TRANSCRIPT:

Tom Hawkins: Welcome to episode 29 of the RCH Consolidation Corner Channel, where we provide audio content that explores key issues in the preservation and consolidation of retirement savings. In this episode, we examine the brighter future that awaits retirement savers as they begin to “graduate” auto portability and build lasting retirement wealth by preserving their small balance retirement savings. We hope you’ll find the audio enjoyable and informative.

NARRATOR: Every year during the late spring, millions of Americans celebrate the culmination of their formal education through graduation ceremonies. Graduation represents an important step forward in their lives, and one that sets the stage for bigger and better things.

Similarly, in the working world, every year millions of Americans will take important step forward in their careers – changing jobs. And while their careers may advance – too often, their retirement savings take a step back. In fact, nearly fifteen million defined contribution plan participants change jobs each year. And for many, the decision about what to do with their retirement account becomes a costly one. Roughly a third of job changers cash out entirely, draining more than ninety billion dollars from the retirement system annually.

For workers with smaller balances, the outlook is even more troubling. When retirement savings are under seven thousand dollars, nearly three out of four are cashed out – either immediately, or slowly over time – never making it to the future they were meant to support.

But there is a different path forward. Auto portability is changing the retirement journey by making preservation – not cashout – the default. Instead of leaving savings behind or pulling them out, balances are automatically moved into a worker’s new employer plan when they change jobs.

Auto portability’s results are transformative. Preservation rates rise dramatically. Cashouts fall by more than half. And for millions of Americans, retirement savings finally begin to move in the right direction.

Yet auto portability does more than reduce leakage. Its greatest impact may be what happens next. Research shows there is a critical milestone in retirement saving: reaching a ten‑thousand‑dollar balance. At that point, behavior changes. Participants are far more likely to preserve their savings during future job transitions. Compounding starts to work its quiet magic. And financial professionals begin to see these accounts as serious long‑term assets.

Auto portability helps participants reach that milestone faster – and in far greater numbers. Using long‑term simulation modeling, Retirement Clearinghouse researchers tracked a cohort of simulated, small‑balance job changers over a ten‑year period. Without auto portability, only a handful reached that ten‑thousand‑dollar threshold. Most saw their savings scattered, stalled, or lost.

With auto portability in place, more than a third achieved full consolidation of their balances – typically after three job changes – and crossed that critical threshold. Starting in their mid‑twenties, those participants would go on to build those small balances to exceed seventy thousand dollars by retirement age. That’s the difference between damage control and wealth creation.

Auto portability doesn’t just help workers preserve savings. It helps them graduate – from fragile beginnings to resilient, lifelong retirement participation – and the benefits extend far beyond individual savers.

Plan sponsors gain more engaged participants. Advisors work with healthier, growing accounts. Recordkeepers and asset managers support a system designed for continuity – not loss. The entire defined contribution ecosystem becomes stronger, more efficient, and more future‑ready.

As adoption accelerates, auto portability is reshaping what retirement security looks like in America – not as a series of disconnected accounts or as savings left behind, but as a portable, growing foundation for lifetime financial wellness. The future of retirement isn’t just about stopping leakage. It’s about helping savers graduate – and giving their money every chance to grow.

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