Sherin Shibu
Oct. 15, 2024
If you start your career earning $60,000 and switch jobs every five years, you've lost about $300,000 in retirement savings.
A study released in September by the Vanguard Group found that changing jobs had a noticeable effect on retirement savings, amounting to six years of lost retirement funds. The study compared two hypotheticals: Someone who stays at one company for 40 years, from age 25 to age 65, with a starting retirement savings rate of 3%. That person reaches their maximum retirement savings rate of 10% by the age of 32.
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The second person is a job switcher who changes roles eight times across the course of a 40-year career. They go back to a default retirement contribution rate of 3% each time they switch to a new employer, and the rate increases by 1% each year until it reaches 10%.
The study calculated that the person who switches jobs has "a 41% smaller retirement nest egg" upon retirement. It also acknowledged that changing jobs "reflects the reality of many workers today."
The study set retirement expenses at $48,000 annually. That number is smaller than estimates from the Bureau of Labor Statistics , which placed average annual expenses at $52,141 as of March.
Changing jobs also has an impact on overall earnings. A July 2022 study from the Pew Research Center found that most workers (60%) who switched jobs from April 2021 to March 2022 saw their wages increase, even with inflation factored in.
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