A new report reveals that more than $2 trillion in retirement savings is stranded in forgotten or abandoned 401(k) accounts — an average of $66,691 per account.
These 31.9 million inactive accounts make up nearly one-quarter of all 401(k) assets, highlighting a growing challenge for American savers.
Why it matters: Released on September 30 by Capitalize, a retirement savings platform, in collaboration with the Center for Retirement Research at Boston College, the report — “The True Cost of Forgotten 401(k) Accounts” — underscores how job changes and complicated transfer processes are leaving massive sums of money sitting idle.
- The number of forgotten 401(k)s has almost doubled over the last decade driven by ongoing job switching and layoffs, albeit at recent levels that remain below the COVID peak observed in 2021 and 2022.
- Layoffs in the federal government have led to growth in the number of left-behind Thrift Savings Plan (TSP) accounts, with almost three million TSP accounts now projected to be left behind by the end of 2025. While smaller than the number of left-behind 401(k)s, volatility in the federal government workforce may lead to more forgotten account dynamics in the public sector.
