Hand dropping three coins

Why having more retirement accounts isn’t always better

Those old retirement accounts may prevent you from achieving your goals.

Contact an advisor for more information.
844-567-9089
How many retirement accounts do you have?
 
Answering this question accurately is a challenge for many Americans. After all, many of us will have 12 or more jobs throughout the course of a career, and one in three Americans do nothing with their workplace retirement plan after leaving a job.1

DID YOU FORGET YOUR RETIREMENT ACCOUNT?

Americans are changing jobs often and leaving their retirement accounts behind.
null
Maybe you think that by having multiple accounts—especially if they’re at different financial institutions—you’re diversifying by making sure your assets aren’t all in the same place.
 
Did you know, though, that this strategy may cost you time and money and potentially leave you with investment redundancies and gaps? After all, when’s the last time you really took a deep look at that retirement account from three jobs ago?
 
A time-proven solution for having too many retirement accounts: consolidate. 2 Here are a few reasons why keeping your accounts separate could be hampering your financial progress.
 

Your investments might not be as diversified as you think

 
An often-cited reason for having retirement accounts spread among different financial institutions is to diversify your investments. But consider someone who has five different accounts: They may be seeing some significant overlap in their investments.

Diversification not guaranteed3

Different companies may have similar holdings in their mutual funds.
null
If you didn’t realize you have overlaps, it’s understandable. When you have a number of different accounts across an array of investment providers, it’s difficult to know exactly what you own. Not only does this mean your investments might have overlaps, but it may leave you with gaps. Are you missing the healthcare sector, international investments, emerging markets or technologies from your portfolio, for example?
 
When your portfolio isn’t properly diversified, it’s more likely to be negatively impacted by market fluctuations. This could have an impact on your ability to retire when you want. If you’re already retired, it could mean your accounts provide you with less income than you were expecting.
 
Consolidation can help you have a holistic view to see how all of your investments are working toward your short- and long-term goals. It can help give you the confidence that you’re on the right track—or even ahead of schedule.
 

Are you missing out on rebalancing?

 
When did you last check all of your old accounts? You may be a different kind of investor now than when you set them up, with a different risk tolerance and different goals. Choices you made in the past may not be right for your goals today.

Getting unbalanced

Does your old account still reflect your current needs?

null
If you set up a retirement plan with an aggressive investment mix (lots more equities than bonds, for example), and you now are more risk averse, your investments likely don’t reflect that.
 
Similarly, stock market gains in the last decade may mean that equity investments make up a higher percentage of your portfolio than you initially intended.
 
If you have a holistic view of your investments and a strategy that is aligned with your goals, you’re more likely to achieve them. A trusted advisor or resource can help you with this.
 

Consider the additional challenges

 
Having assets spread among several accounts may not just impact your returns. Consider these other common challenges of having multiple accounts:
 
  • It’s hard to track required minimum distributions (RMDs): You’ll be required to start taking RMDs from your retirement accounts when you turn 70.5. If you have multiple accounts, you will need to determine how much to take from each account, which can be very complicated. Consolidating helps streamline the process, which may also help you avoid significant tax consequences associated with taking your RMDs incorrectly.
  • You may face additional fees: Some accounts may begin charging you a administrative fee if you’re no longer contributing to them or no longer employed at your old company. When you consolidate, you may have access to a lower fee structure due to having more assets in one place.
  • Your loved ones could be affected at an emotional time: What would happen if something were to prevent you from being able to access your finances? Would your loved ones know where to look and how to take control of many different accounts? It’s easy for something to be lost in the shuffle.
  • You’ll have more paperwork: When you want to review your monthly or quarterly performance, you have to deal with multiple statements. Also, when you need to do things like update your beneficiaries, you have to do it for every single account.
 

A trusted source can help figure out what’s right for you

 
Don’t put off until tomorrow what you should be doing today: Help yourself and your loved ones by talking with your financial advisor. You may well learn that bringing some of your accounts together may simplify your life, save you time and money, improve your portfolio diversification and help you pursue your goals more confidently.
 
Take Action

We're here to help

Call Us
We’re here to answer your questions and set up a meeting.
 
 
Weekdays, 8 a.m. - 10 p.m. (ET)
Saturday, 9 a.m. - 6 p.m. (ET)
Find an advisor
Want to find an advisor near you?
 
 
 
Schedule a call
We will call you at your convenience.

Related articles

null
Building a solid foundation for your retirement
null
Four options for your retirement plans from former jobs
null
Learn about required minimum distributions
1 2017 TIAA Transition to Retirement survey.
 
2 Before consolidating assets, be sure to carefully consider the benefits of both the existing and new product. There will likely be differences in features, costs, surrender charges, services, company strength and other important aspects. There may also be tax consequences or other penalties associated with the transfer of assets. Indirect transfers may be subject to taxation and penalties. Speak with a TIAA consultant and your tax advisor regarding your situation.
 
3Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of investment or income.
 
The TIAA group of companies does not provide tax or legal advice. Tax and other laws are subject to change, either prospectively or retroactively. Individuals should consult with a qualified independent tax advisor, CPA and/or attorney for specific advice based on the individual’s personal circumstances. Examples included in this article, if any, are hypothetical and for illustrative purposes only.
 
This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.
 
Advisory services provided by Advice & Planning Services, a division of TIAA CREF Individual & Institutional Services, LLC, a registered investment adviser.
612653