To put that into prospective would you pay $20 for a gallon of gas or would you go across the street and buy it for $4 a gallon. And the gas is the same; $20 gas isn't 5 times better. And what if your car maker forced you to buy $20 gas and you had no other choice even if you knew there was equally good gas out there for $4?
It's not my wife's fault, and it's not even her company's fault either. Too many companies are unknowingly placed into 401(k) plans with poor investment options because they haven't been shown there's a better way to invest and unfortunately I think at times advisors are someway incentivized or even compensated to set up employers with these inferior plans. Those additional fees are going to somebody.
Check out this great mutual calculator provided by bankrate.com: http://www.bankrate.com/calculators/retirement/mutual-funds-fees-calculator.aspx
Keep these numbers constant: investment amount, rate of return, and holding period (you want to compare apples to apples). Take the expense ratio for your mutual fund, that amount goes into total operating expenses, put in 1%, .5%, .2% and see how that impacts your final balance over time - it's drastic and startling at the same time.
Here's an example: say my wife had $100,000 in the S&P 500 Index fund with the .6% expense ratio. She's got 30 years until retirement (holding period), if she were to get an average annual return of 7% (rate of return), she would have $635,484 in her plan at retirement. This is good, but it can very easily be better. If her plan offered a low-cost S&P 500 Index Fund with say a .15% expense ratio, my wife would have $727,705 in her plan at the end of 30 years - both plans will offer the same return cuz they simply track the same index - they're both the same gallon of gas. That's a difference of over $92,000 just because of the lower operating expenses!
Fees matter!!! Check your 401(k) plan's investment options, are your mutual fund choices loaded with high fees? Look at the expense ratio for the fund, if you can't find it (generally a warning sign right there) punch the fund symbol (it should be 5 letters long and end with an X) into the quote lookup box at yahoo/finance.com. Click on 'profile' and check out the Fees & Expenses box at the bottom. Generally if your fund is not less than .5% you've got a high-fee fund and it is secretly stealing your retirement fund!
The solution: go to your employer and demand low-cost index funds for your 401(k) plan; it will simply save everyone more money for retirement. If enough people speak up, or maybe it just takes one person to alert his/her employer that there are better less expensive options out there, we can all start saving more money for retirement.