The Job Search: A Few Thoughts on Investment Benefits

During an interview, be sure to inquire about benefits before you leave the room. However, previous to asking the question, take the time to familiarize yourself with at least some of the monetary investments businesses offer their employees. For many of you out there, this may not be necessary. But for those job seekers just entering or re-entering the market place, it might not be a bad idea to brush up on your knowledge just a little.
The two investments I’m going to discuss are the standard 401 K and the Roth IRA. I will state here and now, that I am not a financial advisor. Nor am I well-versed in financial investing. The information I’m giving is available from many sources–both online and at your local public library– and is not in any way an endorsement for a particular product. It is always a good idea to get feedback from a financial expert before investing a penny of your money.
First, here’s what I have learned about 401 K plans. Some of the advantages of a 401 K retirement plan are that it will reduce the amount of tax taken out of your pay check each week, you often have a choice of a variety of investment options, many employers (but not all) will match your contribution, it is protected by federal pension laws and from garnishment (exception: domestic disputes) and your capital, while it grows, does so tax-free. However, there can be a downside to a 401 K. You can be penalized for accessing your pension before the age of 60, and it can be quite expensive. Also, the plan is not insured, the matching funds are not actually yours until quite a few years have passed and your investments, to truly pay off, must be fairly aggressive–until you near retirement age. This is why it pays to have some kind of financial advisor in your pocket. Additionally, every company seems to have a different plan, so the plan you had (or your parents have) with one employer, may be in total contrast with another businesses’ plan. There is much more to a 401 K plan than the little I’ve discussed here. Your best bet is to hit the books or the internet and find out which investment(s) would be most suited to you and your personal needs.
Another investment offered by some employers is the Roth IRA. This type of account has some advantages which many employees find more agreeable than the usual 401 K plan. One of the big drawing points is that you can take money from this account without the substantial penalty that the 401 K insists on. However, this only applies to whatever amount you initially put into the account, and not to whatever sums it may have earned in the meantime. In other words, if you put $5000 in at the beginning, you can withdraw up to that amount of cash at anytime, without penalty. Another advantage is that the Roth IRA is that your money is growing tax-free, but on the downside, contributions are not tax-deductible. This is a good plan for anyone whose income ranges from the lower-middle to medium-high range, because of the higher income it generates. Be warned however. Your tax rate may also increase a percentage or two with that boost in income. Again, don’t blindly launch into retirement benefits–even if retirement is fifty years away. Look carefully before you make the leap onto the road of investment.