Boost Your Employer Benefits
While your paycheck is important, according to the U.S. Bureau of Labor Statistics, employee benefits made up 37.8% of an employer’s payroll costs in 2020. Below are some tips to maximize your benefits.
MAX OUT ON YOUR 401K EMPLOYER MATCH
Most large companies offer a retirement plan and many will even contribute money to the plan so long as you also stow away a percentage of your paycheck each pay period. This is free money and something you cannot afford to pass up.
For example: if you make $50,000 each year, put away 2% into your 401(k), and your employer matches 2%, you will have $2,000 to invest in your company’s retirement plan each year. Considering an above average savings account returns 1% in interest, take advantage of this (rare) 100% return on your money.
TRADITIONAL VS. ROTH IRA
The main difference between these types of individual retirement accounts is their tax treatment.
Traditional IRA: use before tax dollars to fund your account
pros: reduce the amount of taxes you owe to uncle sam in April
cons: pay taxes on your initial contributions and earnings (increases in stock portfolio) when you retire.
Roth IRA: use after tax dollars to fund your account
pros: since you’ve already paid taxes on the $ you use to initially fund your account, there’s no need to pay taxes when you withdraw in retirement.
cons: no short term benefit to reduce your tax burden.
NEGOTIATE FOR FRINGE BENEFITS
Many companies will have set salary programs that dictate what a manager can offer to a new hire, so negotiating for a higher salary might be difficult. This has less to do with personal assessment, and more to do with peer alignment (corporate speak for “everyone starts out on the same foot”).
If you feel you bring something extra to the table consider negotiating for other fringe benefits like an extra week of vacation, paid parking/transportation, or company provided training opportunities. These costs can translate to a few thousand dollars a year. However, be prepared to back up your claim with a couple tangible reasons why you are worth it.
