Leaving behind small 401(k) balances when changing jobs could cost Americans tens of thousands of dollars in lost retirement savings, according to a new analysis.

The report highlights the financial risks associated with Safe Harbor IRAs, a type of retirement account where employers are permitted to move stranded 401(k) funds—typically $7,000 or less—without an employee’s consent. While these accounts are intended to preserve capital, their low returns and often high fees can significantly erode long-term value.

Safe Harbor IRAs are invested in low-risk assets like bank deposits, sometimes earning as little as 0.5% annually—well below inflation. Compounding the issue are fees that can exceed the account’s earnings. One example cited in the report showed an annual fee of 2.4% on a $3,500 account, more than enough to wipe out any growth.

Some providers also engage in “interest skimming,” offering below-market rates to account holders while keeping the difference as servicing fees. When left unchecked, these practices can leave savers with significantly less than they expect at retirement.

To illustrate the long-term impact, the analysis calculated that a $4,500 balance left in a Safe Harbor IRA from age 20 would grow to just $5,507 by retirement. If the same amount were rolled over into a traditional 401(k) with a 5% annual return, it would be worth over $25,000. If a worker changes jobs multiple times in their 20s and fails to roll over accounts each time, the cumulative loss could reach $90,000.

With over 29 million forgotten 401(k)s in the U.S., this issue affects a broad swath of the workforce—but younger workers are especially vulnerable. Gen Z employees, who tend to switch jobs more frequently and begin saving earlier than previous generations, could suffer the biggest losses. The average worker aged 25 to 34 stays at a job for just 2.7 years, according to federal data.

To avoid these losses, savers are advised to roll over their 401(k) balances within 30 days of leaving a job. Consolidating accounts not only improves long-term growth potential but also helps reduce the fees and risks associated with inactive retirement accounts.

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