Call it the Great Cash Out: Almost half of job switchers are making the mistake of cashing out their retirement savings when they go
That's according to Tom Leslie, the communications manager at the University of British Columbia Sauder School of Business, in reference to a newWang, along with Muxin Zhai at Texas State University and John G. Lynch Jr. at the University of Colorado Boulder, released the results of a study that found nearly half of 162,360 employees who left their jobs between 2014 and 2016 at 28 US companies cashed out of workplace retirement plans like 401s that incentivize saving over time.
Wang and her coauthors wrote that there are multiple ways that"pre-retirement leakage" — or dipping into your retirement fund early — happens: borrowing against a 401 then defaulting on the loan, for instance, or making withdrawals while actively employed. "Whatever benchmark you try to find, it cannot completely explain why such a significant number of people would touch their 401 at job separation," Wang said in a press release, adding that many workers experience financial difficulties while employed and don't run to cash out their funds.
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