For many people, being retired is almost synonymous with being frugal. With little control over your monthly income, it is natural that your attention is more focused on controlling expenditure.
In fact, 52% of American seniors on Social Security declared that they reduce discretionary articles like eating outside and traveling due to the increase in life costs exceeding the benefits, according to a recent national survey [1]. More than 30% said they were withdrawing essential elements such as grocery store and drugs.
However, there is a large expenditure which is rarely mentioned and could be one of the easiest to cut without having an impact on your lifestyle: investment costs. This is why this silent drain on your finances could reduce thousands of dollars from your nest egg.
Paying relatively high fees for investment advice or actively managed investment strategies seems to be a decision -making decision on paper.
First, the costs generally seem to be misleadingly low. The average expenditure ratio for all active American funds was 1% in 2024, according to Morningstar [2].
At the same time, professional financial advisers generally charge a percentage of assets under management (AUM), often from 0.5% to 1.5%, according to Yahoo Finance [3].
Paying 1% for a professional to carry out sophisticated strategies that involve exotic options or assets such as private credit may seem justified. But performance after many of these funds and strategies may not be up to the media threshing.
Only 33% of the common investment funds managed actively and funded funds on the stock market (ETF) survived and surpassed their average passive peer during the 12 months until June 2025, according to Morningstar [4]. “The titles on the superiority of managers active in turbulence navigation often decorate the decreases of the market. Data rarely support it – at least for the average active manager,” said the report.
In simple terms, these expenses are avoidable. And cutting them could save you a lot of money retired. This is why the billionaire investor Warren Buffett recommends that average investors to stick to index funds at low cost.
Read more: Rich, young Americans abandon the actions – here are the alternative assets on which they are beating instead
Even reducing some basic points of the costs you pay to invest could make a large difference in the long term.
