New Job! What Now?

 

We’ve all been there – you spend time perfecting your craft and your resume.  You nail the interview and land the job.  Now what?

 

A new job can be thrilling and daunting at the same time.  A new environment, commute, and colleagues… new job duties, responsibilities, and training.  Then right in the middle of all this change, you find yourself faced with the sometimes tortured task of selecting benefits.  Your first call will probably be to your Rembert Pendleton Jackson advisor for guidance on this exact subject, but what follows are a few general thoughts.

 

When selecting benefits it’s important to have a full grasp of what is available to you along with the cost.  Many companies offer 100% employer-paid benefits like basic life insurance and disability.  But how much is enough? Though it may seem like a throwaway decision, disability coverage can change the entire trajectory of your finances and having to go on claim CAN happen to you! According to the National Bureau of Economic Research, a 50-year-old male household head has a 36% chance of having been disabled at least once during his working years. [1]. (And ladies, we’re right there with the men.)  Terrifying!  But having proper disability and life insurance coverage can help navigate against a major financial blow.  After all, while we’re in our accumulation stage of life one of our most powerful financial assets is our ability to earn an income.

 

Then there’s health insurance - Liz wrote a fantastic article covering the high-deductible health insurance plan, which includes a powerful health savings vehicle: The Mighty HSA.  The high-deductible health insurance plan has always been my cup of tea but deciding which plan is right for you is highly dependent on your personal needs, including whether you have existing providers that may be in or out of network or if you are able to hop on your spouse’s plan.  The most important part of the decision is to take note of when your coverage starts to make sure you aren’t left without health insurance. If needed, the Affordable Care Act offers insurance availability for those who qualify for a Special Enrollment Period – such qualifying events include losing health coverage, moving, getting married, having a baby, or adopting a child.

 

Your 401(k) decision can depend on various factors including, most importantly, your budget – Dan wrote a great post with a starting point on budgeting and tracking your expenses.  If available, you may need to decide whether to contribute pre-tax (save yourself some money on taxes now, but pay the IRS later when you withdraw funds) or via Roth contributions (pay taxes on your contributions now, hoping that your tax rate is lower than it may be during retirement).  Since employer matches are always considered 100% taxable upon withdrawal, I prefer to contribute via Roth contributions, giving my future-self two different buckets of money to choose from.  If possible, max out that 401k!  However if you want to take some time and see how your expenses shake out, at least contribute the minimum amount to take advantage of any employer matching available. 

 

When it comes to investment selection for your 401k, most plans offer an age-based portfolio option that will invest in a variety of different asset classes and automatically rebalance as you age.  By selecting the portfolio that most closely matches your target retirement date, the portfolio managers will adjust the holdings to take on less risk as you approach retirement. While most people prefer to have more control over what is often their largest retirement savings vehicle, the age-based portfolio is the most bang for your buck when you are first starting out with small contributions.  As your savings grow, you can take advantage of diversifying into the different funds available to you.  

 

If this isn’t your first rodeo, you may have a previous company 401k to deal with – do you leave it where it is, roll it to your new company 401k, or roll it to an IRA?  There are many factors that go into making this call, including investment selection, fees, and plan structure.  This decision is highly personal and should be discussed with your advisor. 

 

And of course the list of potential benefits goes on – dental, vision, FSA, ESPP, parental leave, commuter benefits.  To make sure they let me blog again I won’t get into the depths of every possible benefit available but suffice to say your company may offer even more options to maximize.