Americans run short of their financial sense

Despite a growing need to save for retirement, 45 percent of workers in company-sponsored 401(k) plans take the money and run when they leave their jobs, according to a study by the human resources consulting firm Hewitt Associates.

The smart thing, of course, would be to keep the money growing tax-deferred by leaving it in the employer plan or rolling it over to an IRA or another qualified retirement plan.

By cashing out, workers are likely to fritter away their retirement savings. On top of that, they owe income taxes on the money withdrawn, plus a 10 percent penalty if under age 55 (it is 55 for 401(k) plans when leaving a job, not 59 1/2as it is for IRAs).

A Senior Sentiment Survey commissioned by reverse-mortgage lender Financial Freedom found that 56 percent of Americans 62 to 75 years old, if given a second chance, would have started earlier saving for retirement. Among this group, most said they would start before age 30.

They say the smart thing is to opt for a 401 k roll over.

Till next time, have a blessed day..