Consolidation Corner

Plug the Leaks Before Expanding Access to Defined Contribution Plans

Posted by Thomas Hawkins on Jun 29, 2017 12:10:32 PM

In recent months, our attention has been drawn to some deserving public policy initiatives that would dramatically expand access to workplace retirement savings accounts and address the “access gap” encountered by millions of American workers who are presently offered no such option.

 

The access gap is very real. According to an analysis of the U.S. Census Survey of Income and Program Participation, The Pew Charitable Trusts estimates that 36.2% of American workers do not have access to either a defined benefit or defined contribution plan sponsored by their employers.

 

One proposal relies upon legislative action to eliminate barriers to open multiple-employer plans (MEPs) and requires private employers to auto-enroll their employees in a defined contribution (DC) plan. Thus, universal access to DC plans could become a reality, and the access gap would be quickly bridged.

 

A surge in new participants contributing to employer-sponsored defined contribution accounts has substantial benefits. The Employee Benefits Research Institute (EBRI) has estimated that universal DC access could contribute $740 billion towards reducing our nation’s $4.1 trillion retirement savings shortfall.

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Topics: Cash Outs, National Retirement Savings Cash Out Clock, 401k leakage

The Fundamentals of 401(k) Cashout Leakage

Posted by Thomas Hawkins on Jun 1, 2017 11:12:10 AM

 

 

 

This video presentation provides viewers with the latest data characterizing the problem of 401(k) cashout leakage, a major challenge that faces 401(k) participants when they change jobs.

 

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Topics: Auto Portability, Cash Outs, America's Mobile Workforce, auto portability simulation, National Retirement Savings Cash Out Clock, 401k leakage

The Rallying Cry for Improving Financial Wellness: ‘Eradicate Cash-Out Leakage In Our Time!’

Posted by Spencer Williams on May 22, 2017 1:45:57 PM

 

Half a century ago, the global medical community united to wipe out smallpox, an infectious disease that afflicted mankind for millennia. In 1966, the World Health Organization (WHO) established the Smallpox Eradication Programme, which sent Western doctors to vaccinate the populations of nations and communities around the globe where smallpox was still rampant. No place where smallpox cases had been reported, or where the local population was not vaccinated, was overlooked by WHO medical teams, no matter how remote the village or how dangerous the journey.

 

The rallying cry of doctors, medical researchers, healthcare professionals, and government officials across the world was, “Eradicate smallpox in our time!”

 

By 1980, after just 14 years of intense global collaboration, smallpox had been eradicated. The magnitude of this achievement cannot be overstated.

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Topics: EBN, Auto Portability, 401(k) Consolidation, Retirement Plan Portability, Retirement Savings Portability, National Retirement Savings Cash Out Clock, 401k leakage

Announcing the National Retirement Savings Cash Out Clock

Posted by Thomas Hawkins on May 12, 2017 12:43:34 PM

 

In 1989, New York real estate developer Seymour Durst wanted to highlight America’s rising national debt, and came up with an idea: the National Debt Clock. Since then, the National Debt Clock has had a physical presence as a billboard near Times Square, serving as a constant reminder to Americans of their government’s ever-growing debt. 

 

In the same spirit as Seymour Durst, Retirement Clearinghouse has now launched a National Retirement Savings Cash Out Clock. While it’s not an actual billboard, this virtual clock calculates 2017 year-to-date cash out leakage from our 401(k) system, highlighting the ongoing problem of cash out leakage in real time. 

 

As of May 12th, the clock indicates that total cash out leakage for 2017 has reached $24.4 billion. If no action is taken to stem this outflow of funds, cash out leakage will eventually reach $68 billion by year’s end.

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Topics: Auto Portability, Cash Outs, America's Mobile Workforce, auto portability simulation, National Retirement Savings Cash Out Clock, 401k leakage

Why America’s Retirement Savings Needs Recycling

Posted by Thomas Hawkins on Apr 24, 2017 10:58:04 AM

 

As we marked the 47th annual Earth Day on April 22nd, we were once again reminded of the need to protect our environment. This heightened awareness is testament to how far Americans have come in both recognizing and curbing the wasteful, destructive behaviors that emerged in the decades following World War II. Those excesses have given rise to conservation and environmentalism, and were heralded by the first Earth Day in 1970. 

 

Today’s Wasteful Behavior: Cash Out Leakage

 

While we may be more environmentally-conscious these days, we don’t apply the same principles financially. There is a highly-wasteful and harmful behavior that silently robs millions of the prospect for a comfortable or timely retirement. Every year, millions of Americans will needlessly cash out their retirement savings after changing jobs, converting these savings into wasted consumption and avoidable tax penalties.


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Topics: Auto Portability, Safe Harbor IRA, Automatic Rollovers, Cash Outs, America's Mobile Workforce, Automatic Rollover, auto portability simulation, National Retirement Savings Cash Out Clock

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