When we select a retirement fund, we still need to consider the cost. Do you know how much it costs for financial institutions and comapnies to provide a mutual fund? They need to rent offices, hire professionals and keep the company operating. In order to cover this, companies will charge a fee on an annual base.
This fee is called Expense Ratio (ER), which plays an important role in your investment. Most of expense ratios are paid to a manager or an advisor who manages the fund. A part of ER are used to cover taxes, legal expenses, accounting fees and etc.
Ideally, the best retirement funds have lowest expense ratios. Low expense ratio allows you gain more returns. For example, index funds outperform with higher fees.
However, not all funds with lower ER cna bring you higher interests. For example, according to a fee study by Morningstar, actively-managed funds have an average ER of 0.67% while passively-managed funds only have 0.15%.
Hence, before you choose a mutual fund to invest, you should take expense ratio seriously. Try to build your portofolio with funds of lower fees and higher benefits, such as index funds. Or you can look at some pre-packaged solution such as a target-date retirement fund.