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

Personal retirement savings form a critical source of late-life income among Americans. These savings accounts, which are typically linked to an employer, are increasingly spread across multiple accounts as individuals experience greater job mobility. Such dispersion makes it more difficult to both remember and manage these accounts, thereby putting them at risk of going “unclaimed.” This paper uses newly collected data from state unclaimed property databases to provide a first estimate of the extent of unclaimed retirement savings. These data allow us to explore both account value distributions and demographic correlates of unclaimed account holders. We estimate that three percent of retirees have an unclaimed retirement account with an average value of $550, and discuss why these statistics are likely to represent lower bounds based on federal escheatment rules. The estimates suggest that nationally in 2016, there were 70,000 unclaimed retirement accounts totaling $38 million. To explore the value of policies that might reduce the incidence of unclaimed accounts such as automatic roll-overs and account reminders, we build and numerically analyze a model of dealing with such accounts that incorporates account management costs and forgetting.