By Lisa Barron
What workers do with their employment-based retirement
savings when they leave or change jobs depends largely on whether they retire or stay in the workforce, according to the nonpartisan Employee Benefit Research Institute.
’s analysis, which focused on the financial behavior of job changers over age 50, found that among those still working, the most common action was to leave the savings in a previous employer’s plan and that, among those retiring, the most common choice was to take the money.
But the analysis also found that several other factors to come into play. The decision to take a cash withdrawal, for example, declined with higher account balances, higher incomes, existing ownership of an IRA and higher financial wealth, while it rose according to debt levels.
On the other hand, the decision to roll over a defined contribution distribution followed the opposite pattern. Rollover decisions increased with higher account balance, higher income, previous ownership of an IRA account and greater financial wealth, and declined with higher debt.
Sudipto Banerjee, EBRI research associate and author of the report, explained, however, that there are no distinct patterns in the findings. “This suggests that there may be behavioral factors — such as inertia — driving what in some cases might be seen as a ‘non-decision.’ Additionally, those who are postponing the distribution may simply be deferring the decision until they need the money,” he said.
EBRI’s analysis is based on 2008 and 2010 data from the Health and Retirement Survey, a study of a nationally representative sample of U.S. households with individuals age 50 and over.
Originally published on BenefitsPro.com