The most expensive thing you’ll probably buy during your lifetime is retirement. Perhaps you’ve never thought of “buying” retirement, but that’s exactly what you do when you participate in a 401(k) plan – you’re saving now to buy retirement income later. When you consider that income may need to last 10, 20, even 30 years, it’s easy to understand why retirement is not cheap. However, by following a simple 3-step plan during your working years - save early and often, invest appropriately, minimize account fees - you can reduce the out-of-pocket cost of your retirement by a lot.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 in response to the COVID-19 crisis. The Act allows – but does not require - employers to loosen the participant distribution and loan provisions of their 401(k) plan and any Coronavirus-affected individual to reduce the tax burden of most 401(k) distributions. 401(k) participants should understand their options under the CARES Act as soon as possible – this economic relief is temporary.

To meet retirement goals as affordably as possible, 401(k) participants must do three basic things – save early and often, invest appropriately, and keep account fees to a minimum. Investing appropriately involves constructing - and maintaining – a 401(k) investment portfolio that balances growth potential with the risk of losses.Striking this balance is important. Otherwise, a 401(k) participant could miss out on gains by investing too conservatively when young or sustain unrecoverable losses by investing too aggressively when near retirement.

The most expensive thing most people will buy in their lifetime is retirement. Perhaps you’ve never thought of “buying” retirement, but that’s exactly what you do when you contribute to a 401(k) plan – you’re saving today to afford income in retirement. When you consider that income may need to last 10, 20, even 30 years, it’s easy to understand why retirement is not cheap.

If you’re leaving your job for a new employer, you must decide what to do with your 401(k) account. To keep growing your savings tax-free until retirement, you could have up to 3 options: keep it where it is, roll it to a new employer-sponsored plan, or roll it to a personal IRA. It’s important to make an educated decision. Otherwise, you risk making your dream retirement more expensive than necessary.

One of my heroes – Jack Bogle, the founder of The Vanguard Group – died on January 16. I can’t think another person who has done more to help the average American save for retirement than Jack Bogle. Before he started an index fund revolution, it was difficult for investors with few assets to pay low fees for top mutual funds. Bogle democratized investing by making it easy for all investors – regardless of assets – to pay low fees for top funds. His guiding principle was simple: costs matter. Since fees reduce investment returns, they should be kept to a minimum.