Job-hopping could mean bigger salaries, but a $300K lifetime loss in retirement savings

The typical U.S. professional will work at nine different companies over the course of their career—and that job hopping could cost them over a quarter of a million dollars, according to a recent Vanguard report.

Assuming an annual salary of $60,000 at their first job—and an average tenure of five years per company—the investment firm estimates that job hoppers can lose $300,000 in retirement savings over their time in the workforce.

That’s a 41% smaller nest egg—or six fewer years of retirement accounted for, had that worker stayed at one place all the while.

Why? When they start a new job, workers gain a median pay bump of 10%, but a slight decline—at 0.7%—in their retirement savings rate, Vanguard finds. That drop is because there’s a large amount of variability in default savings rates of different 401(k) plans, and many don’t automatically enter new hires into the system. 

“The current design of many 401(k) plans does not account for repeated job switches,” the report reads.

“The benefits of plan features that encourage greater retirement savings, such as automatic enrollment and automatic escalation, can be diminished with each job transition when plan features do not line up from employer to employer.”

Is retirement a pipe dream?

This news might fall on deaf ears, given that more and more American workers are losing confidence in their ability to retire at all. 

About a quarter of adults over 50 fear they’ll never be able to retire—unsurprising, given that $1 million is no longer enough to stop working in today’s economy.

Despite the bleak outlook, Gen Zers—the youngest generation in the workforce, and those who can expect to job hop more times in the future than anyone—contributed more to their 401(k)s last year than any other age group. That’s despite the fact that they overwhelmingly fear they’ll be unable to reap the rewards of socking money away. 

“The onset of the COVID-19 pandemic rocked the economy as Gen Z entered young adulthood,” Charlie Pastor, a financial planner, told Fortune’s Alicia Adamczyk last year. “Older generations should understand that the next generation of savers has seen a lot of economic turbulence in a short period of time.”

Even if job hopping means losing out on retirement savings, it’s still in every worker’s best interest to contribute as much as they can. 

After all, failing to adequately save for retirement is most workers’ number-one money regret.