Planning for retirement
Saving up for retirement is one of the toughest things to do, which is why lots of employers also offer retirement and pension plans!
One of the most popular pension plans is the 401K, a defined benefits plan you open up to which you contribute, and save, a certain percentage of your salary every year. The money is deducted from your paycheck before taxes come into play, and to discourage you from withdrawing money (hence encouraging you to save), most 401K accounts charge a tax when you withdraw money from your account. While most 401K plans have an annual contribution limit of $17,500, there are often employer-offered 401K plans that have a higher limit.
Some companies will match your contributions to your 401K. In these cases, companies will set a certain percentage dictating your 401K salary contribution, and they will contribute to your account with the exact amount of money you did that was predetermined by your employer. Sounds complicated? Katlyn, who works in the computer software industry, explains it a little more clearly.
“I received a 6% 401k match [when I joined the company],” says Katlyn. “For my 401k match, I get immediate participation in a 6% match, [meaning that] if I put 6% of my salary into my 401k retirement plan, [my company] will match with an equal contribution.”
Another plan offered by employers is the defined contribution plan, which is a monthly amount paid to you upon retirement that takes your salary and years of service in account. Both types of plans usually increase the longer you’ve been working for an employer, meaning that the longer you work for a company, the more they will help you save for retirement.
You’ve probably heard of some companies that offer stock options, gym memberships, and other bonus benefits to their employees, all of which are great perks. But just like insurance coverage, retirement plans, and paid leave, how many of those extra benefits you get (and even whether or not those benefits are available to you) depends largely on the company you work for. While companies like Google can afford to offer their employees legal aid and reimbursement for classes they may need, many other employers can’t necessarily offer the same things. As expected, smaller companies usually offer fewer benefits, while big companies can give you more in terms of job perks.
Don’t be discouraged! In most industries, you can earn more benefits over time as you move up the ladder. So even though your health care coverage or your company’s training programs may seem a bit lacking, you’re sure to receive more the longer and harder you work. It’s just a matter of what industry you work in and how much experience you have!
Are benefits negotiable?
If you’re caught in a position where you’re not entirely satisfied with the benefits that come with your job offer, or if you don’t have benefits at all, can you negotiate? Unfortunately, you may need to wait a while before the option of negotiating your benefits is even available to you, as benefits are not always subject to negotiation. As Mitler points out, usually only salaries and bonuses are up for discussion, especially where optional company benefits are concerned.
In the meantime you may have to find other ways to make ends meet if you’re not getting the benefits you want. Fortunately, there are ways to make up for the lack of benefits being offered to you, as Mitler explains.
“If you aren’t offered health care coverage or your company’s health insurance is too basic, you can consider staying on your parents’ healthcare coverage until you’re 26,” says Mitler. “Something else you can definitely do is negotiate for a higher salary, which will hopefully let you cover costs that would have been accounted for in the benefits you wanted.”
In the end, job perks and benefits go a long way, especially when you’re a college grad with your first job. While not all employers provide all of the benefits listed above, most do provide some combination of them. When you’re offered the position, definitely make sure you’re clear on every benefit being offered and their specifics, such as the number of paid absences you get per year. Benefits will, without a doubt, help you to make ends meet, but only if you’re sure which ones you’re getting and which ones you aren’t!