Humans are Bad at Understanding Compound Interest

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Maybe you haven’t even thought about your retirement, but according to Matthew O’Brien, you should. This is particularly true if you are contributing to a 401 (k).

Questions:
1. What should you look at rather than the returns when picking your 401(k) funds?
2. According to O’Brien, what do 1.25 % annual fees for retirement funds add up to during a lifetime of earnings?
3. A fee of 1 percent does not sound bad until you look at what, according to O’Brien?

Source:
O’Brien, M. (2014). The Crushingly Expensive Mistake Killing Your Retirement. The Atlantic, Feb. 15 (Retrievable online at
http://www.theatlantic.com/business/archive/2014/02/the-crushingly-expensive-mistake-killing-your-retirement/283866/)