According to the poll taken for American Express, a third of respondents who had recently walked off from an employer or had gotten fired weren’t participating in the company’s 401(k) plan.
The survey revealed that young workers, by a wide margin, were the least likely to be saving for retirement. Almost half of those who didn’t invest in their 401(k) plan were between the ages of 18 and 24, and 30% were between the ages of 25 and 34, the poll found.
Income was another contributing factor. More than half of the non-savers earned less than $25,000 while another third pulled in $25,000 and $50,000.
Another key finding was that a quarter of the workers who invested in their 401(k) left their retirement assets in their former employer’s plan after they left their job, despite a number of other options that may have been more financially beneficial.
The survey also revealed that 16% of workers who left the workforce rolled their money into an IRA, and the overwhelming majority of those who rolled over their assets said they would make the same decision again.
Some 11% of those surveyed said they cashed out of their retirement plan because they needed the money to pay off debt or for everyday living expenses – a decision half said they later regretted.
By law, individuals who take a lump-sum distribution from their 401(k) before age 55 will be assessed a 10% early withdrawal penalty, as well as federal and state income taxes.
The American Express survey was conducted in June 2002 and covered 2,000 adults interviewed by phone.