Data & Research May 21, 2009

Nearly Half of Terminated Workers Kept Assets in 401(k) Plan

Almost half (43%) of workers who left their jobs in the first quarter of 2008 still had not moved their 401(k) assets a year later, according a Charles Schwab report about plans it administers.
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The other 57% of assets held by 401(k) participants who left their job in the first quarter of 2008 had been distributed from former employers’ plans by the end of the first quarter 2009. Of that amount:

  • 75% of assets were rolled over into IRAs;
  • 14% of assets were taken in cash distributions;
  • 7% of assets were moved into new employer plans;
  • 4% of assets were taken in other forms of distributions.

“We urge people to educate themselves on their options when they leave a job, especially if they expect to be out of work without access to a savings plan at a new job,” said Rene Kim, Charles Schwab senior vice president, in the news release.

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Kim said participants should carefully evaluate whether to stay in the old employer’s plan, roll into a new employer’s plan, roll into an IRA, or take a distribution.

The data is based on 9,790 terminated participants in Schwab Retirement Plan Services’ 401(k) plans from January 1, 2008, to March 31, 2009.

Data & Research May 21, 2009

Boomers Lose Focus on Debt-Free Retirement, Survey Finds

Consumers are more concerned about short-term security than long-term financial goals, according to a survey sponsored by Securian Financial Group.
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While the survey indicated Americans have found many ways to spend less, it also indicated they are not reducing their debt, according to a release of the results of the 2009 Survey of Financial Values and Debt . Eighty-two percent of respondents are carrying non-mortgage debt, a figure that is virtually undiminished since Securian’s initial survey in 2007.

One-fifth of Boomers who are in debt owe at least $50,000 in non-mortgage debt—that is a 10-point spike from the 2007 survey. Boomers were the only generation in the survey (which included Generations Y, X, and the Silent Generation) to add debt since 2007.

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Three-quarters of non-retirees expecting to retire with debt are concerned about the amount of debt they might carry into retirement.

On a more positive note, only one in five people (22%) polled for the Securian survey applied for credit or non-mortgage loans in the last 12 months, and they were less willing overall to take on debt for cars, vacations, gifts, home improvements, or meals out. They also identified several ways to save money on everyday expenses, and eight out of 10 expressed pride in the ways they have cut back.

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