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Job Benefits To Look for: Retirement Plans

Job Benefits To Look for: Retirement Plans

With pensions going the way of the VHS tape, most companies (a whopping 90 percent, according to SHRM) offer 401(k) plans or similar retirement savings options. If you haven’t started investing in yours, contact your HR department ASAP and figure out how to enroll. The reason is simple: Your 401(k) contributions come straight out of your paycheck, which makes it easy to start building your nest egg.

A 401(k) also has tax advantages: The contributions and earnings you make to a Traditional 401(k) are tax-deferred, meaning you won’t have to pay taxes on that money until you make withdrawals in retirement — plus, anything you contribute now helps to lower your taxable income. Roth 401(k)s, meanwhile, are funded with post-tax dollars, but you won’t have to pay taxes on your earnings when you withdraw later in retirement. (Traditional 401(k)s are more common, but some companies do offer a Roth option.)

What makes 401(k)s even sweeter is that your company might offer an employer match. That means they’ll throw some money into your retirement account on your behalf. An example of a typical match is 50 percent up to 6 percent of your salary. So if you make $100,000 and contribute $6,000 a year to your 401(k), your company would throw in another $3,000 for you. That’s free money for retirement!

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