Investment manager TIAA is joining a group that aims to help America’s under-saved, minority and low-income workers improve their retirement outcomes.
TIAA announced Tuesday that it’s joining Retirement Clearinghouse to participate in a consortium known as the Portability Services Network that’s designed to help workers automatically move smaller amounts of retirement savings in 401(k), 401(a), 403(b), and 457 plans to their new employers’ plans as they change jobs.
“Forty percent of American families are at risk of running out of money in retirement, and the issue is even more dire for women and minority communities,” Thasunda Brown Duckett, president and CEO of TIAA, said in a statement.
Duckett described the industry consortium enabling auto-portability as “an important step toward helping more Americans hold on to their money during their professional journeys, so they have the option to turn their savings into lifetime income when they stop working.”
According to Employee Benefit Research Institute, approximately $92 billion in savings exits the U.S. retirement system every year because Americans who change jobs prematurely cash out their workplace retirement accounts and pay taxes and penalties on those cash-outs. Moreover, EBRI says workers with less than $5,000 tend to cash out at the time of their job change at much higher rates than other job-changing workers, making them the ideal focus of the auto portability service.
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