83% of Gen Z say they’re job hoppers. Here’s how to handle old workplace retirement funds

Generation Z is embracing frequent job changes, or job hopping, as a career approach.

In fact, 83% of surveyed Gen Z workers consider themselves job hoppers, according to ResumeLab, which polled more than 1,100 workers born between the mid-1990s and early 2010s. They view job hopping as a strategy to acquire new skills, face new challenges and seek environments that align with their values, the resume- and cover letter-building website found.

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However, it’s important for these workers not to lose sight of their long-term savings programs, such as 401(k) plans, linked to previous employers.

“When you’re job hopping, it’s really easy to forget older accounts. You may forget to move or roll them out,” said certified financial planner Shaun Williams, partner and private wealth advisor of Paragon Capital Management based in Denver. The firm is ranked No. 57 on the CNBC FA 100 list this year. 

Workers who frequently change jobs tend to increase their salaries faster than employees who stay in companies for longer, said CFP Sophia Bera Daigle, founder of virtual firm Gen Y Planning in Austin, Texas. Starting a new job is the best time to negotiate a higher salary, bonuses and perks, added Bera Daigle, who is also a member of CNBC’s Advisor Council.

Job hoppers earned increasingly more than job stayers during the Covid-19 pandemic, but gains have languished. Wages for “job switchers” were 5.6%, as wages for “job stayers” slid 5.2%, according to Atlanta Fed data.

However, job hopping won’t necessarily make work difficulties disappear. If there is a value disconnect at your current employer or if you want a raise, talk to your manager to try and address these concerns before you hunt for a new role, said Daigle, a member of the CNBC FA Council.

“Don’t complain to people who can’t help you. Bring concerns to your manager,” she added.

More than half, 56%, of Americans in the workforce feel behind on their retirement savings, while 22% haven’t made retirement contributions in at least a year, according to a Bankrate survey.

As your funds keep growing for your retirement, keeping tabs on your old workplace accounts after you switch jobs can help ensure you aren’t losing track of those accounts over time.

“It’s important to take action with your old 401(k),” said Daigle.

Job hoppers typically have a few options for when they leave: keep their old 401(k) plan open with their old employer, roll it into an IRA, transfer it to the new employer’s plan or cash it out, said Williams. However, cashing out your retirement savings may not be in your best interest, he added. “That is the most detrimental thing job hoppers could do,” he said.

Here are three considerations for job hoppers looking to manage retirement accounts:

1. Your new employer may not accept rollovers from other 401(k) plans. Rolling over your 401(k) from a previous job may be a good move, but some companies may not allow it. Check before you take steps to initiate a rollover from your old plan.
2. A Roth individual retirement account may be a smart bet for younger workers. If you want to move your old 401(k) into an IRA, consider a Roth IRA. While you will owe taxes now to convert pretax funds to a Roth IRA, now may be a “great time” for young workers, who are likely in a lower tax bracket than they will be at retirement, said Daigle.
3. 401(K) matches from your new employer may not belong to you. Companies use different timelines or “vesting” schedules to determine how long it takes for savers to fully own the employer contributions, said Daigle. In some cases, it can take five or six years. “Call your 401(k) provider and ask how vested you are in the 401(k) match and learn how much you’d get” if you left your job, said Daigle.