Lower your retirement fees: simple ETFs to replace broker-selected funds

Proprietary funds are typically identified by sharing the same name as the brokerage firm. These funds often have higher fees than comparable options. Even a seemingly small difference, like 1% versus 0.03% in annual fees, can have a substantial impact over time. A $100,000 account would lose $1,000 annually at 1%, compared to just $30 at 0.03%.

The iShares Core S&P 500 ETF (IVV) provides exposure to the largest U.S. companies, mirroring the performance of a typical “large-cap” or “core equity” fund. With an expense ratio of 0.03%, IVV held approximately $888 billion in assets as of June 30, 2026. It distributes income quarterly, yielding around 1.1% based on recent prices. Over five years, its adjusted price increased by 72.75%, and over ten years, it rose by 314.81%. However, returns are influenced by the performance of the largest U.S. companies, and recent volatility saw a 2.91% decrease over the past month.

For international exposure, the iShares Core MSCI EAFE ETF (IEFA) covers developed markets outside the U.S. and Canada. Japan accounts for a significant portion (24.37%), followed by the U.K. (14.67%). IEFA’s expense ratio is 0.07%, and it boasts a Gold rating from Morningstar. As of July 31, 2026, it managed roughly $190 billion in assets. It pays distributions twice a year, yielding approximately 3.4%. IEFA outperformed IVV over the past year, returning 15.68% versus 13.86%. Keep in mind that currency fluctuations and the exclusion of emerging markets can impact returns.

To replace a typical “income” fund, the iShares Core U.S. Aggregate Bond ETF (AGG) tracks the broad U.S. investment-grade bond market. Its expense ratio is 0.03%, and it pays distributions monthly, yielding around 4.1%. While bond prices can decline when interest rates rise, a recent drop in the 10-year Treasury yield led to a 2.77% gain for AGG over the past month.

Before making any changes, investors should consider potential back-end sales charges, the tax implications of selling funds in taxable accounts, and the ability to transfer funds to another brokerage. While these ETFs offer a cost-effective solution, they lack the personalized rebalancing and active management some investors may value.

Ultimately, switching to these ETFs allows retirees to see exactly what they own and how much it costs, potentially boosting their retirement income by reducing unnecessary fees. At age 68, every dollar saved on fees translates to more income during retirement.