#USA #Greenwood Village #Job Change #Retirement Drift #Empower Research

Lost in Retirement: The Challenge of Tracking Dispersed Savings

In the rapidly changing workforce landscape, a shocking new study by Empower has brought to light the growing issue of 'retirement drift.' This term underscores the plight of many Americans who have accumulated retirement savings in multiple accounts from various previous employers, leading to confusion and complications in financial planning.

The research indicates that one out of three Americans (34%) have lost track of retirement funds tied to past jobs. Among younger workers, this statistic is even more alarming. It found that 50% of Generation Z and 45% of Millennials are in the same predicament, potentially jeopardizing their financial futures as they navigate increasingly complex career paths.

Understanding Retirement Drift

Retirement drift refers to the dispersal of savings across multiple accounts due to frequent job changes throughout a career. According to the findings, over half (53%) of respondents reported having changed jobs three or more times, which often leads to fragmented retirement savings. This fragmentation complicates users' ability to effectively manage and track these funds, resulting in a disorienting financial landscape.

Jane Bartosik, Senior Vice President of Wealth Solutions at Empower, emphasized that while job transitions are quite normal, the accompanying financial adjustments do not always occur smoothly. Many individuals neglect to address older 401(k) accounts or other retirement savings when starting new employment or managing day-to-day financial obligations. As a result, these old accounts can pile up, obscuring an individual’s comprehensive retirement picture.

Key Findings from the Study

The study contains several insights that highlight the challenges faced by individuals as they try to manage retirement savings:

• - 39% of respondents indicated they have savings scattered across various employers' retirement plans.
• - A substantial 54% admitted that managing retirement savings is frequently deprioritized when considering other financial responsibilities. Additionally, 47% revealed they have postponed addressing their retirement savings due to feelings of being overwhelmed by the overall task.
• - A noteworthy 66% expressed a desire for clearer communication about retirement options during job transitions. Furthermore, 54% reported being unaware of the various choices available post-employment.
• - Encouragingly, 76% stated that concise, step-by-step guidance on these matters would motivate them to take action, and 70% would be more inclined to consolidate accounts if the process were streamlined.
• - Trust in financial advisors is notably high, with 78% preferring professional guidance over AI assistance for pivotal retirement decisions, though 73% view AI as a supportive addition to traditional advice.
• - Interestingly, 83% recognized the importance of Individual Retirement Accounts (IRAs) for long-term savings, yet 59% admitted uncertainty about whether a Roth or a Traditional IRA better suits their needs.

A Call for Consistent Guidance

The study underscored an overwhelming need for continuous retirement planning support that individuals can rely on through various employment stages. A striking 81% of participants expressed interest in guidance that remains accessible throughout their working lives, while 84% stated that keeping retirement savings organized could significantly ease their minds.

Ultimately, this research highlights the need for greater awareness and resources to help individuals maintain visibility over their retirement savings. With increasing career fluidity and the complexities that come with it, understanding and managing retirement funds becomes crucial for achieving long-term financial security.

Do you have an old 401(k) or retirement savings plan from your past employment? Engaging with a financial professional can provide clarity on your options and help you strategize effectively for your financial future.

For more detailed information, you can read the full report titled 'The Retirement Drift' available at Empower.com.