Abandoned Retirement Savings

54 Pages Posted: 11 Jun 2021

See all articles by Lucas Goodman

Lucas Goodman

U.S. Department of the Treasury

Anita Mukherjee

Wisconsin School of Business

Shanthi Ramnath

Federal Reserve Bank of Chicago

Date Written: June 2021


Retirement savings abandonment is a rising concern connected to defined contribution systems and default enrollment. We use tax data on Individual Retirement Accounts (IRAs) to establish that in 2017, 2.7% of 72.5 year-old account-holders in total abandoned $790 million; the median abandoned account held $5,400. Nearly all of these funds remain with plans and are not sent to state unclaimed property. Regression discontinuity estimates show that abandonment is 10 times higher in automatic rollover IRAs, a type of default account. We nest our findings in a model of retirement savings featuring forgetting to derive implications for passive and active savers.

Keywords: retirement savings, defaults, memory, escheatment

JEL Classification: D83, H24, H31, J32, J14, J63

Suggested Citation

Goodman, Lucas and Mukherjee, Anita and Ramnath, Shanthi, Abandoned Retirement Savings (June 2021). Available at SSRN: https://ssrn.com/abstract=3864530 or http://dx.doi.org/10.2139/ssrn.3864530

Lucas Goodman (Contact Author)

U.S. Department of the Treasury ( email )

1500 Pennsylvania Avenue
Washington, DC 20220
United States

Anita Mukherjee

Wisconsin School of Business ( email )

975 University Avenue
Madison, WI 53706
United States

HOME PAGE: http://www.anitamukherjee.com

Shanthi Ramnath

Federal Reserve Bank of Chicago ( email )

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