How to save more money for retirement, without actually putting one more dime into your IRA

Since we moved to California I’ve pitched in to take my turn at steering the family finances.  I’ve setup Quicken, combined our money, put us on a strict budget and examined all our retirement finances.  One of the things I became obsessed with is our retirement funds.  One thing I focused on was a Simple IRA at Fidelity that I can’t move to be managed by Sarah’s broker who has most of our nest egg.  Since I still work at the company where I started the Simple IRA, I have to leave it there and manage it myself. 

I had just blindly been putting it into a lifecycle fund with basically tracked the performance of the markets and had a 0.82% annual expense rate.  That means that no matter what the market did I was paying 0.82% in expenses.  I thought this was good when I started the plan until I checked out some other ETFs (Exchange Traded Funds) that can have expenses as low as 0.07% and also perform as well (or as bad as) the overall market.

Then this article appeared in the Wall Street Journal about how you can construct a pretty impressive portfolio based around ETFs for just 0.15%.  Why bother?  What’s the difference?  Well the difference of 0.67% is real money.  Annually you can shove in around $10,000 tax free to most retirement vehicles like IRAs and 401ks.  That 0.67% is $67 extra you can put in.  If you’re not at your first job and you’ve been saving like this for five years, then you’ve got at least $50,000 in your retirement account.  Every year you save 0.067% you have an additional $335.  Over time that starts to add up.  After 10 years you probably have at least $100,000, and that’s $670 extra you’ve saved for yourself, without actually putting any more money into the account.