Nearly a third of workers who rolled retirement savings into IRAs at Vanguard in 2015 still had the balance sitting in cash seven years later, according to a...
When you switch jobs, the basic advice is to roll over your old employer-sponsored retirement account to an individual retirement account , or IRA. Sounds easy, but beware.My method: I divvy my rollover up between a handful of low-fee index funds. I have also carved out a portion for a, a “set-it-and-forget-it” way to invest based on the date of retirement. from Vanguard Group .
The downside to keeping retirement money at a former employer, of course, is that you can't add any more money to it. And you’re stuck investing only in that specific menu of investments. An IRA will typically offer many more choices.When you roll your 401 account into an IRA, the company that administers the plan typically liquidates your holdings, then moves the cash into your IRA. But, it doesn’t automatically invest it for you.
Given all the job changing across all generations in recent years, this mistake is pretty significant, particularly for younger workers. “If you want to have any chance of retiring and living the life you want in retirement, then you're going to have to have a large portion of your retirement savings allocated to equities to maximize your chance of success,” Reed said.
Call the firm where you’re moving your money to and get an idea of what would be an appropriate investment, she added. “Having a good understanding up front as to what that process is going to look like can help you get your money invested right away, so it doesn't get stuck in a cash limbo.”
Retirement Savings Vanguard Group Individual Retirement Account Andy Reed Financial Services Firm Index Funds Rollover
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