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

Voters are on the sidelines as the port fills a vacant seat

Troy McClelland resigned from the Port of Everett commission too late for an election before 2019.

Don’t rely just on productivity measurements to value a worker

The controversies swirling around the productivity data at the national level are… Continue reading

In space capsules today, little room but big improvement

Boeing and SpaceX are relying on a tried-and-true design as they each develop new spacecraft.

First Boeing KC-46 delivery to Air Force slides into 2018

Certification milestones have been missed, and problems have emerged in flight test, a source says.

SEC reveals hack, possibility info was used for trading

The regulatory agency said the hack was discovered last year.

Newest must-try eatery: 85°C Bakery Cafe in Lynnwood

The popular bakery, part of a Taiwan-based chain, is already drawing out-the-door crowds.

Snohomish County tax liens

Tax liens are gathered from online public records filed with the Snohomish… Continue reading

Trudeau: Canada could stop dealing with Boeing over dispute

Boeing had petitioned the U.S. to investigate government subsidies of Bombardier’s CSeries aircraft.

Toys ‘R’ Us files for bankruptcy but keeps stores open

Retailers of all kinds are struggling. Toys ‘R’ Us is among at least 18 other bankruptcies this year.

Most Read