total fees of: $8,000
  • Their Bucket #2 bank funds of $100,000 had a 0.00% fee so total annual cost was: $0
  • Their Bucket #3 growth with stop loss of $500,000 had 1.83% in total fees of: $9,150

Their total annual fees on their new $1,600,000 portfolio equaled $17,150.

Their total annual fee percentage on their new $1,600,000 portfolio equaled 1.07%.

Total annual fee savings were calculated as follows:

  • Current plan total annual fees $49,218
  • Less new plan total annual fees -$17,150
  • Equals annual fee savings $32,068

Their new plan projected fee savings over 20 years to age 85 of $640,360!

SEE ALSO: Annuities 101: A Primer on a Polarizing Term

Final Thoughts on Fee Analysis in Your Retirement Income Projection

As we finish out this series, here are a few reminders about why each of the three steps in your retirement income projection is crucial:

Your income analysis is the first step, and it is the best way to set your mind at ease about how you’ll replace your paycheck once you retire. You want to be sure you can create income for yourself every month for the rest of your life – just think about how much stress and tension could dissolve when you have a plan!

Your risk analysis is essential because we believe so many retirees are taking on far more risk than they realize – and this is dangerous when there is a possibility you could lose much more money than you realize in the next stock market downturn.

When it comes to the usefulness of a fee analysis, all you need to do is review Bob and Carol’s example above to see how significantly your fees can impact your nest egg.

Taken together, these three steps constitute the first part of your retirement income projection. This process puts you on the path to creating your all-important comprehensive written retirement income plan. If you’d like help in completing these steps, give us a call today to discuss our professional analysis process.

If you found this content helpful, check out more valuable retirement planning information available on our blog and radio show!

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661


All of the information presented here is provided and intended to be used for general educational and informational purposes only and is not intended as a solicitation for you to buy or sell any financial product. None of the information presented is intended to give you specific tax, investment, real estate, legal, estate, or financial advice but rather to serve as an educational platform to deliver information. The ideas, thoughts, and strategies presented here are those of the Management Team and provide an insight to our views on Peak Financial Freedom Group, LLC. Every detail in this website is subject to change without notice. Seminar, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC.

2nd Opinion Package available to Qualified Retirees and Soon-To-Be-Retirees may include free consultations, a free retirement income plan, risk analysis, and fee analysis. In addition, a comprehensive written retirement income plan may be provided to those who complete the entire process. Qualified Retirees and Soon-To-Be-Retirees must have a minimum of $500,000 of investible assets such as IRA’s, 401K’s from past employers, stocks, bonds, mutual funds, bank accounts, money markets, CD’s, etc., but DOES NOT include real estate, businesses, limited partnerships, 401K/retirement plans that can’t be moved to another plan, and other illiquid type assets.

All investments involve risk, can involve the loss of principal, and unless otherwise stated, are not guaranteed. Past performance is no indication of future performance and such information cannot be relied upon regarding future potential gains. Nothing is directly or indirectly guaranteed by this information. The planning and ideas presented herein are not suitable for all individuals or situations. Hypothetical examples are used to explain concepts and are not indicative of potential results you could receive; past performance is not a guarantee of future results; and results are not indicative of any particular investment or income tax situation; your results will be different and could be lower or higher. Consult your financial professional before making any investment decision.

Insurance product features and benefits, such as guaranteed lifetime income riders, are subject to contract terms, limitations, fees, and the claims paying ability of the insurance company issuing the contract. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of any other asset including an annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. Different assets can be complex and carry fees, costs, and surrender charges. If you place assets under management with Fiduciary Solutions LLC, we are paid an advisory fee from Fiduciary Solutions LLC and if you purchase an annuity through us, we are paid commissions from an insurance company.

2019(1), 2020(2), 2021(3), 2022(4) and 2023 (5) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019, 2020, 2021, 2022 and 2023 Five Star Wealth Manager Awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to fivestarprofessional.com.

Investment advisory services are offered through Fiduciary Solutions, LLC, a California Registered Investment Advisor. Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA Insurance License #0N14013). Peak Financial Freedom Group LLC is a financial planning and umbrella marketing organization, which enables the provision of multiple financial services under one brand. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are affiliated entities with common ownership and control. Jim Files is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1620449) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0F06511). Dan Ahmad is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1491561) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0732913).

© 2023 Peak Financial Freedom Group