New LIMRA Secure Retirement Institute research indicates that many clients have retirement assets in orphan accounts. A recent survey of working Americans age 45-75 with more than $100,000 in household assets found that the majority had balances left in former employers’ DC plans, creating “orphan” accounts. What’s more, two thirds of those ages 55-75 with these accounts had DC plan balances of $100,000 or more.
These orphan accounts can add to the complexity of managing assets and may not be appropriately invested for the participant’s current age and financial situation. LIMRA SRI research found men and women equally likely to have a DC plan balance with a former employer (41 percent vs. 40 percent). The study found Americans with household assets of at least $500,000 are more likely to have an orphan account (44 percent vs. 38 percent) than those with less than $500,000.
What should advisors do?
Prior LIMRA SRI research shows that pre-retirees and retirees are more confident in their retirement security when they have a comprehensive written retirement plan. In addition, advisors should be helping their clients account for all of their assets to properly ensure their retirement plan is well-designed and invested based on their clients’ needs and resources.