Interviewing for a new job can be a daunting and stressful experience, but it’s a critical time to keep your wits about you, particularly when it comes to discussing financial matters tied to new employment such as retirement benefits and programs.
Accumulating enough money to live comfortably once you’ve left the workforce behind is an uphill climb, and there are many ways a solid benefits package from an employer can help lighten your load, ensuring that your retirement years are well-funded and as stress-free as possible. Here are some of the retirement benefits to ask about when you’re interviewing with a potential employer.
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Do they offer a 401k or 403b and when do new employees become eligible?
The sooner you can begin contributing to a retirement savings account such as a 401k or 403b, the sooner you can start growing your nest egg for the future, says Lorna Kapusta, head of women investors and customer engagement at Fidelity Investments. When interviewing for a job, ask what types of plans are offered and exactly when new hires are eligible to contribute. The key here is that you do not want to miss open enrollment as doing so can sometimes mean having to wait another six months to a year for the next opportunity to get involved in the plan.
“Starting early and contributing consistently provides the opportunity to take advantage of the power of compound interest and growth of your invested savings over time,” says Kapusta.
Does the employer make matching 401k contributions?
Matching 401k contributions are one of the most valuable retirement benefits employers provide most workers. Typically, as part of this type of benefit, an employer will match what you’re personally depositing into a company-sponsored 401k, up to a certain percentage, such as 4 percent of 5 percent of your contributions. That’s free money in your retirement coffers.
“Matching 401k contributions are the easiest way, along with auto-enrollment, to both put your retirement savings on auto pilot and often double the funds being stashed away for retirement,” says Rhian Horgan, a former JP Morgan wealth advisor and founder and CEO of the retirement planning platform Silvur.
For example, if you saved $125 per month in an employer-sponsored 401k plan and your employer matched those contributions in their entirety that would be $250 per month being saved every month, says Horgan.
When do you become vested?
Some retirement plans vest over time, which means that an employee owns a growing percentage of the plan with each passing year of employment.
“Once 100 percent vested, all savings in the account are yours, even if you leave that employer,” explains Kapusta. On the other hand, if you leave an employer before you’re 100 percent vested, you will lose some, or all, of the money. Asking about this particular program rule can be important depending on how long the employment contract is likely to last.
Does the employer offer access to a Health Savings Account (HSA)?
Health savings accounts (often referred to as simply HSAs) can be another very valuable benefit when it comes to being financially prepared for retirement. HSAs are accounts that allow you to save pre-tax dollars to pay for eligible medical expenses today, or you can save the money in an HSA and use it at some point in the future, including during retirement, says Kapusta.
Fidelity says HSAs are one of the most tax-efficient savings vehicles around because they offer triple tax savings. That is—you contribute pre-tax dollars to the HSA, you pay no taxes on earnings in an HSA, and you’re able withdraw the money from an HSA tax-free now or during retirement to pay for qualified medical expenses.
Does the employer (or their retirement savings plan provider) offer financial education?
Fidelity’s Kapusta says this too is an incredibly important question and benefit to ask about. Firms such as Fidelity, who manage the retirement savings plans of thousands of organizations across the country, offer educational workshops and one-on-one consultations to help employees plan and save for retirement.
Can retirement benefits be negotiated?
One last point about retirement benefits. Despite what you may think or have heard, it’s rarely possible to negotiate retirement benefits during the hiring process, as most company’s benefits packages are standardized.
“Typically, retirement benefits, unless you are a senior executive, are broadly available across the entire company,” says Horgan. Meaning, it’s unlikely you can demand specific retirement benefits for yourself.
However, that doesn’t mean you can’t advocate for modernizing benefits when joining a new company, in order to help both yourself and your new colleagues. For instance, if an employer doesn’t already offer an HSA, you might suggest they consider adding that to the benefits package for everyone.
“During retirement, you can use your HSA to cover your Medicare, long-term care insurance, or COBRA premiums, if you’re not yet eligible for Medicare,” says Horgan. “Once you reach age 65, you may use the funds for any reason. However, keep in mind that withdrawals for anything other than qualified medical expenses will get taxed at the federal and state levels.”
