Is a Higher Salary or Better Benefits More Important in a Job?

Sometimes people decide to apply for a job because it is a high paying job. However, one should think about the long run of the job. Does it have good retirement benefits, does it offer good health and dental coverage, does it offer a 401K or an IRA? These are just as if not as important as the amount of the wages.

Here are a few tips if you are looking for a job.

First of all, what type of "Cafeteria" Plan does to job offer? These are the plans such as: flexible spending accounts (or those that pay pretax medical and dependent care expenses), medical and dental benefits, health savings accounts (employees pay on a pretax basis for medical expenses), term life insurance, and even adoption and assistance for dependent care.

If these are offered then the employee can have extra money because of lower out-of-pocket costs. Thus, they can start their own retirement accounts and nest eggs.

The next thing one wants to consider is what kind of retirement package is offered. A retirement plan can be of more importance than a higher salary unless the salary is high enough for one to put money into his/her retirement account. The best choice based on the retirement plan is to go with the company that will match your contribution. Say if you put in $1200 monthly, make sure that the employer also puts in $1200. In the long run you will be thankful you have this instead of getting a higher salary.

Another thing to look at is a 401K versus a defined benefit plan. Since in a defined benefit plan your benefits are not affected by the markets performance, this would be your best bet. Unless for some reason your employer files bankruptcy and goes out of business, your pension is pretty much a certain thing and guaranteed. Since these plans are protected by The Pension Guaranty Corporation your are pretty much safe even if the employer is unable to fund the pan. In this event, you may not get the entire amount but you will get a certain percentage of it.

If choosing jobs based on one of two defined-contribution plans look for the following things:

First of all if you choose the guaranteed contributions this means that the employer must put into the account as long as it is maintained or you switch jobs. Profit-sharing means that the employer does not have put money into the account. Therefore this makes the guaranteed contribution plan more appealing.

However, there is also the salary-deferred and matching contribution plans. Make sure that in these two plans that they do not have a cap on the deferral amount. If it does this could be that it is not enough to meet your retirement needs. Also, in a matching contribution plan check to see if the employer offers a higher matching plan.

Between the options of a qualified plan and an IRA based plan, it may be best to go with the qualified plan. This plan most of the time requires you leave the money untouched until you retire or change jobs. This can be very beneficial since it will force you to save the money and not try to take it out for some reason. Most IRA based plans allow for withdrawal of some of the money which means that you can take it out for non-necessary items and then find you do not have much left in the event of your retirement or job change.

In conclusion, a higher salary job may not be as important as a job with good benefits. So if you are given a choice of jobs make sure to take into consideration what will happen in the long haul and years to come. Will you be making enough money to start you own savings/retirement account if it is a high paying job, or is a little less money right now more important than having a nest egg upon retirement?

Source:

www.wate.com/global/story.asp?S=10236371