Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.<\/em><\/p>\n For many people, being retired is almost synonymous with being frugal. With less control over your monthly income, it\u2019s natural that you might become more focused on controlling expenses.<\/p>\n In a recent survey from the Senior Citizens League, an overwhelming 94% of respondents said that the 2025 cost-of-living adjustment to Social Security wasn\u2019t enough to keep up with their actual expenses (1).<\/p>\n What\u2019s more, 52% of American seniors on Social Security said they were cutting back on discretionary items like dining out and travel due to the cost of living outpacing their benefits, according to a survey by Nationwide (2). More than 30% said they were even cutting back on essentials such as groceries and medication.<\/p>\n However, there is one big expense that rarely gets mentioned and could be one of the easiest to cut without impacting your lifestyle: investment fees.<\/p>\n Here\u2019s why this silent drag on your finances could drain thousands of dollars from your nest egg over a 30-year investment horizon, especially if you\u2019re doing well for yourself.<\/p>\n Paying a relatively high fee for investment advice or actively managed funds could seem like a savvy move on paper, especially if the targeted returns outpace the price.<\/p>\n First, the fees usually sound deceptively low. The average expense ratio for all active U.S. funds was 1% in 2024, according to Morningstar (3).<\/p>\n Meanwhile, professional financial advisors usually charge a percentage of assets under management (AUM), often ranging from 0.5% to 1.5%, according to Yahoo Finance (4).<\/p>\n Paying 1% for a professional to execute sophisticated strategies involving options or exotic assets like private credit might seem justified. But the after-fee performance of many of these funds and strategies can fail to live up to the hype.<\/p>\n Legendary investors like Warren Buffett echo this sentiment.<\/p>\n \u201cCosts really matter in investments,\u201d Buffett said during an interview with CNBC in 2017 (5).<\/p>\n \u201cIf returns are going to be 7 or 8 percent and you\u2019re paying 1 percent for fees, that makes an enormous difference in how much money you\u2019re going to have in retirement.\u201d<\/p>\n<\/p><\/div>\n And the research supports his argument. Only 33% of actively managed mutual funds and exchange-traded funds (ETFs) survived and outperformed their average passive peer over the 12 months through June 2025, according to Morningstar (6).<\/p>\n \u201cThe record shows that the unmanaged index fund is going to do quite well over time, and active investment as a group can\u2019t beat it,\u201d Buffett said in the same interview.<\/p>\n Since an AUM fee is typically proportional to your assets under management, it will only increase as your portfolio grows.<\/p>\n According to Morningstar\u2019s report: \u201c\u2018Headlines about active managers\u2019 superiority in navigating turbulence often decorate market declines. The data rarely backs this up \u2014 at least for the average active manager.\u201d<\/p>\n Read More: Approaching retirement with no savings? Don\u2019t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)<\/strong><\/p>\n Put simply, these expenses are avoidable. And cutting them out could save you a lot of money in retirement. That’s why billionaire investor Warren Buffett recommends that everyday investors stick to low-cost index funds.<\/p>\n Still, most financial experts agree on one thing \u2014 you shouldn\u2019t put all your eggs in one basket. And not everyone is aware of their options, even when it comes to ETFs and index funds.<\/p>\n With economic uncertainty on the rise, building a diversified portfolio can give you more breathing room, especially if the market takes a hit. This way, you can reduce the risk of needing to withdraw money during a downturn or watching a chunk of your savings get wiped out.<\/p>\n That\u2019s why it can help to talk things through with a vetted financial expert at least once. They can walk you through your options and help you invest wisely so you can protect your nest egg for the long haul.<\/p>\n You can easily connect with a vetted FINRA\/SEC-registered financial advisor near you for free through Advisor.com.<\/p>\n All you have to do is answer a few questions about your financial situation, and Advisor.com will connect you with a qualified expert. Every advisor on their network is a fiduciary, meaning they\u2019re legally obligated to act in your best interests.<\/p>\n Hiring a financial advisor can also be a lifelong commitment. That\u2019s why Advisor.com lets you set up a free initial consultation with no obligation to hire to see if your match is the right fit for you before making a decision.<\/p>\n Cutting even a few basis points from investment fees could make a big difference over the long term.<\/p>\n To understand this, assume you retire with $1 million and put the money in an actively traded mutual fund with a 1% fee. Your fee expense is $10,000. Meanwhile, based on Morningstar\u2019s data, you\u2019ll be lucky if that actively-managed fund even matches the performance of its cheaper, passive counterpart.<\/p>\n For instance, you could invest that same $1 million into a low-cost passive fund, such as Vanguard\u2019s S&P 500 ETF (VOO) with an expense ratio of just 0.03%. Your fee for a single year is just $300, and the performance is likely to be just as good, if not better, than an actively-managed fund.<\/p>\n Assuming equal performance, you\u2019d pay $9,700 more for the active fund in a single year. That\u2019s the cost of a nice vacation. Over several years of compounding and opportunity costs, this could drain tens of thousands of dollars from your net worth.<\/p>\n And the best thing about cutting investment fees? It\u2019s easy to pull off and doesn\u2019t require any lifestyle adjustments.<\/p>\n With platforms like Robinhood, you can invest in ETFs like the Vanguard S&P 500 to get a start on your nest egg.<\/p>\n Robinhood has 24\/7 support, and you won\u2019t pay any commission fees on stocks, ETFs and options. Their platform also offers both a traditional IRA and a Roth IRA, so you can benefit from tax-efficient retirement investing. You can also set up recurring investments of your preferred fractional shares, stocks and ETFs on your own schedule. Over time, this helps make investing a habit and steadily grow your portfolio.<\/p>\n Even better, new Robinhood customers can also get a free stock once you sign up and link your bank account to the app.<\/p>\n You can pick your stock reward from top American companies, with amounts ranging from $5 to $200.<\/p>\n While Warren Buffett recommends beginners to stick with index funds, he didn\u2019t build Berkshire Hathaway\u2019s fortune by investing everything in just one fund. As of the third quarter of 2025 \u2014 before Buffett retired \u2014 Berkshire Hathaway\u2019s wealth was concentrated in just 41 stocks \u2014 underscoring the importance of picking your stocks with care (7).<\/p>\n But for most investors, it can be difficult to identify value stocks with precision. Fortunately, you can get advice from hedge fund analysts, thanks to platforms like Moby.<\/p>\n Moby\u2019s team of former hedge fund analysts and experts spend hundreds of hours each week sifting through financial news and data to provide you with breaking stock recommendations. And if you sign up for Moby Premium you get one free top-stock.<\/p>\n Moby\u2019s stock picks have outperformed the S&P 500 index by about 11.9% over the past four years.<\/p>\n Even better, Moby offers a 30-day money-back guarantee so you can see if the service is right for you.<\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.<\/em><\/p>\n Retirement Living (1); Nationwide (2); Morningstar (3), (6); CNBC (5); Yahoo Finance (4); GuruFocus (7)<\/p>\n