Let me ask you a few questions, and let the numbers answer them.

How can a fee that looks tiny do that much damage?

Here’s the thing almost nobody stops to think about. When you pay a 1% fee, you’re not just giving up that 1%. You’re giving up everything that 1% would have earned for you, year after year, decade after decade.

Picture two retirees who are identical in every way. Same savings, same market, same plan. One pays about 1% all-in. The other pays close to nothing. The market doesn’t treat them differently. The fee does. And because the fee comes out every single year, the gap between them doesn’t stay small. It widens, slowly at first, then faster, like two roads splitting apart by one degree and ending up miles from each other.

That’s why a number that sounds like a rounding error on your statement turns into a six-figure number by the time you actually need the money.

What does the fee do to the income I can live on?

This is the part that should get your attention, because it touches the paycheck you’re going to depend on.

There’s a body of research on how much you can safely pull from a portfolio each year without running it dry. Dr. Wade Pfau’s work puts the worst-case sustainable starting rate at about 4.03% for a 30-year retirement. Now here’s what the same research shows about cost: every 1% of annual fee or underperformance doesn’t come straight off the top, it drags that sustainable rate down by about 0.47 of a percentage point.

So a 1% all-in fee takes your safe withdrawal rate from about 4.03% down to about 3.56%.

On a million dollars, that’s the difference between roughly $40,300 a year and roughly $35,600 a year. About $4,700 less, every year, for life. That’s around 12% less income, before you even adjust for inflation, which only makes the gap bigger over time.

Read that again. The fee didn’t cost you 1% of your income. It cost you about 12% of the paycheck you were counting on. What would you do with an extra $4,700 a year in retirement? A trip? Time with the grandkids? The fee already decided that for you.

And what does it do to the money I want to leave behind?

Say you’re not living on this money yet, you’re still growing it. Same quiet erosion, different victim.

Run a portfolio forward at a steady growth rate and charge the fee against the balance each year, the way it actually comes out, and a 1% all-in fee takes about 21% of the final balance over 25 years, and close to a quarter of it over 30 years.

So on a portfolio that would have grown to several million dollars, the fee quietly walks off with a sum larger than many people’s entire nest egg. Not because the market did anything to you. Because the fee did.

But surely I’m paying for performance, right?

Here’s the question I’d gently put to you, and I’d just think about it for a moment.

If you’re paying that fee to beat the market, are you beating the market?

Standard and Poor’s publishes a scorecard every year, called SPIVA, that tracks how actively managed funds do against the index they’re measured against. The verdict has been remarkably consistent. Over the 20 years through 2025, about nine in ten actively managed U.S. stock funds, roughly 92%, failed to beat the index they’re compared to. Stretch it to fifteen years, and there’s no major stock category where most active managers came out ahead. And the few that win in one stretch rarely stay on top in the next one.

So if the odds say you’re very likely not beating the market over the time frame that actually matters for retirement, what exactly is the fee buying?

I’m not telling you the answer. I’m asking you to think about it, because it’s your money and it’s a fair question to ask.

Isn’t a low-cost option just as risky?

There are broad index funds out there with fees around 0.03%. I’m not here to recommend any specific fund, that’s not what I do, and that’s not my license. But it’s worth knowing they exist, because it reframes the whole conversation. If a low-cost option captures the same market the expensive one is chasing, and most of the expensive ones don’t beat that market anyway, then the higher fee isn’t buying you safety. It’s just buying you a higher fee.

So what’s the real takeaway?

I’m not anti-investing. I’m anti-paying for something you’re not getting. Fees are fine when they buy you real value. The trouble is that most retirees have never seen what their fee actually costs them, because it’s taken out before the return ever shows up on the statement. It’s invisible in any single year and enormous over a full retirement.

This is also one of the quiet reasons I build retirement plans the way I do. When your essentials and your non-negotiable adventures are covered by Protected Lifetime Income that you can’t outlive, the fee drag on your growth portfolio stops being a threat to your lifestyle. It becomes a math problem on your discretionary money, not a question of whether you can eat or take the trip. The floor does its job. Your investments, ideally at a far lower cost, do theirs.

But before any of that, you deserve to actually see the number. So see it.

Educational only, not tax, legal, or individualized investment advice. Kurt Jackson is licensed for life and health insurance and does not manage investments, sell securities, or recommend any specific security, fund, or strategy. All figures are hypothetical and illustrative, based on simplified assumptions, and are not a projection or guarantee of any outcome. Sustainable withdrawal figures reference Wade Pfau, Retirement Planning Guidebook (3rd ed.); fund-underperformance figures reference Standard and Poor’s SPIVA U.S. Scorecards. Guarantees related to any insurance-based strategies rely on the claims-paying ability of the issuing insurance company. Fees, returns, and sustainable withdrawal rates vary widely and change over time. Please consult a qualified professional about your own situation before making any decision.