If you had a pot of money -- $5,000, $20,000 or even $40,000 -- would you forget about it? Some millennials are doing just that.
“It's definitely something I think is pretty widespread,” said financial planner, Ryan Frailich, founder of Deliberate Finances, which works with millennial investors.
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A. T. Kearney’s “2017 Future of Advice Study” shows in 2017, 59 percent of millennials between the ages of 25 to 34, with tens of thousands of dollars saved, had at least one 401k at a prior employer, while the same was true for only 41 percent of investors overall.
Why is the millennial generation leaving 401ks with former companies?
“With a lot of younger people, they are changing jobs more frequently than generations have in the past,” Frailich said.
These U.S. Department of Labor stats show millennials are job-hopping more than older workers. Some of Frailich’s clients have left several 401ks behind. Many tell him when they change employers, life can get stressful and busy.
“Money for your 60s isn't really on your mind if you're moving cities, and changing to a new job, and having to find a new place to live,” Frailich said.
But leaving that money with former employers can cost you. Frailich had a client who left $10,000 unattended in an old 401k. The account only made $400 over time.
His calculations found if other, more appropriate investments were made, it could have increased by $12,000, giving her a total of $22,000.
“The risk is that if you don't sit down to make an affirmative choice, you might be leaving it in something that's an inappropriate investment,” Frailich said.
Another risk is if the employer goes out of business, you may have a tough time tracking down your old 401k.
“Now you have to figure out, 'How do I get an employer signature from a company that no longer exists?' because a signature from your employer is often required,” he said.
According to experts, you don’t have to immediately move your money as soon as you change jobs -- just don’t neglect it or forget about it.
“You might have better options elsewhere, but if you don't sit down and look at it, you know, you can't know that," Frailich said.
If you are trying to find an old 401k, call the human resources department at your old company.
If the place you worked closed and you’re having trouble locating your money, check out the following sites for more information: