ADVICE FOR JOB-HOPPERS.

• Position: Brief Article

Once, the hallmark of a good employee was the loyal worker who stayed with the same company for 20 to 30 years. Today, the average worker changes employers every five years, and, thanks to the tight labor market, many think nothing of switching every two or three years. Some companies even frown on applicants who don't have a resume showing job changes. However, although changing employers can boost wages and bring exciting new opportunities, it also can affect one's long-term financial health.

If job-hopping is in your future, the Financial Planning Association, Denver, Colo., offers some cautions and financial planning strategies that can make the moves more financially sound:

Think about retirement. Often, the biggest impact of frequent job changes is that it can seriously undermine efforts to save for a comfortable retirement. This is especially true for workers covered by defined-benefit pension plans, which guarantee a benefit based on length of service and highest salary. Consequently, long,term employees typically earn the biggest Chunk of their pension benefits in the last years on the job. Workers who change defined-benefit employers every 10 years may end up with less than half of the benefits they would have earned working for the same firm their entire career.

Be sure to vest. Traditional pension plans have been on the wane in recent years. Many large companies are switching to cash-balance pension plans, which neither favor long-term employees nor shortchange lesser-term employees. Many other employers offer defined-contribution plans, such as the 401(k). Although cash-balance and defined-contribution plans don't reward long-term loyalty, they also won't benefit job-hoppers. That is because employees who leave before they are fully vested in the plan--often at least five years--lose out on some or all of any employer's contributions. That is why it is important to try to work for an employer at least long enough to vest.

Cover the gaps. Another retirement consequence for job-hoppers is that they may not be eligible to join a plan until they have worked for the employer at least a few months or even a year. That is lost money that could have been compounding over time to build a bigger nest egg. If you can't join a plan for a...