Many companies will tout the excellent retirement benefits offered, but the majority of twenty-somethings should have much more pressing concerns on their mind.
The what-if factor is always a good motivator. What if you become sick or injured while working in the next year? What if you require prescription medication on a regular basis? What if you need to see a chiropractor, psychologist, clinical physician, or any other medical professional consistently?
At times when these medical expenses crop up, the thought of retirement seems much farther into the distant future than it already did before. There is no hiding the fact that health insurance is a big financial burden. Employers often offer some form of a company-provided insurance policy; however, within this policy, there are often several options. In any case, employees will be subject to paying a substantial portion of their insurance coverage in one manner or another.
First, employers will remove a portion of one’s wages as a premium for company-provided insurance coverage. Asking employers what this premium amounts to on a monthly basis is a very important question for job candidates to ask. Besides premiums, employees face other out of pocket expenses in regards to company-provided insurance policies, which include deductibles and co-payments at the time of service. A deductible is an out of pocket expense employees will face up to a certain dollar amount before the insurance benefits truly begin to kick in.
Co-payments are due at the time of service at any medical health provider one may opt to visit. Job hunters must ask employers about any deductibles and co-payments required by existing insurance policies to ascertain fully the truly benevolent nature of their prospective company’s insurance benefits plan. For more information concerning individual insurance plans, every company should offer a human resources department, which will gladly inform new employees of their insurance policies and rules.
Other online options for finding more info on health benefits include the website allaboutthebenefits.com, which is specifically designed to assist confused, newly graduated employees. Every working individual within the United States must pay taxes according to the law, however, some employees underestimate the nature of how much tax liabilities will take away from their gross annual salary.
On average, most workers will look towards netting an average of eighty-two percent of their gross annual salary. The deductions for taxes include federal income, social security, Medicare, state, and local taxes. For employees, avoiding these taxes is essentially impossible. There are some interesting tax options, however, for recent graduates paying back school loans or interested in retirement accounts.
Employees repaying student loan debt from college can write-off the interest paid to these loans are tax-deductible. When filing a W-4 form for a company, the website paycheckcity.com offers useful information for new graduates. The site also goes on to explain the common question about the number of dependents you are filing for on Line A in the W-4. For persons whose parents claiming them as dependents on their own tax forms, employees must put “0” and for recent graduates claiming themselves as dependent and their parents do not, enter a “1”.
After addressing the more pressing issues regarding benefits, prospective employees should wade into the all too murky waters of retirement benefits plans. Taking advantage of retirement plans offered by companies seems like such a forlorn thought to many twenty-somethings, however, making one smart decision to begin contributing to a retirement savings plan can eventually earn workers thousands upon thousands of extra dollars income; here is how.
Workers can contribute to retirement accounts with no federal income tax liability until the funds are withdrawn many years later. In many of these retirement accounts, employers will match employee contributions up to a certain percentage of their paycheck, which averages around two to five percent. Essentially, by adding money to a retirement investments account, employees can increase their annual earnings by whatever percent the company offers to match contributions. With help from online calculators such as the one at paycheckcity.com, new graduates can outline the weekly costs of contributing to any retirement savings plan as well as tabulate the amount available at the time of retirement if one sticks with the plan.
Deciding where to invest retirement money is critical to employees. Some companies are already affiliated with an investment organization; however, others may allow employees to pursue their own 401(K) or IRA managers. In any case, having someone manage retirement benefits on the behalf of busy income earning individuals is the key to retirement savings success. For those younger individuals seeking the help of professional investments managers at Charles Schwab for example, they enjoyed a rate of return of 14 percent in comparison to older persons not seeking professional assistance, who earned only 9.3 percent. Overall, the financial constraints facing workers following college as they newly enter the workforce, including loan debts, living costs, and credit card debt, are only a minor inconvenience when looking at the bigger picture of retirement savings.