Vanguard Head of Global Total Rewards: How to Prioritize Health and Finances During a Career Change

Over the past few years, we have all overcome a series of increasingly complex challenges.
A global pandemic, social and economic crosswinds, and newly flexible work arrangements have had direct implications for how we view work, our careers, and our livelihoods.

According to recent data compiled by the Bureau of Labor Statistics, the proportion of unemployed workers in September who voluntarily left their jobs stood at 15.9%, a 30-year high. At the heart of this historic exodus is a unique focus on the role our workplaces play in our physical, emotional and mental well-being.

That’s why great benefits have never been more important in determining whether we continue to stay with our current employer or join the millions of people who have been looking for new jobs in a job market teeming with opportunity. In my role leading Vanguard Global Total Rewards since 2019, I’ve seen firsthand the value a benefits suite can have in having a profound impact during the times that matter most to our team (employees ), such as the management of mental health problems. , become a parent or retire.

While the brilliance of unlimited paid time off, on-site yoga classes, free lunch, and other unique perks may catch your eye if you’re considering a career change, recognize and also consider perks that will have a significant impact on your health. and financial well-being. Out-of-the-box benefits can have a certain appeal and can certainly add to our lives, but it’s important to avoid getting carried away with the moment without also considering the long-term value of “traditional” benefits. » such as industry-leading benefits. retirement packages and health savings plans. Indeed, not doing so could have a lasting effect on your future financial freedom.

Finding the Right Match (Retirement)

Contrary to popular belief today, great benefits aren’t just about meeting today’s needs, they’re also preparing you for future success. The Federal Reserve reports that a quarter of American adults have no retirement savings. And, of those with savings, only 40% are on track for retirement.

The amount needed to save for retirement depends on several individual factors, including expected retirement age, lifestyle, savings and retirement income. However, a good rule of thumb is to save at least 12-15% of your salary to meet your retirement goals.

So what does it mean if you’re considering a career change? It is essential to understand that while many potential employers offer a retirement savings plan, not all plans are created equal. In fact, employer matches, unequal contributions, eligibility, and vesting schedules can vary significantly.

According to our research, most company 401(k) plans offer a match between 3% and 6% of participants’ salary, with an average match of 4.5%. Of these pension plans, only 36% offer both employer matching and additional employer contributions.

When evaluating your next career opportunity, you will be well served by researching and evaluating a future employer’s retirement savings plans and their ability to meet your long-term financial goals.

As a company with a mission to help investors achieve investment success, Vanguard, for example, offers its team (employees) a generous matching and contribution program that has resulted in savings plan balances- pension above 2.5 times the national average, according to How America Saves 2022.

Maximize flexibility and savings with an HSA

While no one wanna to think about future health needs, proactive thinking will help ensure you are well prepared when the time comes. The average couple is expected to need close to $300,000 in retirement to pay for personal healthcare expenses only, according to the Employee Benefits Research Institute. As rising healthcare costs and inflation continue to be a concern, a Health Savings Account (HSA) can be a great option if you’re looking to avoid dipping into your retirement accounts for finance health expenditure.

An HSA works like a tax-advantaged savings account outside of a workplace retirement plan where you can save money to pay for medical expenses now. and in the future. It is important to note that all interest earned is tax-deferred and withdrawals are tax exempt for qualifying medical expenses. These tax advantages, combined with the continued rollover of an HSA and the ability to invest the balance, make it an excellent vehicle for increasing your retirement savings.

But like a company’s retirement benefits, the value of an HSA can depend on a few factors, including the initial employer contribution and consideration. Both can increase your ability to fund your health care expenses and your long-term retirement savings goals.

As HSA dues are on the rise, you should increasingly ask potential employers how their health benefits will help you succeed in the future. According to Willis Tower Watson’s 2021 Healthcare Best Practices Employer Survey, of financial services companies that contribute to an HSA, only 9% offer an HSA matching contribution. Of note, Vanguard contributes up to $2,450 in annual HSA contributions to individual enrollees, which is approximately 5 times the median contribution provided by other financial services companies, according to the 2021 Willis Tower Watson survey.

Benefits for your future

As this new focus on overall wellness shows no signs of slowing down, benefits and perks are sure to remain a critical factor in deciding whether to stay with a company or sign the dotted line with a potential employer. Factors such as company culture, compensation, vacation days, and unique perks are important considerations when considering your next career move, but they shouldn’t come at the expense of your future needs. in health and finance.

Although retirement may seem like a distant concern, effective financial planning and preparation can (in most cases) only be accomplished in advance and is often fundamental to fostering good physical, mental and financial well-being now and in the future.

In the midst of a robust and deliberate talent market, it is essential to consider retirement when making the final decision. Understanding your all-inclusive benefits, now and for your future, can help you have peace of mind now, as well as safety, security and fulfillment for years to come.

[Disclosure: HSA tax implications: You will be responsible for paying any federal, state, local, or foreign taxes on a nonqualified distribution or withdrawal. Nonqualified withdrawals made before age 65 may be subject to a 20% federal penalty tax.]

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