Key Points Make sure you're not saying no to free money. Don't overpay to invest your money. Recognize the value of saving in a Roth 401(k) if that option is available to you. The $23,760 Social Security bonus most retirees completely overlook › One of the best things you can do to set yourself up for a secure retirement is save consistently during your working years. And you have different options in that regard. Many companies offer a 401(k) plan. If yours doesn't, you can always look to an IR ...

Group 1 - The importance of contributing to a 401(k) for a financially stable retirement is emphasized, highlighting that many individuals rely solely on Social Security, which may not be sufficient [1] - Avoiding common mistakes in 401(k) plans is crucial for maximizing retirement savings, particularly in 2026 [2] Group 2 - Not claiming the full workplace match is a significant mistake; for example, if an employer offers $3,000 in matching dollars and an employee only contributes $2,000, they forfeit $1,000, which could grow substantially over time [3][4] - An investment of $1,000 today at an 8% annual return could potentially grow to nearly $22,000 in 40 years, underscoring the long-term benefits of maximizing employer contributions [5] Group 3 - Ignoring investment fees in 401(k) plans can lead to reduced returns; high fees associated with certain funds, such as target date funds, can significantly impact overall investment performance [6][8]

Core Insights - Mutual funds and exchange-traded funds (ETFs) serve similar purposes for investors but have key differences that may influence financial choices [1] Trading Mechanism - ETFs trade on stock exchanges like stocks, allowing investors to know their exact purchase price at the time of transaction, while mutual fund transactions occur directly with the fund and prices are only known at the end of the trading day [2][3] Tax Efficiency - ETFs are generally more tax-efficient than mutual funds, with only 6.5% of U.S. stock ETFs distributing capital gains in 2024 compared to 78% of U.S. stock mutual funds [6] - For international stock funds, about 6% of ETFs distributed capital gains versus 42% for mutual funds [7] - The "in-kind" transaction mechanism used by ETF managers helps avoid triggering capital gains taxes, a significant advantage for long-term investors [8] Cost Structure - The average asset-weighted investment fee for ETFs was 0.42% in 2024, compared to 0.57% for mutual funds, indicating that ETFs are generally cheaper to own [10] - Many ETFs are index funds, which tend to have lower fees than actively managed mutual funds, contributing to the cost differential [11] Availability and Accessibility - The universe of mutual funds is larger, which may limit access to certain funds for investors who prefer ETFs [13] - ETFs may not be available in 401(k) plans, restricting options for some investors [13][14]

Core Insights - Many retirees are focusing on controlling expenses due to limited monthly income, leading to a frugal lifestyle [1] - A significant portion of American seniors on Social Security are cutting back on discretionary and essential items due to rising living costs [2] Investment Fees - Investment fees are a major expense that can be easily reduced without affecting lifestyle, potentially saving thousands of dollars in retirement [3] - The average expense ratio for active U.S. funds was 1% in 2024, while financial advisors typically charge between 0.5% to 1.5% of assets under management [4] - Despite the perceived value of high fees for sophisticated investment strategies, many funds fail to deliver superior performance after fees are considered [5] - Only 33% of actively managed mutual funds and ETFs outperformed their passive counterparts over a 12-month period through June 2025, indicating that high fees may not correlate with better returns [6] - Reducing investment fees, even by a small percentage, can significantly impact long-term savings, aligning with Warren Buffett's advice to invest in low-cost index funds [7]