The $40,000 Mistake of Job-Hopping (Hidden 401k Cost)

Job hopping might look smart on LinkedIn, but it's probably draining tens of thousands of dollars out of your future, and most people don't even realize it. Our team has spent over 30 years watching high earners throw away money they could have kept. If you watch this next segment, you'll see exactly how much you're losing and the simple moves that lock that cash back into your pocket. Let's get into it.

We live in an age where people bounce from job to job to job, and stability seems to be something that has long since been forgotten.

Mhm.

But I think it should become popular again, because staying with the right employer, moving up the ladder, is a great way to gain a lot of ground, and it's a great first step to becoming a millionaire.

It definitely is. And one of the things that people don't think about, actually a few things that people don't think about, are what the cost of moving from one employer to another are. For example, how long do you have to wait when you move to a new employer to become part of their 401k plan or 403b or whatever plan they have available? Is it a year? How long does that take?

Such a great point, because if you have to wait a year, most plans are a year. Right, we manage so many 401k plans, we know this not because we're guessing at it, we know it because almost every plan that we manage has a 1-year wait. So, if you have to wait a year, that cost could be somewhat consequential. It could have an effect.

Definitely. So, what if I'm putting away 8,000 or 10,000 dollars a year and I'm getting a match on that?

Mhm.

What is that worth over the course of the next 20 or 30 years? That 1 year of missed opportunity could be worth a lot of money.

It's worth significant money. Let's say you make 80,000 dollars.

Okay.

And you decide, you know what, I'm going to jump ship, I'm going to go to another employer. And that employer says, okay Phil, when you start working for us, you have to work a year, you have to give us a year of service before we allow you into our 401k plan. With your old employer, you were getting, let's say, a 5% match if you were contributing 5%. You can still save that 5% at your new employer, but for that first year, you won't be able to save it in the 401k plan. You can save it elsewhere. But for that first year, you're going to give up a 5% match, which in dollars is 4,000 dollars. If we grew that 4,000 dollars over 30 years and earned a modest rate of return,

Mhm.

you could be leaving upwards of 40,000 dollars on the table. So, it's not, it's when you draw these things out, a year's worth of savings lost over the long term is a lot of money. And that's just one component.

One component. So, what if you learn how to negotiate better for a raise? What if you are growing your knowledge in that place where you're staying, because you're clearly getting better and better and better the longer you're in the same place, same industry, same kind of work, you can get better, and as long as it's a company that allows you to grow, then build your knowledge, that equals build your income. It gives you a huge advantage.

And building those rare skills, which I think is missed so often. In fact, what I've seen throughout my work inside of companies with 401k plans and the things that we do at the corporate level, you get a lot of people in the workplace and all they want to do is get upset because they don't think they're being recognized, and they start saying, oh, no one's recognizing me, no raise, I'm not getting what I deserve. Well, guess what? You might not be noticed for a reason. Maybe it's because you've got an attitude. Maybe it's because you think everybody owes you.

Figure out how to build your skills, get some knowledge, grow your knowledge, figure out what your great skill is and get really good at it. I promise you, you'll get noticed, and that will then give them the ability to do something like negotiate for much better compensation.

You don't want to repeat that constantly. When you keep moving employers, you got to go through all that. It's hard to get really excited about doing all those things when you're constantly bouncing trying to find an extra nickel of compensation.

That's true. That's true. And we're not saying that it's a good idea to stay with an employer forever. There are questions that you can ask yourself that, depending on the answer, it might be time for you to find a new employer. For example, do you have what it takes to produce in the current role?

Yeah. Those kinds of questions. Are you finding joy in your role? I think that's important. If you don't have what it takes to be in the role, you got to go.

Yeah. Unless you are the one that's standing in the way of it. But if you're open and you've given it your all, you've been really, really focused and you tried, and it's just not working, then you got to go. Otherwise, don't jump just yet. Think about the things we've just said. You can probably turn that into a much, much faster route to a millionaire status.

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