I always shake my head in disbelief at people who don’t take the time to rollover their 401(k). I understand that investing has a high barrier for people — both because of our fear of math & the “heaviness” of to topic of money.
It’s simply irresponsible* to leave your 401(k) in an employee plan after leaving the company.
When you actually think about it, and follow the money, 401(k)s aren’t really a great deal. They’re sold on the benefit to the customer because “funds are better” and “individual stocks are dangerous” (otherwise known as fear-mongering, for the most part).
I know that sounds conspiracy theory-ish, but take it from someone much smarter than me, Ben Carlson from A Wealth of Common Sense, on lowering the costs of 401(k)s:
The 401(k) and 403(b) markets are ripe for disruption by a low-cost provider as most of these plans are filled with terrible fund choices and high costs to plan users. […] Most companies don’t have the expertise to understand these plans on their own so offering a simple, low-cost solution would seem like an obvious way for robo-advisors to gain market share. This is especially true among small businesses who are the most over-charged group in need of a better solution.
The linked-to article is about robe-advisors and isn’t really relevant to my point, except that in passing to discuss them, Ben talks about how poorly structured the 401(k) market is from a client perspective. I know, I never want to hear the phrases “terrible choices” or “overcharged” or “high costs” when it comes to how I buy things, financial services or otherwise.
* There of course aren’t any absolutes, so take what I say in the spirit of how I’m saying it — put some small thought into your financial health, as even minor investments in doing so yield big returns.