Biden cracks down on retirement junk fees that cost Americans billions a year

The war on bogus retirement fees comes as the nation deals with a retirement shortfall crisis

A new retirement security rule could help Americans build up 20% more in retirement savings. (iStock)

President Joe Biden is cracking down on junk fees in retirement investment advice that can cost Americans as much as $5 billion per year over a lifetime, according to a White House statement

The Department of Labor proposed a retirement security rule that would update the definition of an investment advice fiduciary under the Employee Retirement Security Act. The proposal would require trusted investment advisers to adhere to high standards of care and loyalty when they make investment recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers.  

"These new standards would hold the industry to a higher level of accountability, ensuring that retirement products, account rollovers, and investment options come with reasonable fee structures and are recommended free of conflict," Edward Gottfried, Betterment at Work senior director of product, said in a statement.

Requiring advisers to make recommendations in the savers' best interest could increase retirement savers' returns by between 0.2% and 1.2% per year. Over a lifetime, that can add up to 20% more retirement savings – potentially tens or even hundreds of thousands of dollars per impacted middle-class saver that could otherwise have been lost to junk fees.

"America's workers and their families should not have excess fees and lost investment returns chipping away at their retirement savings due to the cost of conflicted investment advice," Labor Department Acting Secretary of Labor Julie Su said in a statement.

If you are preparing for your retirement, you could consider using a personal loan to help you pay off debt at a lower interest rate, saving you money each month. Visit Credible to find your personalized interest rate without affecting your credit score.

BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF

America is facing a retirement shortfall

Redirecting money back to savers is crucial as Americans collectively face a $7.1 million retirement shortfall, according to Gottfried.

Most seniors (89%) are worried that the U.S. is in the grip of a retirement crisis, and nearly half said they are struggling to build their savings, according to a recent survey from the American Advisors Group (AAG). Nearly half (47%) of the seniors surveyed rated the conditions of their retirement savings as poor and 44% said they had not saved enough to retire comfortably. Additionally, 57% said they were somewhat or not optimistic that the savings would last through retirement.

Rising costs and inflation have made it hard for 40% of the respondents to make ends meet, and 47% said it was challenging to put funds aside for retirement. 

"The retirement savings crisis is a real thing," AAG Chief Marketing Officer Chris Moschner said in a statement. "Our data highlights the severity of the crisis and the actions seniors are taking to make ends meet."  

If you're struggling to save for retirement in today's economy, you could consider paying down high-interest debt with a personal loan at a lower interest rate, which can help you lower your monthly payments. Visit Credible to compare options from multiple lenders and choose the one that's the best for you.

MANY AMERICANS PREPARING FOR A RECESSION DESPITE SIGNS THAT SAY OTHERWISE: SURVEY

Gen X faces significant retirement challenges

The typical Gen Xer household has an average of $243,332 tucked away to finance the milestone, according to the National Institute on Retirement Savings (NIRS) study. However, the median balance is a low $40,000 for the average household. 

That gap between average and median savings reflects the relatively small number of people who successfully save for retirement while others struggle.

When broken down by individual savings, the average account balance for Gen Xers was $129,994 — far below the amount they'll need to finance a comfortable retirement soon, according to the study. Even more concerning is that the median account balance for an individual in Gen X is only $10,000, and 40% have a zero-dollar balance in their savings account.

"Gen Xers are fast approaching retirement age, but the data indicate that the vast majority are not even close to having enough savings to retire," NIRS Executive Director Dan Doonan said in a statement. "This really isn't surprising given the terrible retirement hand that has been dealt to the latchkey generation. 

"Most Gen Xers don't have a pension plan, they've lived through multiple economic crises, wages aren't keeping up with inflation, and costs are rising," Doonan continued. "The American Dream of retirement is going to be a nightmare for too many Gen Xers."

If you are retired or are preparing to retire, paying down debt with a personal loan can help you reduce your interest rate and monthly expenses. You can visit Credible to compare multiple personal loan lenders in one place and choose the one with the best interest rate for you.

COLLEGE TUITION PAYMENT PLANS MAY PUT STUDENT AT RISK: CFPB

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news
news