Benefit Plan Blog

Despite the growing need for employees to save for retirement, a significant number of workers participating in 401(k) plans “cash out” of them once they leave their company, according to new research by Hewitt Associates.

The Hewitt study found a direct correlation between age and tenure and employees' decisions to cash out of their 401(k)plans, and not surprisingly, the size of the account balance was also a factor.

Lori Lucas, Hewitt's Director of Participant Research commented on the study:

Retirement security relies not only on employees saving in their 401(k) plan, but on them actually preserving their retirement wealth when they leave their company. Our findings show that too many workers are not looking at their 401(k) savings as long-term in nature, but are instead using termination of employment as an opportunity to spend this money. With fewer workers tending to remain at one company until retirement, employees may become ‘serial consumers’ of their 401(k) savings, which can have serious consequences when it comes to their ultimate ability to reach their retirement goals.