Question

"A 45-year old man earns $150,000 per year and is covered by his employer's 401(k) Plan. He quits" his job and moves to a new company that has no retirement plan, but will also pay him $150,000 per year. He should be advised to:

Answer 1

Answer:

Not to leave previous job.

Explanation:

• First of all, the question is that what he will lose after leaving the job?

• His earning per year is equal at both sides, still what's the opportunity cost for him?

The answer is simple, he may earn equal but if looked at it in a bigger picture he is losing 401k retirement plan and It is his opportunity cost. He may regret this after leaving the job.