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Saving for Your Future

When looking at prospective employers, it’s easy to be enticed by an attractive salary, but it’s also important to know what type of benefits your employer will offer – in particular, retirement plans and pension.  With the economy and laws governing Social Security and Medicare constantly changing, the benefits an employer offers oftentimes change just as quickly.  Many small businesses do not offer a traditional pension and a lot of larger employers are steering away from them too.  If your employer does not offer a pension, it’s best to know what type of options are offered for retirement savings.

Does your employer offer a 401(k) plan? Many employers offer some type of retirement savings.  If they offer a 401(k) plan, there are a few items you will want to know and understand to maximize your contributions.  (1) Do they provide any matching employer contributions? (2) What is the vesting period to earn the employee contributions?  (3) What is your annual contribution limit, as you don’t want to begin contributing only to find out ¾ of the way through the year you have maxed out and no longer gain the benefits of contributions. (4) If you are entitled to catch up contributions due to your age.

For employees who work for companies that don’t or no longer offer pensions, this may be your only means of saving for retirement through your employer.  If you find yourself working for such an employer where a 401(k)-retirement savings plan is offered, develop a plan for saving and follow it.  401(k) deductions are pre-taxed, and in some cases depending on your earnings, you can possibly increase your take home pay as a result of being taxed on less while affording you the power to save.  If you’re not used to saving on your own, start small and build up from there.  Most plans allow you to do a flat dollar amount or percentage amount of salary per pay.  Start with the minimum and gradually increase it over time.

Many plans offered will include providing you financial advice on investing and offer to do an evaluation of your income and outline for you strategies on how to make your savings grow over time for when you’re ready for retirement.  Take advantage of all the resources provided to maximize what you can save over time.  Employers are not required to offer retirement plans or pensions to their employees – it’s purely voluntary on the employer’s part.  The important thing is the earlier you start saving, the more time your money will have to grow.

Article Written by Daniel Schmitt, HR Assistant