Analysis: The Hidden Cost of Leaving Your 401k Behind: How $4.55 Per Month Can Cost You Nearly $18,000

When you leave a job, you might not think twice about what happens to your 401(k). But what you don’t think about can cost you.

New analysis from PensionBee reveals how discreet non-employee fees on retirement accounts can snowball into nearly $18,000 in lost funds over time. The findings highlight the surprising impact of these innocuous account maintenance fees on left-behind retirement accounts.

When employees change jobs, many retirement providers may start charging fees previously covered during their employment. It's essentially the retirement account version of COBRA, where costs that were once employer-subsidized suddenly become the consumer’s responsibility. But, unlike COBRA, which has clear notification requirements from the insurance provider and former employer, these 401(k) fee changes often happen with minimal transparency and continue indefinitely.

The Compounding Problem

PensionBee’s case study analyzed the long-term impact of non-employee fees at one employer, a major, US-based bank. Former employees who leave their 401(k) behind with this employer are charged a $4.55 monthly maintenance fee on top of other costs, such as platform fees or fund/ETF fees.

The analysis looked at a typical worker who:

• Works for 33 years, changing jobs every three years (12 employers total)
• Has a 5% investment return, minus average 401(k) fees (net return: 4.15%)
• Leaves behind a 401(k) with a $4.55 monthly account maintenance fee every time they switch jobs

The Erosion Effect Visualized

When we factor in the additional $4.55 monthly non-employee fee for maintaining a dormant 401(k), the impact is striking. Consumers who routinely leave 401(k)s behind can pay $17,905 in fees over their career.

Table 1: Future Cost of Non-Employee Fees*

The table above demonstrates how these fees compound over time. For example:

• One account left behind for 33 years incurs a total cost of $3,718.19 in fees
• Even just one account left behind for only 3 years costs the customer $170.69
• Taken together, the total of all accounts in this scenario equals $17,905 of fees incurred

This erosion happens because:

1. The monthly fee reduces the principal balance
2. Consumers lose the compound growth that would have occurred on those fees
3. The impact multiplies across multiple abandoned accounts

The Invisible Drain on Retirement Security

What makes this particularly concerning is how invisible these fees are to most employees. According to the Pew Charitable Trusts, small fee differences can dramatically impact retirement outcomes. Their analysis shows that a 1% annual fee difference can reduce a retirement account balance by 30% over 40 years compared to a low-fee alternative.

A Common Problem

This isn’t just about one fee. The case study models the impact of one company’s $4.55 monthly non-employee fee, but many common employer practices can harm former employees’ long-term financial health.

1. Consumers could be forced out. If an account balance is under $7,000, providers can force former employees out of the company’s retirement plan and into a different one that may have fixed fees that can eat away at savings.
2. Lack of Consumer Understanding. A recent survey by the Government Accountability Office (GAO) reports that 40% of people do not fully understand 401(k) fees, while 41% are unaware that they pay fees at all.
3. Abandoned accounts multiply losses. There are over 30 million accounts currently unclaimed. As workers change jobs more frequently, the potential for multiple dormant accounts increases. Even if consumers can keep track of all old accounts, each incurs fees that compound over time.

How to Protect Your Retirement Savings

• Active Engagement: Periodically review both current and former accounts if you have not consolidated them. The earlier in your career you leave an account behind, the more significant the financial impact.
• Consolidate Accounts: Minimize the total number of accounts. Combine old accounts into an IRA or rollover your 401(k) to your new employer’s plan.
• Avoid Early Cashouts: Try not to cash out unless necessary, as early withdrawals come with penalties and taxes.

Bottom Line

A $4.55 monthly fee may not sound like much, but over time, it can quietly steal thousands from your retirement. If you’ve switched jobs, check on your old 401(k)s. Those “out of sight, out of mind” accounts could be costing you far more than you think.

Romi Savova, CEO of PensionBee, commented:

"Non-employee fees are just one example of how costly a lack of transparency can be. The retirement industry has historically operated behind a veil of complexity that often leaves consumers bamboozled and at risk of a poorer retirement. Always check your old 401(k) accounts to make sure you understand your fees and what you’re invested in. Consider consolidating old accounts so you can keep track of them. Ultimately, a happy retirement is in your hands. It pays to be in control."

About PensionBee

PensionBee is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages over $7 billion in assets and serves over 265,000 customers globally, with a focus on simplicity, transparency, and accessibility.

Notes

The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.

*Disclosure for Table 1

Your investment can go down as well as up.

This data is provided solely for informational and educational purposes. PensionBee Inc. does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PensionBee Inc.’s website or incorporated herein, and takes no responsibility therefore. Nothing presented here constitutes tax, legal, financial or investment advice. This information does not take into account the specific financial, legal or tax situation, objectives, risk tolerance, or investment needs of any individual investor. All information provided is based on publicly available data and research at the time of posting. Any data, statistics, or third-party sources referenced are for educational purposes only and should not be relied upon as sole decision-making tools. This information, and any associated customer testimonial or third party endorsement does not constitute an offer, solicitation, or recommendation to buy or sell any securities or investments. Your investment is at risk. Past performance is no guarantee of future results.

Source: PensionBee, 2025

PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004.

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"Non-employee fees are just one example of how costly a lack of transparency can be," says Romi Savova, CEO of PensionBee. "The retirement industry has historically operated behind a veil of complexity."