The Collectively Forgotten $1.6 Trillion in Retirement Accounts

What are the odds you would forget about $1 million? Nonsense, you might say. What kind of person would forget about any amount of money, let alone that sum?

Well, before one rushes to judgement, consider this article about so-called forgotten 401(k) retirement accounts.

How to Find Forgotten 401(k) Retirement Accounts

When a worker changes jobs or resigns, there is an astonishing tendency to unknowingly abandon money accrued in a retirement plan of the previous place of employment. In fact, it is estimated that there are 29 million forgotten 401(k) accounts worth more than $1.6 TRILLION!

The problem is so pervasive that the Department of Labor launched a database to help workers find these missing assets.

Even when these retirement plans are not forgotten, they are often neglected by being left uninvested or invested in low-yielding cash equivalents.

The result is massive opportunity costs, which add up significantly when compounded over decades. For example, a 401(k) with $100,000 that averages an 8% return over 30 years (which is below the long-term performance of the S&P 500 Index) would end in an account balance of more than $1 million! Even a balance of as little as $25,000 would grow to as much as $250,000 over 30 years at 8%. At a 10% return, the end balance almost doubles to just under $500,000.

Getting Back to Basics With Your Financial Coach

If one were to ask some of the greatest coaches in history what is the secret to success, it’s likely a common answer would be mastering the fundamentals.

From John Wooden to Chuck Noll and Bill Belichick, a foundational part of their success was an emphasis on doing the basic elements of the game well.

In basketball, this can be as simple as setting proper screens. In football, this might be correctly taking a three-point stance or properly holding a defensive position against an opponent’s running attack.

This same principle applies to the military or the arts.

A mastery of the basics always precedes greatness.

Achieving financial goals is very similar to the examples above.

Far too often we observe investors focusing way too much attention on the splashy elements of retirement planning, such as attempting to identify the next NVIDIA or deciding whether to invest in Bitcoin.

While investment performance can have a significant impact on financial goal achievement, it is also true that goals can be accomplished without exotic investment selections. Similarly, all the investment performance in the world won’t offset forgetting assets or making poor choices about spending and saving.

For us, this absolutely underscores the value of simple, yet effective financial decisions. Among the simplest and most effective is working with your own financial coach.

Retirement Planning with Miller Wealth Partners

A financial advisor who knows the right questions to ask can help you master the fundamentals by ensuring you are properly accounting for all the various assets you have accumulated and then optimally deploying those assets to help you achieve your goals.

Just like a general cannot develop a successful battle plan without first taking inventory of the soldiers and tools at his or her disposal, an investor is unlikely to maximize the odds of success without first knowing what they have to work with. A good advisor can help you develop and execute a repeatable battle plan to accomplish your goals.

Disclosures:

Blueprint Financial Advisors (“Blueprint”) d/b/a Miller Wealth Partners is an investment adviser registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. For more information, please visit adviserinfo.sec.gov and search for our firm name. All content available on this website is general in nature, not directed or tailored to any particular person, and is for informational purposes only. Neither the website nor any of its content is offered as investment advice and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. Blueprint does not represent that any opinion or projection will be realized. Neither Blueprint nor any of its advisers, officers, directors, or affiliates represents that the information presented on this website is accurate, current or complete, and such information is subject to change without notice. Past performance is not a guarantee of future results. Neither this website nor its contents should be construed as legal, tax, or other advice. Individuals are urged to consult with their own tax or legal advisers before entering into any advisory contract.  

Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice.

Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.

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An index is an unmanaged portfolio of specific securities. The performance of which is often used as a benchmark in judging the relative performance of certain asset classes. It should not be assumed that past performance in any way relates to future results. An investment cannot be made directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

S&P 500 Index: A widely used U.S. equity benchmark. It contains 500 U.S. stocks chosen for market size, liquidity, and industry group representation.