The Collectively Forgotten $1.6 Trillion in Retirement Accounts

What are the odds you would forget about $1 million? Nonsense, you might say. What kind of person would forget about any amount of money, let alone that sum?

Well, before one rushes to judgement, consider this article about so-called forgotten 401(k) retirement accounts.

How to Find Forgotten 401(k) Retirement Accounts

When a worker changes jobs or resigns, there is an astonishing tendency to unknowingly abandon money accrued in a retirement plan of the previous place of employment. In fact, it is estimated that there are 29 million forgotten 401(k) accounts worth more than $1.6 TRILLION!

The problem is so pervasive that the Department of Labor launched a database to help workers find these missing assets.

Even when these retirement plans are not forgotten, they are often neglected by being left uninvested or invested in low-yielding cash equivalents.

The result is massive opportunity costs, which add up significantly when compounded over decades. For example, a 401(k) with $100,000 that averages an 8% return over 30 years (which is below the long-term performance of the S&P 500 Index) would end in an account balance of more than $1 million! Even a balance of as little as $25,000 would grow to as much as $250,000 over 30 years at 8%. At a 10% return, the end balance almost doubles to just under $500,000.

Getting Back to Basics With Your Financial Coach

If one were to ask some of the greatest coaches in history what is the secret to success, it’s likely a common answer would be mastering the fundamentals.

From John Wooden to Chuck Noll and Bill Belichick, a foundational part of their success was an emphasis on doing the basic elements of the game well.

In basketball, this can be as simple as setting proper screens. In football, this might be correctly taking a three-point stance or properly holding a defensive position against an opponent’s running attack.

This same principle applies to the military or the arts.

A mastery of the basics always precedes greatness.

Achieving financial goals is very similar to the examples above.

Far too often we observe investors focusing way too much attention on the splashy elements of retirement planning, such as attempting to identify the next NVIDIA or deciding whether to invest in Bitcoin.

While investment performance can have a significant impact on financial goal achievement, it is also true that goals can be accomplished without exotic investment selections. Similarly, all the investment performance in the world won’t offset forgetting assets or making poor choices about spending and saving.

For us, this absolutely underscores the value of simple, yet effective financial decisions. Among the simplest and most effective is working with your own financial coach.

Retirement Planning with Blueprint Financial Advisors

A financial advisor who knows the right questions to ask can help you master the fundamentals by ensuring you are properly accounting for all the various assets you have accumulated and then optimally deploying those assets to help you achieve your goals.

Just like a general cannot develop a successful battle plan without first taking inventory of the soldiers and tools at his or her disposal, an investor is unlikely to maximize the odds of success without first knowing what they have to work with. A good advisor can help you develop and execute a repeatable battle plan to accomplish your goals.