The average balance in a forgotten 401(K) has increased to $56,616, experts have warned. A period of increased job switching during 'The Great Resignation' has led to a surge in lost accounts. Savers are at risk of potentially missing out on hundreds of thousands of dollars in later life. There are more details in the original article here:
How in the hell do you forget something like that? Seriously?
ReplyDeleteThey built the account with payroll deductions + employer contributions and never had the money in their hands, so it was never real to those that don't understand numbers. Nor is $56K much of a retirement account. It may allow a retiree to pay cash for a new car or settle medical bills above what Medicare and insurance will pay ONE TIME, but if you start drawing on it for living expenses, it probably won't last two years.
ReplyDeleteOTOH, are those accounts really forgotten, or is it just that the owners aren't doing anything with them at present? You can't spend the account until you retire - and maybe not for a few years afterwards if you retired early. Generally your former employer manages them and I doubt you can add to them with earnings from another job. You could roll them into another IRA or 401-K account, but there isn't often a real reason to. I've got one just about that size from a place that fired me in 2019, and no reason to touch it; it's been making higher gains than any of my other investments, so I'm not going to roll it into another account, and I'll spend it last.