Does your company 401k suck? High expenses + No Match = Don't Bother

Rick Ferri today discusses High 401k fees in his blog . I have long had a rule of thumb and actually have shown a few companies and 401k contributors that their colleagues are better off not contributing.

I ran a scenario for a small software company in Atlanta.  Their fees were 1.8% and they had no match.  I showed them a plan that had a cost of 0.6%

Here is the difference of that 1.2% for someone in a Balanced Portfolio.

It was the difference between retiring at 63 and 66

OR

It was the difference between spending 60% of their current income in retirement and 50%

OR

It was the difference between spending 6,000/year and 10,000 per year to allow a retirement at 63, spending 60% of current salary.

These are the types of questions that your advisor should be answering for you and solving for you.

For this particular client, it made more sense to not contribute to his 401k.  He has since told several other colleagues.