When you switch jobs, the basic advice is to roll over your old employer-sponsored retirement account to an individual retirement account, or IRA. Sounds easy, but beware.
I know because I’ve done this a few times. And have learned to keep it simple.
My method: I divvy my rollover up between a handful of low-fee index funds. I have also carved out a portion for a target-date fund, a “set-it-and-forget-it” way to invest based on the date of retirement. (As you age, the fund shifts the account’s investments from stocks to less volatile choices, such as cash and bonds.)
But guess what?
That’s not what many people do, according to recent research from Vanguard Group. Instead, their money is transferred from a former employer’s 401(k) plan to an IRA, usually at another financial services firm, and the balance goes into a market-type cash account that generally pays a marginal rate of interest.
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Nearly a third of those who rolled retirement savings into IRAs at Vanguard in 2015 still had the balance sitting in cash seven years later. Not cool. You lose years of potential gains from being invested in stocks, which compound and boost your wealth for your golden years.
John Bogle: the late founder of the Vanguard Group was an index fund evangelist. (AP Photo/Mark Lennihan) (ASSOCIATED PRESS)
We’re not talking about chump change here. For investors under age 55, the estimated long-term benefit of investing in a target-date fund (versus staying in cash) upon rollover is equivalent to, on average, an increase of at least $130,000 in retirement wealth at age 65, according to Vanguard.
“How many people stayed in cash and for how long far exceeded our expectations,” Andy Reed, Vanguard’s head of investor behavior research and co-author of the study, told me.
Most older investors, however — and/or those with balances exceeding $100,000 — moved out of cash within the first few months after the rollover. Compared to men, women, however, were significantly more likely to remain in cash for years after the rollover.
Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals?
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There are several ways to handle retirement savings when leaving jobs. You can keep your 401(k) balance with your old company, roll the money into a new employer’s 401(k) plan, or move it into an IRA.
The downside to keeping retirement money at a former employer, of course, is that you can’t add any more money to it. And you’re stuck investing only in that specific menu of investments. An IRA will typically offer many more choices.
How it works
When you roll your 401(k) account into an IRA, the company that administers the plan typically liquidates your holdings, then moves the cash into your IRA. But, it doesn’t automatically invest it for you. “We often see people assume their IRA cash will be auto-invested, similar to a workplace plan such as a 401(k),” Rita Assaf, vice president of retirement products at Fidelity Investments, told Yahoo Finance.
Put it down to confusion, “not necessarily about investing, but with the mechanics of IRAs,” Reed of Vanguard said. “It’s not that people intentionally want to make this money mistake. This is not deliberate and part of a master plan. It’s out of sight, out of mind.”
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‘No idea’
In another survey of over 500 Vanguard IRA clients who completed a rollover in 2023 but were still in cash in June, about two-thirds had no idea how their IRA money was invested.
The remainder said they never got around to investing it, or they didn’t want to risk putting their savings into stocks, or they simply felt overwhelmed by their IRA choices. Reed said: “You can have too much of a good thing when it comes to choice.”
Given all the job changing across all generations in recent years, this mistake is pretty significant, particularly for younger workers. “If you want to have any chance of retiring and living the life you want in retirement, then you’re going to have to have a large portion of your retirement savings allocated to equities to maximize your chance of success,” Reed said.
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Targets to the rescue
To improve retirement outcomes, you need to stay invested consistently.
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One solution: Make it possible for financial services firms to invest rollovers to IRA accounts automatically into a target-date fund or something akin to how many employers now enroll workers automatically into these diversified accounts when they come on board.
Virtually all 401(k) plan sponsors and the majority of state auto-IRA programs use target-date funds when they automatically enroll workers in a retirement plan. Track record: not bad. Vanguard’s Target Retirement Fund 2050 is up 11.4% to date and 10.1% over the past five years.
Rolling over an IRA? Your best move is to have a plan, says T. Rowe Price. (Photo: Getty Creative) (PIKSEL via Getty Images)
This way you don’t have to know what an index fund or the other nitty-gritty of investment lingo.
Until the laws are changed, your best move is to have a plan for how you want your savings invested before you initiate a rollover, said Lindsay Theodore, a senior manager in advisory services at T. Rowe Price.
Call the firm where you’re moving your money to and get an idea of what would be an appropriate investment, she added. “Having a good understanding up front as to what that process is going to look like can help you get your money invested right away, so it doesn’t get stuck in a cash limbo.”
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Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.
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Cornell University administrator Warren Petrofsky will serve as the Faculty of Arts and Sciences’ new dean of administration and finance, charged with spearheading efforts to shore up the school’s finances as it faces a hefty budget deficit.
Petrofsky’s appointment, announced in a Friday email from FAS Dean Hopi E. Hoekstra to FAS affiliates, will begin April 20 — nearly a year after former FAS dean of administration and finance Scott A. Jordan stepped down. Petrofsky will replace interim dean Mary Ann Bradley, who helped shape the early stages of FAS cost-cutting initiatives.
Petrofsky currently serves as associate dean of administration at Cornell University’s College of Arts and Sciences.
As dean, he oversaw a budget cut of nearly $11 million to the institution’s College of Arts and Sciences after the federal government slashed at least $250 million in stop-work orders and frozen grants, according to the Cornell Daily Sun.
He also serves on a work group established in November 2025 to streamline the school’s administrative systems.
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Earlier, at the University of Pennsylvania, Petrofsky managed capital initiatives and organizational redesigns in a number of administrative roles.
Petrofsky is poised to lead similar efforts at the FAS, which relaunched its Resources Committee in spring 2025 and created a committee to consolidate staff positions amid massive federal funding cuts.
As part of its planning process, the committee has quietly brought on external help. Over several months, consultants from McKinsey & Company have been interviewing dozens of administrators and staff across the FAS.
Petrofsky will also likely have a hand in other cost-cutting measures across the FAS, which is facing a $365 million budget deficit. The school has already announced it will keep spending flat for the 2026 fiscal year, and it has dramatically reduced Ph.D. admissions.
In her email, Hoekstra praised Petrofsky’s performance across his career.
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“Warren has emphasized transparency, clarity in communication, and investment in staff development,” she wrote. “He approaches change with steadiness and purpose, and with deep respect for the mission that unites our faculty, researchers, staff, and students. I am confident that he will be a strong partner to me and to our community.”
—Staff writer Amann S. Mahajan can be reached at [email protected] and on Signal at amannsm.38. Follow her on X @amannmahajan.
My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.
When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.
The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.
Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).
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Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.
However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).
Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.
San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).
The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.
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A peek inside the scorecard’s grades shows where trouble exists within California.
Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.
Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.
Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
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On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
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Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
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$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
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Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
