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- The ADP Workforce Vitality Report reveals that the “Great Resignation” pays off for workers seeking better prospects with new employers.
- Many employees are demanding – and receiving – higher wages, better benefits and more flexible work-life balances post-pandemic.
- This dynamic won’t last forever, so consider bringing your concerns to your employer before you go. And if you do leave, don’t forget your retirement accounts.
- If you’re worried you left a 401(k) plan with an old employer, never fear – you can get it back. There are ways to recover lost accounts, from calling up your plan’s administrator to searching national databases.
Before the pandemic, the labor market was already in the process of tightening, one month at a time. But the pandemic forced that process into overdrive through work-from-home arrangements, temporary pay increases and the ongoing digital transformation. Now, for the first time in three decades, employees find themselves applying, negotiating and otherwise bargaining their way into better working conditions for better pay.
As a result, the onus no longer falls on workers to accept unbearable working conditions for subpar wages. Amidst the pandemic, employers increasingly find themselves bowing to demands of higher wages, comprehensive benefits and flexible working arrangements. Some are reimagining business entirely, from “work-from-home-forever” policies and four-day workweeks to personal and professional development opportunities.
In other words, the Great Resignation is sparking societal change head-to-toe. But too many workers are leaving their retirement funds in the dust rather than bringing their thousands along for the ride.
The Great Resignation by the Numbers
According to the latest ADP Workforce Vitality Report, those quitting their jobs in the “Great Resignation” see measurably better outcomes. While workers who stayed put saw 4.8% wage growth in the third quarter, job switchers netted a 6.6% increase. Meanwhile, workers taking entry-level jobs saw comparably paltry growth of just 2.5%.
Of course, the itch – and incentive – to switch varies between groups. On the whole, those in leisure and hospitality fared worse, netting measly 0.4% growth year-over-year. However, job switchers in information, professional and businesses services yielded average paycheck gains of 10.5% in the same timeframe.
Still, job openings remain at a record high – and may even be worsening. In July, the number of open positions sat at 11.1 million before creeping down to 10.4 million by August. But in October, open positions soared, topping 11 million once again as nearly 3% of the U.S. workforce resigned.
The reasons for the Great Resignation appear abundantly clear. In mid-September, a survey by Morning Consult found that 46% of full-time workers were actively looking for or considering a new job. Some of the main reasons for the desire to switch included:
- Stagnant wages
- Burnout
- A desire to work remotely
- A lack of upward mobility and professional development opportunities
- Wanting to switch careers, not just employers
Of course, some of this year’s resignations deal with potentially more pressing matters: namely, caring for a sick or elderly relative. And a fair number aren’t reshuffling to new employers but taking early retirement to exit the workforce, full-stop.
Many workers are leaving potential thousands behind
Still, this dynamic won’t last forever. Although new Covid-19 variants continue to crop up every few months, the workforce is slowing shifting to a “new normal.” While workers have a chance to capitalize on the movement, job switchers should still ensure they have prospects lined up before walking out on their current employer.
And one of the biggest concerns you should review before switching is what happens to your retirement dollars. According to the Government Accountability Office (GAO), more than 25 million job switchers left their retirement accounts behind between 2004-2014. In the chaos of the Great Resignation, many thousands more may be making this same mistake.
But never fear.
Whether you’re thinking about leaving or have already left, you don’t have to leave your retirement funds in limbo. And in fact, you shouldn’t: failing to withdraw your funds on time can lead to penalties down the line.
Instead of leaving your thousands scattered hither and yon, here’s what you can do to recover your accounts. (Or bring them with you from the get-go.)
Finding Your Lost Account(s)
If you’ve already left a job with a 401(k), the first step is to track down your missing dollars. You can start by contacting your previous employer to request the name of the company they use for their retirement plans. This information may also be available on your W-2 in Box 12.
If you prefer not to contact your old employer, you can also search the National Registry of Unclaimed Retirement Benefits, which lists lost and unclaimed accounts. And if your employer rolled your funds into a default or missing participant IRA, you can track down your funds via the Labor Department’s Abandoned Plan Database.
Cashing Out
It rarely makes sense to cash out your retirement before age 59.5. Typically, leaving your money invested will yield better gains and minimize costly early withdrawal penalties. That said, if you have under $5,000 invested before you leave, your employer may force you out of your plan. In this case, they may cash out your plan and send you a check.
However, employees with more than $5,000 invested typically can’t be forced out of their retirement plans. This gives you more time to sort through your finances, settle into a new job and make the best money moves for your situation. As long as you know where your money is, there’s no rush to switch to a new 401(k) right away.
Rolling Over
Taking a rollover is often the preferable route to cashing out your retirement account. This occurs when you transfer invested retirement funds to a new plan or into a new type of retirement account.
Talking with your plan administrators can ensure the process goes smoothly and avoid unnecessary rollover fees. Typically, it’s wise to involve your administrators regardless of if you’re switching to a new work-sponsored account or an individual retirement account (IRA).
Aside from bringing your money with you, a rollover makes it easier to:
- Track your investment allocations
- Update your beneficiaries
- And remember to regularly contribute to your retirement
Plus, if you ever need to take a loan against your retirement funds, the bigger your balance, the more you can borrow.
If you don’t have a retirement plan, it’s time to get one.
Unfortunately, many people have nothing set aside in a formal retirement account – not a 401(k) or IRA to their name. If that describes you, this is your reminder not to leave your retirement goals in the dust! No matter your current or future career, investing for retirement early and often should be one of your biggest goals.
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