WI19-04: Frictions in Saving and Claiming: An Analysis of Unclaimed Retirement Accounts

Abstract

Retirees today face significant challenges in preparing for retirement, as they face greater responsibility in managing their savings. Savings is particularly important in light of longer lives and potential policy changes that reduce or delay Social Security benefits. Yet, billions of dollars in retirement accounts go unclaimed each year. This may occur if accessing old accounts is difficult. For example, retirees may have forgotten about savings from jobs in their youth, or may not know how to reach out to their old employers. These unclaimed retirement funds are the subject of much policy attention: regulation requires plan managers and companies to engage in costly measures to distribute funds owed, and a key initiative of the government’s Pension Benefit Guaranty Corporation is to match individuals with unclaimed funds. In this project, we will analyze the features of “abandoned” accounts using data from tax forms and state unclaimed property databases. We will also estimate an economic model of savings that incorporates challenges in claiming old accounts, with the goal of quantifying the reasons for these unclaimed retirement accounts.