It’s easy enough to lose track of money when it’s a couple of bucks — but what if that number were in the trillions? Well, as of last year, more than $1 trillion was left behind in old 401(k) retirement plans by former employees. It turns out, losing track of your retirement money is a lot easier than it seems.
Luckily, there are a few ways, endorsed by financial professionals, for you to track down your missing retirement money.
Be proactive
From changing jobs to your employer’s changing money management companies to a switch from paper to electronic notifications, there are various ways you can lose track of your money.
Keep a paper trail for yourself, or an Excel document on your computer reminding you where you worked and what you contributed.
Contact your former employer
It can be a challenge to track down your former employers’ HR department for your retirement benefits and information. Wait times on the phone are long and follow-up emails may not come for weeks or months. Be patient and don’t get discouraged. Remember that this is your money and don’t give up trying to get it.
“I was helping a client track down his 401(k). It’s important to save documentation, save your papers, try to remember the provider or remember where you worked,” Marguerita Cheng, CFP® and CEO at Blue Ocean Global Wealth, told The Atlanta Journal-Constitution.
“We called one plan which had been moved to two other plans. Eventually, we tracked it down, it came to around $37,000.”
What to do if your former employer is no longer in business
If your former employer is no longer in business, don’t worry, you can still find your old plan. Checking one of these sites can help you find phone numbers and figure out which money management team has your retirement money:
- Abandoned Plan Search: https://www.askebsa.dol.gov/AbandonedPlanSearch/
- National Registry of Unclaimed Retirement Benefits: https://unclaimedretirementbenefits.com/
- Pension Benefit Guaranty Corporation: https://www.pbgc.gov/search-trusteed-plans
- National Association of Unclaimed Property Administrators: https://unclaimed.org
It’s easy to forget about retirement funds until you start approaching retirement age. But if you have contributed to a 401(k) at some point in your work history, you should investigate those previous plans. Even if you think you didn’t contribute enough, you never know what could be left on the table.
Work with a financial advisor
“Everybody can benefit from financial planning, it’s all about money management. Even from someone who’s had their first summer job to those who are retiring, it’s beneficial to start as soon as possible.” said Cheng.
A financial advisor helps to provide financial services and guidance to clients by creating strategies for eliminating financial risk and building wealth over the long term. Hiring a financial advisor takes some of the pressure off you when it comes to money management.
In the case of hunting down lost retirement funds, your financial advisor is on the front lines, battling it out with your former HR departments. And they have the patience to get the answers they need to track down your funds.
“My ultimate goal in ensuring their retirement plans is to make sure the client and I are on the same page about what the retirement age looks like and make sure the right investment vehicles are in place,” Rianka R. Dorsainvil, CFP®, Co-CEO & senior Financial Planner at 2050 Wealth Partners, told The Atlanta Journal-Constitution.
Working with a financial advisor or planner can help ensure your financial freedom, and with it the peace of mind that comes from understanding of your portfolio. A financial advisor can also help you create plans to have multiple streams of income and build a more complex and diverse portfolio so you’re not relying solely on your employer’s 401(k) or Roth IRA.
Mistakes to avoid
“If you max your company’s match for this year in 2022, that’s $20,500.” said Dorsainvil.
If you’re eligible to start contributing to your company’s 401(k), taking advantage of this as soon as possible is a sure way to get on track for your retirement planning. If you’re financially able to match your contributions, typically the company you work for could match up to 6% of your contributions. To be sure what your max match is, contact your HR department.
“If you’re in the position to match the max, it’s important to do so because it’s tax-free money.” urged Cheng “ It’s also very important to make sure your information is up-to-date. I had a client who was with his company for a long time, at the start of his career he was married, towards the end of it, he had a new wife. His retirement plan had his ex-wife as his beneficiary.”
You also want to avoid not having a budget that plans for unexpected expenses, whether it’s a leaky faucet, an unplanned vehicle repair or a much-needed vacation. Living on a realistic budget will make your future financial planning process a lot easier.
Rianka Dorsainvil warns her clients about “lifestyle creep” and not having a budget. “Anytime you get a raise/pay increase, the cost of your lifestyle increases.” When you get a little more money in the bank, you tend to splurge on more things, even if it’s just ordering food deliveries more often, those expenses add up. Not keeping track of your budget will have you wondering where your raise went.
Keeping a record of your finances and investing in a financial planner can help fast-track your retirement with the most financial freedom possible.
“Retirement means different things for different people; their time frames are unique. I want to make sure my client is financially free once they get to that point in time.” explained Rianka Dorsainvil.
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