Many high earners unknowingly turn their retirement into a cluttered collection of accounts with no clear plan. We discuss with John D. Davis, founder and CEO of Legacy Wealth Management based in Lexington, Ky., about the hidden costs of scattered assets and how you can unlock clarity and confidence for the future.
Larry Light: Why do so many people find themselves with retirement savings scattered across different accounts?
John Davis: It happens gradually. A 401(k) from a job five years ago, a Roth IRA opened in your thirties, maybe a pension benefit you vaguely remember electing, or even stock options from your last bonus season.
Over time, as accounts accumulate and life gets busier, your financial picture can start to look less like a well-organized plan and more like a junk drawer. This isn’t unusual. As of mid-2023, about 25 million U.S. households—that’s roughly 62% of those with traditional IRAs—held rollover assets, often from multiple former employers.
Light: On the surface, scattered accounts don’t sound like a serious problem. Isn’t it still your money?
Davis: That’s true, but disorganization comes with hidden costs. Fragmented assets make it harder to rebalance, consolidate fees or take advantage of tax strategies, such as Roth conversions or tax-loss harvesting. You may unknowingly be invested too conservatively or too aggressively. And because your accounts aren’t coordinated, you may miss opportunities to grow and protect your wealth in the most efficient way.
Light: Beyond investment strategy, how does this lack of organization affect someone’s ability to plan for retirement?
Davis: When accounts are scattered, it’s difficult to answer fundamental questions: Am I saving enough? When can I realistically retire? How do I draw down assets in a tax-efficient way? Without a consolidated view, even experienced professionals can feel uncertain. And the stakes are high.
According to the National Retirement Risk Index, about half of U.S. households may not be able to maintain their pre-retirement standard of living. Disorganization can quietly contribute to that shortfall.
Light: What about the risks of overlap or missing pieces in a portfolio?
Davis: That’s another consequence. Many people discover they own multiple funds that all track the same large-cap index, which concentrates risk without adding value. On the other hand, they might be missing asset classes that could help balance the portfolio. A scattered approach increases the likelihood of duplication and gaps, both of which undermine a well-constructed strategy.
Light: Can scattered assets complicate the estate planning process, too?
Davis: Estate planning is an area where disorganization can cause real headaches. Outdated or missing beneficiary designations are common and can lead to delays, unintended distributions or even disputes among heirs. For high earners focused on legacy, scattered accounts increase complexity, create friction and sometimes send assets in directions the owner never intended.
Light: So, what practical steps can people take right now to start organizing their retirement savings?
Davis: First, take inventory. Make a list of every retirement-related account you own: 401(k)s, IRAs, pensions, brokerage accounts, HSAs, annuities, stock options, ESPPs; include everything. List the balances, providers, account types, fees and investment allocations.
Second, update beneficiaries and contact information. You’d be surprised how many people still have outdated designations, including ex-spouses. Then assess consolidation opportunities. Rolling old 401(k)s into a single IRA or your current employer’s plan can simplify management and reduce fees. But consolidation should be considered carefully, ideally with an advisor, because there may be trade-offs in protections or access.
Finally, build a centralized strategy. Once your accounts are organized, you can align investments with your timeline, prepare tax-efficient drawdown strategies, and plan for major transitions such as retiring before 65, covering healthcare costs or navigating Social Security.
Light: It sounds like clarity is the main goal.
Davis: Exactly. Retirement is a process, and like any complex endeavor, it’s easier to manage with a map. By organizing your accounts and gaining clarity, you unlock the ability to make confident decisions about when you can retire and how you’ll sustain your lifestyle.
Light: If someone feels overwhelmed by this process, what advice would you give them?
Davis: Start small and don’t try to tackle everything at once. Begin with a simple inventory of your accounts and update your beneficiaries. From there, think about whether consolidating makes sense and how to create a strategy that reflects the big picture.
If you feel uncertain, consider seeking guidance from a trusted financial advisor. Having an experienced partner can help you bring structure to the process and give you greater confidence in your retirement plan.