A growing number of American workers are losing track of their retirement savings, potentially missing out on a significant portion of their financial nest egg.
Trillions in retirement assets abandoned
A recent analysis from Capitalize, a service dedicated to helping individuals transfer retirement accounts, reveals that there are currently 31.9 million
lost 401(k) accounts
as of July 2025. Collectively, these accounts hold an estimated $2.1 trillion in assets, marking a 30% increase from the previous report in mid-2023.
It’s not just private sector employees who are affected; federal workers are also at risk. Capitalize projects that nearly three million Thrift Savings Plan accounts will be left behind by the end of 2025, largely due to federal government layoffs.
What’s causing 401(k)s to get left behind
Frequent job changes and layoffs contribute significantly to the abandonment of 401(k)s. However, other factors are also at play. More workers are enrolling in retirement plans, thanks in part to legislation like
the Secure 2.0 Act
, which has expanded automatic enrollment.
Moreover,
rolling a 401(k) into another retirement plan
is often a manual and complicated process. To initiate a rollover, you must contact your plan administrator, who will either make a payment to your new retirement plan or send you a check to deposit. If you receive a check, you have 60 days to deposit it, or it may be considered taxable income.
This complexity can lead to delays in decision-making or even complete forgetfulness regarding these accounts. If individuals were automatically enrolled, they might not realize they need to take action regarding their rollovers. Looking ahead, the process could become even more intricate as recent policy changes encourage the inclusion of alternative assets like private equity in 401(k)s, which are less liquid than traditional mutual funds.
The high costs of forgetting a 401(k)
While you can leave your 401(k) where it is, doing so may expose you to higher fees and lower returns over time.
Capitalize estimates that the average forgotten 401(k) holds around $66,691, an increase of 18% from $56,616 in May 2023. This growth is attributed to the stock market, but if managed properly, the potential returns could be even higher.
In a worst-case scenario, with high fees and poor asset allocation, a forgotten 401(k) could cost an individual over $500,000 in lost savings.
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Forgotten 401(k) in a money market fund
|
Well-allocated, low-fee IRA or 401(k)
|
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What to do with your 401(k) if you leave a job
To avoid leaving money on the table, it’s crucial to understand your options for your 401(k) plan.
-
Rollover to your new 401(k) plan.
If you’re starting a new job with a workplace retirement account, consider rolling over your existing 401(k) into the new one. Consult both plan administrators to understand their processes and keep track of timelines, especially if you receive a paper check that needs to be deposited. -
Cash out your 401(k).
If you are at retirement age, you may consider cashing out some of your 401(k). However, be aware of potential taxes and how it could affect your tax bracket and Medicare premiums. If you are not at retirement age, an
early 401(k) withdrawal
could lead to taxes and penalties. -
Leave it where it is.
In some cases, this may be the best choice. Compare the plan’s fees and investments with what you might pay and access elsewhere, such as in an IRA. It’s also wise to plan regular reviews of the account to monitor investment performance and potential fee changes.
