Nearly half of job changers cashed out of 401(k) accounts in 2008
Posted on 30 October 2009
Permanent URL of this article: http://retirementrevised.com/money/nearly-half-of-job-changers-cashed-out-of-401k-accounts-in-2008
Wondering why Americans haven’t accumulated more wealth in 401(k) accounts? Here’s one good reason: nearly half of people who changed or lost jobs last year cashed out of their accounts on the way out the door. A study by Hewitt Associates reveals that 46 percent took cash out of their accounts on their way out the door. That decision incurs taxes and penalties for most–and it means the money is no longer invested and growing.
That’s not the only reasons 401(k)s haven’t replaced traditional pensions as a source of retirement security; the other causes include low participation rates by employees, a fairly large number of employers that don’t even offer plans, low savings rates and shaky asset management decisions by retirement investors.
