Are you paying a financial advisor 25% of your retirement income?
Note: An advisor's fee is in addition to (not included in) your retirement income calculations.
Over time, high asset-based, percentage fees can cause people to work longer and rob retirees of a significant portion of their retirement income every year.
Example: You have accumulated $1 million in retirement assets, a 4% withdrawal rate would be $40,000 per year and the advisor's 1% fee would be an additional $10,000 per year or 25% of your retirement income. Now let's assume that you have $2.5 million for retirement and you are withdrawing 4%. That's $100,000 per year and your advisor's 0.88% fee is an additional $22,000 per year. This would equate to 22% of your income. At $5 million in assets your 4% withdrawal would be $200,000 and your advisor's 0.84% fee is an additional $42,000 per year or 21% of your income. At $7.5 million in assets your 4% withdrawal rate or $300,000 and your advisor's 0.80% fee is an additional $57,750 per year or 19% of your income.
(The annual asset-based fees used in the calculations are from the AdvisoryHQ study, "Average Financial Advisor Fees and Costs 2019 Report.")