Increasing number of “job changers” holding on to retirement savings, EBRI reports

When employees change jobs, an increasing number appear to be leaving their retirement savings intact, according to research by the Employee Benefit Research Institute (EBRI). The EBRI analysis finds that preservation of retirement benefits appears to have improved after 1986, with some evidence it has continued to improve through 2012.

Using recently released U.S. Census Bureau data, the EBRI analyzed the prevalence of how workers take lump-sum distributions from their retirement plans when they change jobs. The EBRI found that the percentage of lump-sum recipients who used the entire amount of their most recent distribution for tax-qualified savings has increased sharply since 1993; well over 4 in 10 (45.2%) of those who received their most recent distribution through 2012 did so, compared with 19.3% of those who received their most recent distribution through 1993 and 35.4% through 1998. Furthermore, just 7.5% of recipients’ most recently received distribution through 2012 was entirely spent on consumption, compared with 22.7% for those who received a distribution through 1993 and 15.1% through 2003.

Also, the EBRI found that more of those who spent their retirement savings at job change used it to improve or enhance their financial situation, choosing to pay down debt or buy a home, rather than on pure consumption.

Source: EBRI press release

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