In today’s fast-paced world, managing multiple retirement accounts can be overwhelming and confusing. Consolidating retirement accounts into a single plan is becoming increasingly important, and it’s an excellent option for individuals who want to simplify their retirement savings and invest in their future.
Created on February 28, 2023
For many individuals, changing jobs can be an exciting opportunity to advance their careers or pursue new interests. However, it can also present a challenge when it comes to managing their retirement savings.
When switching jobs, individuals may need to move their retirement accounts from their previous employer’s plan to a new plan, which can be a complicated and time-consuming process. Your financial advisor can make this process easier to help you stay on track with your retirement savings.
Retirement savings is a critical aspect of financial planning, and for most people, workplace retirement plans such as 401(k)s, 403(b)s, and 457 plans are the primary way they save for retirement. However, as individuals change jobs throughout their careers, they may accumulate multiple retirement accounts, making it difficult to keep track of and manage their savings effectively. Moreover, having multiple accounts can lead to unnecessary fees, and investment choices can be difficult to coordinate.
Rollovers Matter
The process of transferring a retirement account from one employer plan to another is called a rollover. A rollover can be complex and time-consuming, and it requires individuals to navigate a range of tax and legal requirements.
According to a study by the Transamerica Center for Retirement Studies:
- Almost half of workers surveyed (45%) were unaware of what to do with their retirement savings when changing jobs;
- Over half of workers (51%) actively choose to transfer their retirement savings when changing jobs; and
- Almost a third of those who leave their savings in their previous employer’s plan (31%) do so because they find the process of moving their savings too complicated.
Professional Help
A financial professional can provide a solution to these problems and help you consolidate your retirement accounts and streamline the rollover process. The benefits of your advisor helping you do this are significant.
- It makes the rollover process much more accessible for individuals. By automating much of the process, a financial professional removes much of the hassle and uncertainty involved in moving retirement savings between employers. Workers can be confident that their savings are being moved efficiently and cost-effectively, and that their retirement planning is not being disrupted by job changes.
- A financial professional can help you avoid unnecessary fees and charges. When individuals have multiple retirement accounts, they may be paying duplicate fees and expenses for each account. By consolidating retirement savings, you reduce the number of accounts and fees paid, which helps you save money over the long term and keep more of your retirement savings working for you.
- A trusted partner can help you make better investment decisions. When you have multiple retirement accounts, it can be challenging to coordinate investment strategies across those accounts. By consolidating retirement accounts, it is easier to develop a comprehensive investment plan that is aligned with your retirement goals.
As more and more workers change jobs throughout their careers, consolidating retirement accounts is becoming increasingly important, and it is an excellent option for individuals who want to simplify their retirement savings and invest in their future.