Retirement blunder: Raiding the 401(k)
Survey: many workers cash out plans when changing jobs, incurring penalties and losing savings.
July 25, 2005: 11:16 AM EDT
By David Ellis, CNN/Money staff writer
NEW YORK (CNN/Money) - Almost half of workers leaving their jobs are raiding their 401(k) accounts for cash when changing jobs instead of holding on to their retirement savings, according to a recent study.
The survey, conducted by Hewitt Associates, a global human resources services firm, revealed that 45 percent of 200,000 individuals participating in 401(k) plans, opted to cash out of the retirement plan after leaving their job. "Our findings show that too many workers are not looking at their 401(k) savings as long-term in nature, but are instead using termination of employment as an opportunity to spend this money," said Lori Lucas, director of participant research at Hewitt Associates, said in a statement.