How to start planning for your retirement with the new company

Liquid savings before 401k

When you get your new job you will be offered lots of benefits and you will at a point have to make decisions on whether or not you decide to partake in the offerings and at what level.  Typically, you will be offered some group plans such as life and disability and these plan are often very inexpensive and can be a great benefit to take advantage of.   There will also often be a retirement plan in place and depending on type of organization you work for that could often be a 401(k) or 403(b) plan.   Before joining the employer sponsored plan make sure you build liquid short term savings.  We always recommend to have at least 6 months of living expenses saved up in an account that can be accessed without any tax implications. Once the liquid funds are there it would be time to explore the company provided retirement plan.

Understand your company provided disability insurance.

As a nurse you have a physical and stressful job and there is a risk that you can get sick or hurt so that you can’t work.  Many nursing jobs will through the employer provide disability insurance but often the coverage is not going to be adequate and often the income form the employer provided plans are taxed as income.  You will want to get a hold of the employee handbook and see what your disability income benefits are and specifically you want to look at how long the plan will pay if you go out on claim and also see how much it will pay. You will also want to look at how the plan defined a disability as it varies dramatically from plan to plan.

Participate to get the company match?

It is always exciting to get information about the employer sponsored retirement plan but it can also be confusing.  Make sure you find out what percentage the company will match and find out what you have to put aside in order to get that employer matching.  You also want to make sure you understand where your money will be invested and make sure that the investment fits with your retirement time horizon.  And finally you have to do some analysis to see if it makes sense for you to put aside more than the what gets you’re the company match.  Sometimes it can be very beneficial to put aside more into the plan but that very much depends on your effective income tax rate and also depend on what else you have put in place.  Just remember that a traditional 401(k) plan or other pore tax retirement plan is simply a tax deferral plan and not a tax avoidance plan.

Written By CreativeNurse Team

2016-26817   Exp. 10/17