Workers changing or leaving jobs don’t always take their 401(k)s with them—or else they cash out and take the money, thus reducing their retirement savings. But new tools could help to change that.
In a new partnership with FeeX, NerdWallet has launched two tools designed to help workers “manage and maximize their retirement savings”: the NerdWallet Retirement Calculator and a 401(k) fee analyzer.
About 20 percent of people who change jobs and leave their 401(k)s with a former employer say it’s because they don’t know how, they don’t have time, or it’s not a priority. According to ING Direct, the number is more like 30 percent. And the problem of “leakage” is huge: according to the Government Accountability Office, workers cash out 2.7 percent of the trillions in 401(k) plans each year—resulting in billions of lost savings.
The NerdWallet/FeeX collaboration has not only produced two tools but also a website, a 401(k) Rollover Center, at which users can explore plans for hidden costs and fees, estimate how much a rollover might save them and look for alternate providers.
Users provide some information online, such as their former employer’s name, the investment firm that holds the account and the type of investment funds in the account—and FeeX analyzes the fees for the account, then and delivers a cost comparison of the existing account and other investment alternatives.
Users can then see how much they’re currently paying in annual fees, as well as how much they might be able to save by rolling over their accounts, depending on their retirement age. They can also then roll their 401(k) to an investment alternative of their choice. The service is free to all users and does not require sensitive personal identifiers.
Through the retirement calculator, Americans can get an idea of how they stand regarding their retirement goals by, again, answering questions about their age, when they expect to retire, current income, retirement savings and contributions. An active interface provides an estimate of how much they’ll need to save to retire comfortably at different ages, and also provides access to NerdWallet’s Ask an Advisor platform. The tool and access to experts are free.
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