If you’re among the many Americans pursuing a post-pandemic job change, you’re not alone. After more than a year of working from home, the US workforce is eager for new job opportunities.
It’s known as “The Great Resignation of 2021,” a movement that’s disrupting the labor market and empowering the workforce to explore their options. Labor Department statistics already show a sharp increase in resignations, and recent studies indicate that 25% of workers plan to look for new roles at different companies.
Here’s my pro tip: in the excitement of giving your two weeks’ notice, don’t make the mistake of leaving your 401(k) behind.
While you take a few days for yourself in between jobs, take the time to see whether you have any other unclaimed 401(k) plans from previous roles. In my experience, corporate employees who’ve changed jobs since starting their career usually have not one, but several 401(k) plans floating out there.
This situation falls in the category of “good problems” to have. It means that you contributed to your 401(k) plan and took advantage of your company’s matching program. Congrats on your investing discipline and for not leaving money on the table!
But there are a few big reasons 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 last employer 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.
No need to panic, though. 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 have more than one 401k to consolidate, then it’s time to think about financial adulting at a broader level. Let’s talk about the next steps in your journey and get a proper wealth strategy in place.