Job transitions could lead to $300K retirement Loss

One of the spookiest facts to hit in 2024 is the idea that switching employers could cost employees in the long-term.

A study by Vanguard, using administrative data of over 54,000 workers for whom Vanguard is a recordkeeper for, found that while the median job switcher sees a 10% salary growth, they’re also likely to experience a 0.7 percentage point decline in retirement savings, despite continuing to save more in dollar terms. Even those who experienced a pay increase of over 20% still exhibited a slowdown in their saving rate.

Vanguard finds that if instead of switching jobs, they had received a promotion at their old employer with the same 26% salary increase, they could have saved $1,274 more in the year after their raise.

Income-wise, workers who earn $60,000 at the beginning of their career, who then switch jobs eight times across employers, could be losing out on a potential retirement savings of $300,000. This is enough to fund an estimated six additional years of spending in retirement, Vanguard reports.