The Daily Tip Jar

Accepting a job can come with a lot more than just a paycheck. If you are new to the workforce, it can be a lot to understand. After the payment, they will tell you about the benefits. Medical benefits are essential and can make us overlook the 401K options. We all need to be paying attention to our options. Is our 401k worth it? Is it going to pay off in the long run? Here are some things to be paying attention too, and maybe negotiating a better deal.

Eligibility

Some employers will not let you start contributing to a 401k until you have been there for a certain amount of time. You want to start putting money in as soon as you can. Employers aren’t always greedy when they do this. Companies are protecting themselves when they delay. They are making sure that you are going to stay with them before enrolling you. If you can be picky about positions, this will be something that you want to consider.

Contributions

Getting hired at a new job can be very hectic. There are so many decisions to make when you sit with HR. When I was asked what I wanted to set my 401k contributions at, I just stared back. They replied by saying what most people do and letting me know I can change it later. After that conversation, I never thought about it again. If you have done the same thing, you may want to check it out. Increasing your rate over time is essential. A low saving rate is around 3%. You will want to raise that over time to maximize your savings. 

Employer Contributions

Does your new job match or contribute at all to your 401k? This can vary a lot, depending on the situation. If your employer does not participate, you are the only one sending money. In this scenario, you will want to be saving as much as you can. Companies that do contribute can have requirements before they will. Make sure you find out what they are, and that you are contributing enough to receive it. On average companies will add 50 cents for each dollar. That will be a nice boost to your retirement years.

Vesting

Vesting is when you are eligible to keep all the contributions that your employer has added to your 401k. The money that you send over each month is yours, but you are not guaranteed to keep the rest. All employers will have a vesting schedule. The schedule will tell you how many years you will have to be with the company to keep 100% of their contributions. Think twice before switching jobs too quickly. It won’t pay off, in the long run, to jump around from position to position. You could end up losing out on a good chunk of money if you do.

Take a look at your 401K. Pay close attention to eligibility, contribution, and vesting. Make sure you 401k is working for you!

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