Job Benefits: Education and Retirement

Posted in Finding a job

Just imagine that all your training or college expenses are paid for… Well, this may happen when your company offers education benefits.

If you want to break away from the ongoing cycle of badly-paying jobs, in-demand skills is what you should focus on, and the only way to get there is through continuing education. So if you have an employer that is helping to pay for your education, head back to school and start learning, you can the ACT or SAT exam, or if you had a longer break from education take a GED test.

You can easily prepare for the exams free of charge websites. Here is the link to a good free prep site:

Your employer’s education benefits may vary from paying for certain costs to a maximum per year, to picking up the full tuition tab for training related to your position. Employers may also opt to furnish a percentage of your education costs, or subsidize a set amount pf money. Regardless of what benefit your employer offers, you should really take advantage of these options.

I’m sure it will pay off in the future, and in many ways. What’s important is that it allows you to grow continually, and it will provide you with the tools to turn your dreams into reality.

Retirement Benefits

If your company offers a company-sponsored retirement plan, you generally have a great vehicle to save for your and your family’s future. Though you may think that retirement is a thing of the long run, if your employer allows for planning now, you definitely will reap the benefits in the future.

One more reason to participate in your employer’s retirement plan is that this may be helpful in reducing your tax burden, and lets you keep more of your hard earned money. Beware though, that most retirement plans have regulations and rules that must be met before you will be able to join. In general, you must be:

  • permanently employed by the company
  • no younger than 21 years of age
  • have a contract for no less than 36 hours per week

There are basically two different sorts of retirement plans:

Pension plans that are paid entirely by the employer, and 401(k) and 403(b) plans where both the employer and you contribute money to the pension plan. With a pension plan entirely paid for by an employer, a person usually works for many years for one single employer, and that employer has set money aside for the employee’s retirement. That money was placed in a pension plan.

When the employee retired, the pension plan began to pay the worker a set amount every month. This is based on the time the employee has worked for the company and the amount of money the worker has earned prior to retirement.

There were times that pension plans were commonly used, but in those days, working for one single company for your entire life was also common. The times have pretty much changed, though, and today, most employers are offering the retirement plans 401(k) or 403(b).

401(k) & 403(b) Plans

The 401(k) retirement plan is among today’s most popular retirement plans. With a 401(k) a plan, your employer sets aside a part of your paycheck, within federally determined limits, and puts that amount in a special savings account. There are many employers who will match (part of) the money that you are furnishing.

Your employer may, for example, put in 60 cents per dollar that you contribute to your retirement account, though usually limited to a specific percentage of your income. In fact, this money is free for you, so if you have an employer that is providing matching funds, you really should put all the money you can.

401(k) plans have several tax benefits. The contributions are from pre-tax income, meaning the amount is subtracted from your paychecks prior to tax assessment. So in case you make $100 per day and you put $10 into your 401(k) plan, you will only pay tax on $90 of the earnings. On top of that are earnings from your 401(k) plan tax deferred, meaning won’t need to pay current-year taxes on the amount of interest paid into the account, regardless of the amount,  until you begin to withdraw money from the fund.

The US government will be taxing your withdrawals, and a 10 percent penalty will be assessed when you take the money out prior to retirement. There are a few exceptions to this rule, for example if you become or are permanently disabled. In those cases, you will be allowed to withdraw funds without having to pay a penalty, but beware that you still will need to pay income tax.

When you have set up your 401(k) plan, you need to decide how the money should be invested. Generally, employers are offering various options like investing it in a mutual or stock funds. These sorts of investments ideas are unknown territory for most people, so you don’t need to be embarrassed when you have a lot of questions to ask. By the time you’ll catch on, though, it is likely to become a second nature.

403(b) plans are quite similar to 401(k) plans, except that they are available to nonprofit organizations. Just as with the 401(k) plans, you won’t need to pay any taxes on the money that you are contributing or on the account’s earnings. You will have to pay taxes though at the time the money will be taken out of the fund after you retire. You may also decide on how your contributions are invested, and just like a 401(k), there are government-set limits on the amount of money that you can contribute each year to a 403(b) plan.

If you have an employer that is not offering a retirement plan, you still have the option to for retirement. You may open your personal IRA (Individual Retirement Account). This enables you to put in a specific amount of your income every year. Just like a 401(k) and a 403(b) plan, are IRAs usually funded through pre-tax money, and your contribution may grow tax deferred till the moment you begin to withdraw the money after you retire.

You have the option to make contributions to either a standard IRA or a so-called Roth IRA. If you have a Roth IRA, your contributions are done with already taxed money. This means that you don’t qualify for tax deduction on the amount when filing your tax returns, but after you retire, you don’t need to pay any income taxes on your withdrawals. The account’s earnings, though, will be taxed if you make withdrawals before you reach the age of 59-1/2.