Generation Z and Job Hopping: A Career Strategy
A recent survey by ResumeLab reveals that 83% of Gen Z workers consider themselves job hoppers. This younger generation sees frequent job changes as a way to gain new skills, face fresh challenges, and find workplaces that align with their values. While this approach can lead to faster salary growth and better negotiation opportunities, it’s crucial for these workers to not overlook their long-term savings plans, such as 401(k) accounts linked to previous employers.
Pros and Cons of Job Hopping
According to CFP Sophia Bera Daigle, employees who frequently switch jobs tend to experience faster salary increases compared to those who stay with the same company. However, despite the financial benefits, job hopping doesn’t guarantee the resolution of work difficulties. It’s essential to address any value disconnect or desire for a raise with your current employer before seeking a new role.
The Importance of Managing Old 401(k) Accounts
A Bankrate survey indicates that more than half of Americans feel behind on their retirement savings. To ensure you don’t lose track of your old workplace accounts, it’s crucial to keep tabs on them as your funds continue to grow. When leaving a job, you have several options for your old 401(k) plan: keep it open with the previous employer, roll it into an IRA, transfer it to the new employer’s plan, or cash it out. However, financial experts advise against cashing out retirement savings as it can have detrimental effects.
Hot Take: Managing Retirement Accounts as a Job Hopper
If you’re a job hopper, there are three important considerations when it comes to managing your retirement accounts:
- Check if your new employer accepts rollovers from other 401(k) plans. Some companies may not allow rollovers, so make sure to confirm before initiating the process.
- Consider a Roth IRA for your old 401(k). Converting your old 401(k) into a Roth IRA may be beneficial, especially for younger workers in lower tax brackets. Consult with a financial advisor to determine if this option suits your needs.
- Understand the vesting schedule of your new employer’s 401(k) match. Different companies have varying timelines for employees to fully own employer contributions. Contact your 401(k) provider to learn about your vesting status and potential benefits if you decide to leave your job.
By being proactive in managing retirement accounts and considering the long-term implications of job hopping, Gen Z workers can navigate their careers while securing their financial futures.
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