Don’t Lose Track of Your Retirement Savings (Article)

Don’t Lose Track of Your Retirement Savings

Over the last several years, financial records have largely gone paperless. That’s great for the environment, and certainly saves on printing and postage costs, but there is a potentially huge cost…. abandoned retirement accounts. And this problem is getting bigger. According to a report from Capitalize as reported in the October 2021 issue of Kiplinger, there are now 24 million “abandoned” retirement accounts nationwide, totaling a whopping $1.35 trillion, up over 70% in the last eight years.

How can this happen, you wonder? It’s easy to lose track of old accounts after you’ve departed an employer, especially when you don’t receive statements or worse yet, you provided your work email only to the account recordkeeper. If they can’t find you, it is more likely you will lose track of the account over time. This may also occur when the account owner passes and the survivor is unaware of accounts their loved one maintained.

What can you do about it?

• 1. Make sure the account recordkeeper has a personal email on file just in case you the leave the company
  2. Be old-fashioned; it is okay to request paper statements sent to your home.
  3. If you think you may have orphaned an account, do a little detective work. Try to find an old account statement then call the recordkeeper listed. Or try contacting your former employer’s HR team and ask for the number of the plan’s recordkeeper.
  4. You can also try searching in the National Registry of Unclaimed Retirement Benefits at unclaimedretirementbenefits.com
  5. Make sure your spouse, significant other, or executor of your estate knows what accounts you have
  6. Consolidate accounts before you orphan them.

Besides making accounts harder to misplace, there are other advantages to account consolidation:

• • Simpler management may mean better returns. Maintaining fewer accounts makes it easier to make asset allocation decisions since you’re not left wondering if your combined fund mix is on target. Better asset allocation decision making leads to potentially improved investment results.
  • Feel wealthier. Looking at one account with a bigger balance is simply more fun than keeping track of many smaller accounts. You may be less tempted to cash out early and enjoy the satisfaction of seeing real progress toward your retirement goals as the account grows.
  • Saves money. If you’ve already rolled the former employer plan into an IRA, you may still be able to roll the account back into your current employer plan. This could save money since many IRA providers charge annual custodial fees.  Owning fewer accounts typically means lower annual charges.  In addition, your investment expenses will likely decrease since retirement plans generally offer lower cost “institutional” mutual funds.

Thanks for reading this edition of Money Messages from your MoneyAdvice@Work team. Check back often for more timely news and tips about your money.

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