In his 6/30/16 MarketWatch article, RCH President and CEO Spencer Williams suggests an inter-generational dialogue on the pitfalls to avoid when saving for retirement.
As the generation whose career has witnessed the emergence and widespread adoption of 401(k) plans, Boomers are uniquely qualified to lend their perspective to Millennials. As Boomers have changed jobs, the specter of the cashing out has loomed largest in their list of regrets.
Sadly, the cashout leakage problem could have been solved by simply providing Boomers with an easier alternative to move their balances forward to their current-employer plans, as they changed jobs. The good news for Millennials is that the problem of portability friction is being taken up in Washington, DC – including by the White House, a bicameral group of Congress members, as well as the Bipartisan Policy Center. All of these calls share one thing in common: making it easier for current and future generations to move their retirement savings forward at the time of job transition, thus avoiding the scourge of cash outs.
Williams cites results from the Auto Portability Simulation (APS) model that show $115 billion in new retirement savings would be added to the nation’s retirement system, if we only added portability to the equation. And that’s just for savers with less than $5,000!
Millennials can ensure they don’t wind up regretting their actions by learning from the mistakes of their elders, and avoiding the temptation to cash out or leave their accounts behind when changing jobs. Solutions like Auto Portability can make that choice a lot easier – not only for Millennials, but for every generation.