Common Pitfalls and How to Avoid Them
As you embark on your search, being aware of potential challenges can help you stay on track and protect yourself. Here are a few common pitfalls to watch for and simple ways to avoid them.
Beware of Scams
Unfortunately, whenever money is involved, scammers are not far behind. It is crucial to be vigilant. The most important thing to remember is this: You should never have to pay a fee to find your own unclaimed pension.
Government agencies like the Pension Benefit Guaranty Corporation (PBGC) and the Department of Labor, as well as official state unclaimed property offices, provide their search services for free. Be extremely wary of any person or company that contacts you unexpectedly and offers to find your missing money for a fee or a percentage of the funds. This is a major red flag.
Here are some signs of a potential scam:
They Ask for Money Upfront: Legitimate organizations will not charge you to search for or claim your benefits.
They Request Personal Financial Information: Never give out your credit card number, bank account details, or passwords. While you will need to provide your Social Security number to a legitimate plan administrator to verify your identity, you should be the one initiating the contact through official channels.
They Create a Sense of Urgency: Scammers often pressure you to act immediately, saying the “offer will expire.” Your earned pension benefits do not expire.
If you are ever unsure about a company or a communication you receive, stop and do your own research. Contact the PBGC or your state’s attorney general’s office to ask if they have heard of the company. It’s always better to be safe than sorry.
Giving Up Too Soon
Searching for a lost pension can sometimes feel like a slow process. You might make a phone call and have to wait a week for a response. You might send in paperwork and not hear back for a month. This is normal. The companies and agencies managing these plans are often large bureaucracies, and it simply takes time for them to research old records.
The key is to be persistent and organized. Use a notebook to keep a log of every action you take. Write down the date you made a call, the name of the person you spoke to, and a summary of the conversation. This will help you keep your facts straight and make it easier to follow up. Don’t let a slow response discourage you. A little polite persistence can pay off in the long run.
Forgetting About Smaller Pensions
It’s easy to focus on the long-term jobs you held, but don’t overlook shorter periods of employment. Many people mistakenly believe they had to work somewhere for ten or twenty years to earn a pension. In reality, many company plans had vesting periods as short as five years.
Think back to every job you held after you became an adult. Even if you only worked at a company for six or seven years in your twenties, you may have become vested in their retirement plan. While the resulting pension might be smaller, it’s still your money. As we’ve discussed, even a modest monthly amount can add up over the course of your retirement and provide a welcome boost to your budget. Be thorough and check on every single employer where you might have met the vesting requirement.
