The Evolution of Leakage and Retirement Asset Flows in the U.S

We study flows between retirement savings accounts from 2003 to 2015, providing the most comprehensive estimates to date of leakage from tax-preferred retirement savings accounts to pre-retirement age individuals. To do so, we create a nationally-representative panel of individuals using administrative tax data, and calculate their retirement contributions, distributions, and transfers between accounts. We estimate that 20 percent of individual contributions to defined contribution accounts made by individuals age 47 or younger leave the retirement system within eight years. Additionally, we estimate the effect of life events on the probability of leakage using event study designs. We find that the probability of leakage increases by 250 percent when an individual changes jobs. Other types of events, such as income shocks, home purchases, and the onset of tuition payments are associated with smaller leakage effect sizes