Combine old 401k accounts to save hundreds of thousands by retirement

financial independence
financial freedom
401k optimizer
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 3 min read

Author: Gagan

Elon: "What did you get done this weekend?"

You: "Rolled over my old 401k's so I will have $700,000 more at retirement!" 💰

🏋️ Do you have 10 mins this weekend to drastically improve one aspect of your finances? Combine old 401k accounts to save hundreds of thousands by retirement. Let’s dive in.

🤯 American workers change jobs every 4 years on average. Almost 2 million Americans leave their 401k’s behind every year. Here’s how you can make sure you’re not one of them. 🧹

💸 Don't be like 3 million Americans who leave their 401k's behind and lose out on decades of growth.

🕘 Spending 10 minutes to rollover your old 401k's could be one of the best time investments for you.

👩‍💻 I always rolled over my 401k after changing jobs 8 times over the last 20 years, where each employer had a different 401k provider.

📉 It was shocking to learn how my old 401k providers were charging me extra fees while putting my money into bad investments.

💸 By leaving money in older 401k accounts, you lose money in multiple ways:

1️⃣ Not paying enough attention to older accounts. 🤦 And then: 2️⃣ Providers kick you out of the employer-provided low-fees plan into a higher fee plan. 📉 3️⃣ Providers often move your money from good index funds to expensive-funds/cash/money-market to charge more fees. 🥷

🥷 Over your lifetime, these hidden costs can potentially add up to hundreds of thousands of dollars. 💰

🕵️‍♀️ Rolling over a 401k is a one-time 10-minute time investment but saves you a lot of money. There are two major ways to go about it:

(Recommended) The 401k Rollover Route: Move all your old 401k money into your current 401k. Here’s how:

1️⃣ Call or visit your current 401 provider and ask them what are the steps needed. You can also do this online, but every company (Fidelity, Vanguard etc) does it slightly differently so in-person or phone is faster. 📞

2️⃣ Call the old 401k and ask them to liquidate all your assets in your 401k and send the check to you. 📱

3️⃣ Send the check & the forms to the new 401k company by mail or in person if you can. ✉️

4️⃣ The transferred money will appear as cash in your new 401k account or your IRA account. 💵

5️⃣ Buy low-fees index funds (FXAIX, VOO, SCHA etc) with this cash in the new 401k account. Or you can buy the funds that you already own with your 401k allocation. ☔

🆗 IRA Route: Move all old 401k funds into IRA. 👩‍💻

1️⃣ Open an IRA account with your favorite broker and then invest this money into index funds or ETFs or individual stocks of your choice. 🔑

2️⃣ The advantages of an IRA are many, including not having to move or rollover entire money next time you switch jobs. 🏁

3️⃣ Disadvantage of this approach is that you now have to monitor one more account, in addition to your 401k account, which typically leads to lower performance in the long run. ➗

🚀 Now you know what to do. Spend the next 10 minutes to get the ball rolling on this.

Combine 401k

📢 PS: We are kicking off Weekend Warrior series where we will share one financial change that you can make in your life each week to make your financial future more secure. Each one of these will require around 10 minutes of time investment from you, but will likely yield huge benefits.

Join Xillion to get ideas on how to get started or to up your investing game. Explore our products & blog at Xillion - Wealth Management for Everyone!.

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