Decades ago, employees often stayed with one employer for life. Today, workers change jobs 12 times on average by mid-career, but moving retirement savings remains slow, confusing, and full of paperwork. Many give up, leaving $1.65 trillion stuck in old accounts. These forgotten savings lose value over time to fees and missed growth opportunities.

This isn’t just a problem for workers. Employers pay more to manage these left-behind accounts, and HR teams waste hours on outdated processes. Women, minorities, and lower-income workers often lose the most when accounts aren’t consolidated.

Let’s explore why the current system fails today’s workforce and how digital solutions like Manifest can help.

The Modern Workforce vs. The Legacy System

In the past, most workers remained with one employer for most of their careers, allowing retirement savings to accumulate within a single plan. Today, however, the average worker changes jobs, which creates a fragmented retirement system where savings are scattered across various accounts.

This mismatch results in several significant issues:

  • Scattered accounts lead to higher fees: The average participant holds 2.8 retirement accounts, and maintaining small, inactive accounts costs about $72 annually. These extra costs add up over time and reduce how much their savings can grow.
  • Complex paperwork: Manual transfers require participants to find old accounts, fill out forms, and deal with multiple providers. This takes over 60 days and can take up to 10 hours of effort, causing many workers to give up.
  • Lost accounts: As employees move jobs, they often lose track of old accounts. 89% of manual transfers are never completed, leaving savings stranded and participants unprepared for retirement.

All of these issues cause participants to feel uncertain about their finances. They might avoid consolidating their accounts because they fear making mistakes and facing penalties. This hesitation leads to millions of dollars in missed savings each year.

The Real Cost of the Old System

The problems with the old system extend beyond individual participants. Plan sponsors and employers also feel the strain, both financially and operationally.

  • Extra fees on small accounts: When workers leave their retirement accounts scattered, they face higher fees. Keeping track of multiple small accounts costs workers money, which could otherwise be invested in their future. Consolidating these accounts helps reduce fees and ensures more money stays in the workers' hands, growing their savings over time.
  • Higher costs for employers: Employers also bear the burden of managing numerous inactive accounts. This adds to their administrative workload, increases complexity, and drives up operational costs. Maintaining these small accounts takes valuable time and resources, distracting from more important tasks.
  • Lost savings opportunities: Scattered accounts mean workers miss out on opportunities to grow their savings faster. Multiple accounts with varying fees hinder the growth of retirement funds. By consolidating into one account, workers benefit from lower fees and better investment management, helping their money grow more effectively.
  • Impact on retirement readiness: The current system's inefficiencies negatively impact workers' ability to prepare for retirement. High fees, lost accounts, and smaller balances leave many people unprepared for the future. Lower-income workers and minorities are hit hardest by these issues, widening existing financial gaps and making it even harder to secure long-term financial stability.

How Digital Solutions Can Help

Manifest provides a solution to the challenges facing today’s retirement system. Our platform makes it easier for workers to transfer their retirement savings and for employers to manage costs and administrative burdens. Here’s how:

  • Faster, simpler transfers: Manifest reduces the transfer process from over 60 days to just 14 days. With a user-friendly digital platform, workers no longer need to deal with complicated paperwork or spend hours dealing with multiple providers. Transfers are quicker and hassle-free.
  • Increased savings growth: Consolidating retirement accounts leads to lower fees, allowing workers to grow their savings. On average, participants who consolidate see their retirement balances grow by $13,450. This compounded growth can significantly impact retirement security over time.
  • Fewer cash-outs: When transferring accounts is simple, workers are 54% less likely to cash out their savings. This ensures their money remains invested for long-term growth, avoiding the penalties and taxes that come with early withdrawals.
  • Higher engagement: A seamless digital process boosts worker confidence in managing their savings. As a result, employees are more likely to engage with their retirement plans. Employers also benefit from reduced administrative workload, better employee satisfaction, and increased retirement contributions.

Manifest also supports plan sponsors by offering real-time tracking of transfers, expert advice, and reporting tools. These features allow for monitoring success, identifying areas for improvement, and making adjustments that drive better retirement outcomes for their teams.

A Call for Modernization

The modern workforce deserves a retirement system that supports mobility, accessibility, and long-term growth. The days of manual transfers, scattered accounts, and lost savings must end. Digital solutions like Manifest paves the way for a seamless and efficient retirement experience, benefiting participants and employers alike.

By modernizing the transfer process, we can help workers consolidate their accounts, reduce fees, and increase their retirement savings. The future of retirement benefits is digital, and Manifest is leading the way.

It’s time to rethink retirement benefits and embrace the power of digital solutions. Schedule a demo today to see how Manifest’s digital transfer platform can simplify account consolidation and maximize retirement outcomes for your team.