Job hoppers may cheat their 401(k)s

Workers who change jobs tend to reset their 401(k) accounts at a lower savings rate without realizing it. The drag can last years into the future.

Switching jobs can significantly impact retirement savings. While dipping into savings isn’t uncommon, simple mistakes—like forgetting to enroll in your new company’s 401(k) or being auto-enrolled at a lower savings rate—can also take a toll. Building wealth requires regular attention. An annual review of your savings rates and investment strategies helps keep your plan on track. It’s also wise to reassess your plan when life changes occur, such as starting a new job, expanding your family, or relocating. As this article notes, not staying on top of your savings plans can substantially dent your future wealth. #mindfulmoney #inspiredwealth #financialplanning #heartstrongwealthplanning #investyourvalues

?? From the The Wall Street Journal today— The 401(k) was designed decades ago for a world where you stayed at one job for 40 years. But today, people change jobs every few years and it’s costing them—up to $300,000 in lost retirement savings, according to Vanguard. We don’t need to fix the 401(k). We need a new model. The Icon PRP is that model—portable, seamless, and built for the way people work today. #RetirementSavings #IconPRP #FutureOfWork #PortableBenefits #401k

The The Wall Street Journal article underscores the crucial role of automated savings features in 401(k) plans, as highlighted by Vanguard's study. The data reveals that a considerable number of workers fail to enroll in their new employer's 401(k) plan after switching jobs, emphasizing the significance of automatic enrollment to address that issue. This feature ensures that employees can seamlessly continue saving for retirement even when changing jobs. Additionally, automatic increase plays a key role by increasing participant retirement savings with maximizing employer matching contributions. #RetirementPlanning #401k #Savings #FinancialWellness

Maxing out your retirement savings is crucial. If you change jobs and there is a wait time to participate in the new 401(k), make sure to take advantage of IRA contributions and any catch-up provisions available.

The 401(k) was supposed to solve a key failing of pensions: Portability. We no longer needed to stay at one job for decades to secure retirement income. Now we could take our nest eggs with us when we switched jobs. But It turns out that 401(k)s, like pensions, delivers better results for people who stay put, Anne Tergesen writes, breaking down data from Vanguard. When people switch jobs their retirement savings reboots, often defaulting them back to a lower contribution rate without them realizing. These repeated resets can get costly over a career.

Switching jobs can boost your pay and prospects. It can also drag on retirement savings. The majority of people who change jobs wind up putting less of their pay into their 401(k)s, often without realizing it, according to?new research?from Vanguard Group. That is because many job switchers either forget to sign up for the 401(k) plan, or get auto-enrolled at a lower savings rate. Over a four-decade career, that can mean as much as $300,000 less in retirement wealth for someone with average pay, Vanguard found. “While changing jobs, a lot comes at you,” said one financial adviser. “Often, the 401(k) falls off the list.” Anne Tergesen reports