Forgotten 401(k) accounts have increased by more than 20% since May 2021; now represent almost 25% of all 401(k) savings

Capitalize, the award-winning platform to transfer retirement accounts, today released an update to its widely-cited 2021 white paper, The True Cost of Forgotten 401(k) Accounts. The analysis highlights continued growth in the number of “forgotten” accounts which represent 401(k) savings that have been left behind by people who have changed jobs or terminated employment. According to the company’s research, as of May 2023, there are an estimated 29.2 million forgotten or left-behind 401(k) accounts in the U.S. representing $1.65 trillion of assets, an increase of over 20% since just two years ago in May 2021. The company’s analysis also suggests that forgotten 401(k) accounts could cost an individual several hundred thousand dollars in foregone retirement savings over 30 years in a worst-case scenario.

Over the past several months, Capitalize has analyzed a range of new data sources to update its 2021 findings. This updated analysis reveals that 3.8 million 401(k) accounts were left behind in 2021 with another 4.4 million left behind in 2022, driven largely by the “Great Resignation” and elevated rates of job switching. The average account balance of a forgotten 401(k) increased to $56,616 from $55,400, and in aggregate, the assets left behind by job changers now represent close to 25% of the total savings in 401(k) plans. In total, the company found that these forgotten 401(k) accounts could be costing retirement savers up to $115 billion annually from higher fees and lower investment returns if misallocated.

“We’ve seen people change jobs at elevated rates - and leave their 401(k) accounts behind as they go from job to job. This reflects one of the structural problems with our 401(k) system: our retirement accounts remain tied to our employers and their 401(k) plans, leading to significant friction at the point of job change,” said Gaurav Sharma, CEO at Capitalize. “At Capitalize, we’re motivated to shine a light on this problem and work with financial institutions, policymakers, and employers to build technology that helps Americans better manage their retirement savings.”

To address this problem, Capitalize is releasing new technology to help savers begin the process of recovering left-behind 401(k)s, including the Capitalize 401(k) Finder, which helps savers search for details on their forgotten 401(k) accounts and employer plans.

For full details of the analysis and findings on forgotten 401(k) accounts, visit https://hicapitalize.com/resources/the-true-cost-of-forgotten-401ks/.

For more information on the Capitalize 401(k) Finder, visit https://hicapitalize.com/find-my-401k/.

About Capitalize

Capitalize is a New York-based technology company that helps consumers find and roll over their old 401(k) accounts through an easy-to-use online platform. Capitalize’s free platform manages the entire 401(k) rollover process, using proprietary technology and delightful customer service to dramatically simplify the process of transferring and managing retirement accounts. Capitalize was recognized as a World Changing Idea by Fast Company in 2022 and as one of TIME’s 100 Best Inventions of 2021. www.hicapitalize.com.

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