The Impact of Leakages on 401(k)/IRA Assets

Alicia Munnell and Anthony Webb ()

Issues in Brief from Center for Retirement Research

Abstract: The brief’s key findings are: *As 401(k)s and IRAs have become the dominant source of retirement saving, the potential for pre-retirement withdrawals – “leakages” – has grown. *Leakages occur via three channels: 1) in-service withdrawals for hardships or after age 59½; 2) cashouts when individuals leave a job; and 3) loans. *Estimates indicate that about 1.5 percent of assets leaks out of 401(k)s/IRAs each year, reducing wealth at retirement by about 25 percent. *Given the size of leakages, it may be time to take steps to curtail them such as: *limiting hardship withdrawals to unpredictable events *raising the age for penalty-free withdrawals to better align with when people actually retire; and *closing down cashouts by requiring the money to stay in the 401(k) system or be rolled over into an IRA.

Pages: 10 pages
Date: 2015-02
New Economics Papers: this item is included in nep-age
References: Add references at CitEc
Citations:

Downloads: (external link)
http://crr.bc.edu/briefs/the-impact-of-leakages-on-401kira-assets/ R
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://crr.bc.edu/briefs/the-impact-of-leakages-on-401kira-assets/ [301 Moved Permanently]--> https://crr.bc.edu/briefs/the-impact-of-leakages-on-401kira-assets/)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crr:issbrf:ib2015-2

Access Statistics for this paper

More papers in Issues in Brief from Center for Retirement Research Contact information at EDIRC.
Bibliographic data for series maintained by Amy Grzybowski () and Christopher F Baum ().