Evaluating a Job Offer
It’s not just about the salary. Here are some things to consider when opportunity knocks.
People can’t necessarily count on Social Security or a hefty pension to support them in retirement. But there are strategies for building a comfortable nest egg:
- Company-Sponsored Defined-Contribution plans
- 403 (b): education and nonprofit institutions
- 401 (k): private companies
- 457 (b): government institutions
These usually offer a wide choice of mutual funds and allow salary deferrals of up to $17,500 in 2013. A catch-up option of $5,500 applies to the 50+ crowd. Some companies will make additional contributions based on the companies’ plans—a nice perk!
- SEP IRAs: Self-employed people may make tax-deferred contributions of up to 20% of compensation, based on self-employment tax calculations. Companies with a Simplified Employee Pension (SEP) plan may make tax-deferred contributions to workers’ SEPs of up to 25% of compensation, or the dollar threshold ($51,000 in 2013).
- If you’re not covered by a company-sponsored plan but your spouse is, whether you can obtain a tax deduction for a contribution to a traditional IRA ($5,500 annually or $6,500 for those over 50) is based on income thresholds. Though the same contribution limits apply for Roth IRAs, they are nondeductible.
The risks of being uninsured can outweigh the cost of the policy. Paying for medical expenses out-of-pocket can quickly exhaust one’s assets. Some choices:
- Individually owned policies: Purchased directly from an HMO or insurance company, they tend to be more expensive than group plans.
- Government programs: Medicare provides basic healthcare for those 65 and up, while Medicaid is for the poor. The military offers programs, and some states have plans too.
- Group health insurance: Usually the most cost-effective, these plans are provided through an employer or professional association. Benefits paid under the insurance plan are not included in the employee’s gross income.
- When you’re between jobs, your former employer must continue coverage for up to 18 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Life Insurance and Disability Policies
If something unexpected happens, these plans can make a big difference. There are tax breaks, too:
- Group Term Life insurance: For coverage under $50,000 an employee is not taxed on premiums paid by an employer. Above that level, there’s still no tax on the first $50,000.
- A surprisingly high 13% of workers will become disabled between the prime earning ages of 35-64. Their expenses will increase while income shrinks. Disability coverage provides a back-up plan.
The prospect of a new job can be exciting. But take the time to crunch the numbers before signing on the dotted line.