How the Great Resignation Can Be Great for Your Retirement Planning
As the Great Resignation rolls on, top corporate talent continues to be courted with novel incentives ranging from 4-day work weeks to subsidies for emergency childcare coverage.
Expectations for total compensation packages have evolved, and work-life balance is defined differently than just two years ago.
In the fervor of attractive new benefits that accompany lucrative job opportunities, it’s easy to lose sight of the staples that form the foundation of a corporate benefits package, including the 401(k).
If you’re among the millions of Americans changing jobs during the Great Resignation, don’t make the mistake of leaving your 401(k) behind. In my experience, corporate employees who’ve changed jobs since starting their career usually have not one, but several 401(k) plans outstanding with various previous employers.
While you take a few days for yourself in between jobs, take the time to take stock of not just your most recent but all unclaimed 401(k) plans from previous roles. You may be pleasantly surprised to see the aggregated value of multiple plans changes your retirement picture.
This situation falls in the category of “good problems” to have. It means that you consistently contributed to your 401(k) plans and took advantage of your company’s matching programs. Congrats on your investing discipline and for not leaving money on the table!
Whether you’re pivoting to launch your own business or transitioning to a new employer, you don’t want to let your former 401(k) plan(s) linger for too long.
With each month you let your 401(k) languish, you lose some of those hard-earned retirement savings. That’s because part of your funds must now pay for management fees. Depending on how much your previous employer(s) contributed to your account, the fees could eat up all those extra dollars.
Successful investing relies on having a long-term strategy and the discipline to stick to it over time. If you opened two or three different 401(k) plans over the course of several jobs, then you likely have completely different portfolios. That’s not how “diversification” is defined in the investing world
As a general rule, you’re better off pooling your available assets and applying a unified strategy. This approach ensures the desired balance between growth and stability in times of market volatility.
There’s an easy solution to simplify your retirement planning and take the next step in your wealth accumulation journey: combine your 401(k) assets into one Rollover IRA account.
If you’re not interested in an IRA, many times when you opt into your new employer’s 401(k) program, you can bring the old one with you.
Whether you choose to roll over your funds into an IRA or new 401(k), consolidating your retirement funds makes it easier to manage and track as part of your overall financial plan.
If you do have more than one 401(k) to consolidate, a Great Resignation-inspired job change is a great time to develop an overarching wealth strategy with the goal of helping your wealth and life appreciate together.