Investing in a 401(k), Roth IRA, or IRA makes sense because of something called “compounding,” the nearly magical way money grows over time into lots more money. However, in order to reap the full benefits of saving in these retirement plans, you have to keep an eye on management fees.

Take a moment today to look at how much each of the funds you invest in charges you to manage your retirement account. All funds charge a percent that comes right off of the top of your return. Sometimes, these are as high as 3.5 percent! That can equal up to half of your fund’s return (assuming a typical yearly average return of 7 to 8 percent), not to mention the opportunity cost or the amount you may potentially lose from missing out on the compounding effect year over year on the money deducted as fees.

Fees matter…even partial percentage points. A few years ago, CBS did a calculation using the following assumptions: an American worker who puts $4,000 into a retirement account every year and pays 1 percent in fees. Assuming she gets an 8 percent return (and no employer match contribution), her account will have grown to $584,000 in 35 years. But if she paid 1.5 percent in fees (just a half a percentage point higher), the account balance would have grown to just $522,000. That half-percentage point would have cost her $62,000.

According to the National Association of Retirement Plan Participants, Americans pay a lot in fees on 401K, Roth IRA, and IRA accounts – to the tune of between $8 billion and $17 billion a year, reported Jason Furman and Betsy Stevenson of the Council of Economic Advisers in 2015. Very few Americans know how much they pay in fees or understand why they are charged.

Get Educated About Retirement Plan Fees

If you have a 401(k) plan, check your plan documents to find out more about the management fees you pay on your funds. The fee can be found on the plan’s 408(b)(2) disclosure or “summary plan description.”

You can also call your plan administrator to get information on the total plan fees, which may include additional costs, such as administrative and recordkeeping fees.

For 401(k), Roth IRA, and IRA plans, management fees between 1 percent and 2 percent are widely considered high, while those that are less than 1 percent are regarded as more acceptable.

Investing in index funds rather than actively managed funds can be an easy way to pay less in management fees. Index funds typically charge between .05 to 0.25 percent in management fees. Over time, index funds have performed better than actively managed funds.

If you have an investment advisor, carefully consider what you pay for their services. According to Forbes, the average advisor charges at least 1 percent. Make sure to thoroughly investigate the products your investment advisor recommends, as some advisors may potentially expose you to additional fees (such as commissions on certain investments) that they are not legally required to divulge.

Concerned about the fees that you’re paying for your retirement plan? One of our financial advisors can help you identify opportunities to save. Click here to request a no-cost, no-obligation consultation with one of our advisors.