Gen Z workers are embracing job hopping as a career approach, with 83% considering themselves job hoppers, according to a survey by ResumeLab. They view frequent job changes as an opportunity to acquire new skills, face new challenges, and seek environments that align with their values. While job hopping can bring short-term benefits such as increased salaries, it is important for Gen Z workers not to lose sight of their long-term savings, particularly linked to previous employers. Certified financial planners emphasize the need to stay mindful of retirement programs like 401(k) plans and take action to avoid losing track of those accounts over time.
Amid the COVID-19 pandemic, job switchers saw increasing wages, while job stayers experienced a decline, according to Atlanta Fed data. However, job hopping does not come without challenges and uncertainties. Financial advisors encourage workers to first address value disconnects or salary aspirations with their current employers before seeking new opportunities. Additionally, workers should take proactive steps to manage their retirement accounts, opting for options like rolling over their 401(k) plans into a new employer’s plan or an individual retirement account (IRA). Cashing out retirement savings is generally discouraged as it can have detrimental effects on long-term financial security.
When considering retirement account management, there are several factors job hoppers should keep in mind. Firstly, they should verify if their new employer accepts rollovers from previous 401(k) plans. If considering an IRA, a Roth IRA may be a suitable choice for younger workers, taking advantage of their lower current tax bracket. Finally, workers should be aware of vesting schedules for 401(k) matches offered by new employers, as company-specific timelines determine when employees fully own the employer contributions. By staying informed and taking proactive steps, Gen Z workers can effectively manage their retirement savings even as they embrace job hopping as part of their career strategy.