Latest / Job Hopping with Fexingo: Tenure, Loyalty, and the Modern Career Resume / How Job Hopping Changes Your 401k Strategy
Transcript
- Lucas: You leave a job after 18 months and you're proud of the salary bump. But there's a number you're not looking at — what you just gave up in retirement money. Luna: The vesting schedule. That cliff is real. Lucas: Exactly. Let's say you're a software engineer at a mid-cap tech company. You get an offer with 40,000 RSUs vesting over four years, with a one-year cliff. You leave after 18 months. You've only vested 25 percent — 10,000 shares. At a grant price of, say, $6 per share, that's $60,000 vested. But the remaining 30,000 shares — worth $180,000 at grant — disappear. You walk away from $180,000 in potential value, though realistically the stock might have moved. The point is: the forfeiture is real. Luna: And that's just equity. What about the 401k match? Most companies match 50 cents on the dollar up to 6 percent of salary, but with a three-year cliff vesting. If you leave at 18 months, you forfeit the entire match. Lucas: Right. For someone earning $120,000, that's $3,600 a year in match. Over 18 months, that's $5,400 in employer contributions you never get to keep. Now, if you job-hop every two years for a decade, you might forfeit $27,000 in matches alone. Compounded at 7 percent over 30 years, that's over $200,000 in lost retirement savings. Luna: The Rule of 72 makes that hurt. So what's the move? Do you stay longer just for the vesting? Lucas: Not necessarily. You can negotiate. When you get a new offer, ask for a signing bonus to cover forfeited equity and unvested match. I've seen candidates get $20,000 to $50,000 signing bonuses specifically to offset that loss. Also, consider a solo 401k if you have freelance income — it lets you contribute as both employer and employee, up to $69,000 in 2026. Luna: That's huge for someone who hops between W-2 and contract work. But what about the rollover hassle? Every time you switch jobs, you have to move your 401k. If you don't, you end up with five or six small accounts, each with fees. Lucas: Yeah, and those fees add up. A 1 percent annual fee on a $10,000 account costs you $100 a year, but over 30 years that drag compounds to thousands. The fix is simple: roll every old 401k into a single rollover IRA at a low-cost provider like Vanguard or Fidelity. One account, one fee structure, much easier to manage. Luna: And then you can still do a backdoor Roth IRA, as long as your income isn't too high. But if you have a big traditional IRA balance, the pro-rata rule complicates things. Lucas: That's a real consideration. One strategy: if your new employer's 401k accepts rollovers from IRAs, you can roll your traditional IRA into the new 401k, clearing the way for a clean backdoor Roth. But not all plans allow that. Check the summary plan description. Luna: So the net takeaway: job hopping costs you real retirement money, but you can offset it with signing bonuses, careful rollovers, and maybe a solo 401k. It's not a reason to stay in a bad job, but it's a reason to do the math. Lucas: Exactly. And speaking of doing the math — if today's episode helped you think through your next move, that's the kind of thing that makes this show possible. We keep it ad-free, and listener support is what allows that. Luna: Yeah, if it was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. No pressure, just a way to keep us going. Lucas: Appreciate that. So back to the numbers: one more thing to watch is the auto-enrollment trend. Starting in 2025, many states mandate auto-enrollment in 401ks. If you hop jobs, you might get automatically enrolled in the new plan at a 3 percent default deferral. That's good — but bump it up. You want to max out the match at least. Luna: And if you're a serial hopper, consider a target-date fund in your rollover IRA. Set it and forget it, no matter how many jobs you switch. Lucas: Right. The key is to be intentional. Don't let the job-hopping lifestyle erode your retirement without you noticing. A few smart moves — negotiate the signing bonus, roll over promptly, consolidate accounts — and you can have both the career mobility and the retirement security. Luna: Well said. That's all for this episode. See you next time. Lucas: Take care.