How Job Hopping Hurts Your Retirement Savings

People who change jobs frequently may come out behind in retirement.

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Waiting periods to join a new plan. Just over half (59 percent) of workers are allowed to begin contributing to a 401(k) plan with their first paycheck. Other workers need to wait periods ranging from three months (17 percent) to a year (12 percent) before they become eligible to use the 401(k) plan, according to a Plan Sponsor Council of America survey of 401(k) plans. Most companies also have service requirements before new employees become eligible for a 401(k) match, often requiring one year (29 percent) of job tenure before any employer contributions are offered. It's important to take the time to find out when you are eligible for both the 401(k) plan and employer contributions to your retirement account. If there's a long waiting period, it's prudent to do some saving on your own outside the retirement plan. "I would definitely start an IRA independently and then there are always taxable options," says Pons. "Max out an IRA first up to the $5,000 limit, and then save into a taxable account."

[See 10 Things You Should Know About Your 401(k) Plan.]

New retirement plan set up. Once you become eligible for the plan, you need to make the time to choose an appropriate savings rate and investment options. Many new employees are automatically enrolled in 401(k) plans, most often with the company investing 3 percent of an employee's paycheck in a target-date fund. However, you should review whether the default savings rate and investment option will meet your retirement income needs. If you aren't automatically enrolled, you'll need take the initiative to sign up online. "People are really busy when they change jobs," says Alexander. "It's hectic, and sometimes you just don't get around to it."