Draining 401(k) accounts when changing jobs: the hidden time bomb undermining retirement savings
Key Takeaways:
At job separation, 41.4% of employees cash out 401(k) savings, most draining their entire accounts.
Cashing out increases with the proportion of the 401(k) balance contributed by employers. The “account composition effect” is most likely driven by behavioral rather than economic explanations.
The cash-out option was presented to terminating employees in a salient way, unintentionally nudging them to withdraw their 401(k) savings.
BALTIMORE, MD, July 17, 2023 – When researchers set out to study 401(k) retirement savings ...












