Fewer people blow 401(k) money after job change

Fewer Americans are blowing their 401(k) savings on cars, clothes and other frivolities when they change jobs.

Only 7.5 percent of U.S. workers last year cashed out their retirement money to spend on purchases when they left a job, according to data released Wednesday by the Employee Benefit Research Institute.

That’s half the 15.1 percent level from a decade ago, and one-third the 22.7 percent of 20 years ago, according to EBRI.

When workers leave a job — often for a new position elsewhere — they have several options with their 401(k) savings. That includes rolling the money into an individual retirement account or cashing out and spending it.

Depending on the amounts involved and the policies of the new employer, workers also can leave the money in the old company’s retirement plan or roll it into a plan at the new employer.

The decrease in consumption-related cash-outs is a sign that Americans — at least those who are disciplined enough to contribute to work-based plans in the first place — are getting the message about the importance of saving for retirement and aren’t squandering those savings on unnecessary purchases.

Almost half of people (45.2 percent) rolled their money into tax-preferred retirement-related vehicles, primarily an IRA or another employer’s savings plan, according to EBRI.

That’s up slightly from 43.4 percent 10 years ago and up sharply from earlier years. It was 35.4 percent in 1998 and 19.3 percent in 1993.

More in Herald Business Journal

Health-care consumers need to take the lead, so get smart

David Russian, CEO of Western Washington Medical Group, writes our third essay about fixing health care.

Robots on Wall Street: Slow-footed regulators lose ground

Watchdogs have to figure out how to check computers running lightening-fast algorithms.

More business, more competition for Everett kidney dialysis center

Nonprofit Puget Sound Kidney Centers sees large for-profit competitors enter state market.

Molina Medical holds fall carnival for families in Everett

Molina Medical is hosting a free event for families in the Everett… Continue reading

Leadership Snohomish County celebrates 20 years of service

Leadership Snohomish County is celebrating its 20th anniversary. The organization was launched… Continue reading

Snohomish, Monroe manufacturers honored for innovation, excellence

Two Snohomish County companies have been honored with Manufacturing Excellence awards at… Continue reading

Remodeled home tours planned this weekend

This weekend, Edmonds-based Chermak Construction will participate in the 2017 Remodeled Homes… Continue reading

Barron Heating to celebrate anniversary at Marysville showroom

Barron Heating and Air Conditioning is celebrating its 45th anniversary from 10… Continue reading

US budget deficit hits $666B, an $80B spike for the year

The deficit issue has largely fallen in prominence in Washington in recent years.

Most Read