Analyzing the monetary component of employee benefits at leading US startups(compile.com)
compile.com
Analyzing the monetary component of employee benefits at leading US startups
https://www.compile.com/blog/insights/highly-valued-startups-generous-employers/
78 comments
It's more complicated than that. Insurance companies negotiate rates with providers. If you just show-up at some provider and pay out-of-pocket, with no insurance, the rate you pay can be vastly different (i.e. higher) than the rate they would charge a large insurance company.
I don't have the sense that this is much of a problem here in Canada, though I haven't researched it.
It's ironic that you have a Security Exchange Commission down there which will put you in jail for trading on an insider stock tip, yet they don't crack the fuck down on this sort of blatant anti-trust between health and insurance.
The US is such a cop against corruption abroad. I worked for a US firm for some years and had to regularly go through anti-corruption training.
Like, clean up your local messes first that affect the lives of millions of Americans at home, before worrying that someone working abroad is wining and dining some foreign official to get a deal and how that affects their democracy over there.
It's ironic that you have a Security Exchange Commission down there which will put you in jail for trading on an insider stock tip, yet they don't crack the fuck down on this sort of blatant anti-trust between health and insurance.
The US is such a cop against corruption abroad. I worked for a US firm for some years and had to regularly go through anti-corruption training.
Like, clean up your local messes first that affect the lives of millions of Americans at home, before worrying that someone working abroad is wining and dining some foreign official to get a deal and how that affects their democracy over there.
> You'd be crazy to buy into a de luxe health plan by yourself if you're self-employed. I go for something minimal: no drugs or routine dental, just emergency dental and medical: for situations you pray won't actually happen.
+1 to this entire concept.
Insurance is for dealing with catastrophes. Not to cover an annual physical or dental cleaning.
+1 to this entire concept.
Insurance is for dealing with catastrophes. Not to cover an annual physical or dental cleaning.
> Insurance is for dealing with catastrophes. Not to cover an annual physical or dental cleaning.
Correct, and that's why we're in the situation we're in today. Insurance turned from, well, insurance into a bizarre discount club.
The real solution to the high price of medial procedures and prescription drugs is to do away with insurance (as we know it today) and normalize paying out-of-pocket for procedures and drugs like we did so many years ago, and still do for car-related expenses. I have no doubt that if the auto insurance industry worked the way health care insurance worked a routine oil change would cost $3000 and the out-of-pocket expense would be anywhere from $30 to $200 depending on how good your coverage is.
But fortunately for us, that industry can't obfuscate prices and consumers are informed and can shop around. And the prices stay sane. Funny, that.
Correct, and that's why we're in the situation we're in today. Insurance turned from, well, insurance into a bizarre discount club.
The real solution to the high price of medial procedures and prescription drugs is to do away with insurance (as we know it today) and normalize paying out-of-pocket for procedures and drugs like we did so many years ago, and still do for car-related expenses. I have no doubt that if the auto insurance industry worked the way health care insurance worked a routine oil change would cost $3000 and the out-of-pocket expense would be anywhere from $30 to $200 depending on how good your coverage is.
But fortunately for us, that industry can't obfuscate prices and consumers are informed and can shop around. And the prices stay sane. Funny, that.
Also, you can do your own oil changes. Although in your alternate timeline, motor oil pricing probably works like prescription drug pricing.
Those annual checkups and cleanings demonstrably reduce the incidence of catastrophesome. People will get fewer checkups if they need to pay for them. Seems like a win win to me...
>> Those annual checkups and cleanings demonstrably reduce the incidence of catastrophes.
There is strong evidence that they actually do not.[1]
___________
http://jamanetwork.com/journals/jamainternalmedicine/article...
There is strong evidence that they actually do not.[1]
___________
http://jamanetwork.com/journals/jamainternalmedicine/article...
For teeth it clearly does. Way easier to fill a tiny cavity then do a root canal. For medical your article is likely right.
Sure it's dumb but in the U.S. employers pay for that stuff before income tax so the difference in price isn't as pronounced as you're implying.
But I'm frustrated that with all the time and energy put into healthcare over the last decade, no progress has been made in keeping health insurance coverage separate from employment status.
But I'm frustrated that with all the time and energy put into healthcare over the last decade, no progress has been made in keeping health insurance coverage separate from employment status.
I don't know about you down there in the US, but here in Canada, I can also pay for the premiums of a private health plan before income tax!
Self-employed people can write off payments for extended health. (There are some upper bounds on how much, but generous enough that I think I would have a full write off even with the rather frivolous plans out there.)
I did the number crunching that way, using pre-tax dollars. Of course, it looked better that way, but still a waste of money compared to giving your credit card to the dentist or whoever.
By the way, in British Columbia, if you make a decent income, you are required to pay some $1800 per year to the province for a health care plan called MSP. That is not a business expense you can deduct from your income as a self-employed person, nor a qualifying medical expense for a tax credit.
Self-employed people can write off payments for extended health. (There are some upper bounds on how much, but generous enough that I think I would have a full write off even with the rather frivolous plans out there.)
I did the number crunching that way, using pre-tax dollars. Of course, it looked better that way, but still a waste of money compared to giving your credit card to the dentist or whoever.
By the way, in British Columbia, if you make a decent income, you are required to pay some $1800 per year to the province for a health care plan called MSP. That is not a business expense you can deduct from your income as a self-employed person, nor a qualifying medical expense for a tax credit.
Some people in the USA have access to an HSA, a tax-free savings account where the contributions may be spent on just about any medical procedure.
Although an HSA generally can't be used for premiums (with a few exceptions).
And you have to have a high-deductible plan. I recommend this to all my (healthy) younger colleagues. Max out the HSA while they don't need the money, let it grow. When they're older, married, kids, and generally find medical expenses increasing you can switch to a standard plan, but still use the HSA money you've accumulated.
I'm at the age and activity level (and higher risk ones) where that's not a sound economic option for me, unfortunately, and didn't know about HSAs until health insurance started paying me more than I paid in (after a shoulder surgery next month, I think I'll have gotten more out of it than I've ever put in).
I'm at the age and activity level (and higher risk ones) where that's not a sound economic option for me, unfortunately, and didn't know about HSAs until health insurance started paying me more than I paid in (after a shoulder surgery next month, I think I'll have gotten more out of it than I've ever put in).
In addition to the tax point already raised, in the US health "insurance" plans act as collective bargaining entities. While you can always find anecdotes of people paying cash getting tremendous discounts, list prices are much much higher than what plans pay.
This only applies if everyone in the plan is using the routine dental, massages, and other benefits.
If, on average, only half of the plan members get dental check-ups and 10% get massages, the insurance company can still make the same 50% profit margin if your premium includes 75 cents per dollar towards dental and 15 cents per dollar towards massages.
Now, in the real world, fewer people use all these benefits, and far more is charged on the premiums. I suspect that the profit margin in the whole industry is much larger than 50%.
If, on average, only half of the plan members get dental check-ups and 10% get massages, the insurance company can still make the same 50% profit margin if your premium includes 75 cents per dollar towards dental and 15 cents per dollar towards massages.
Now, in the real world, fewer people use all these benefits, and far more is charged on the premiums. I suspect that the profit margin in the whole industry is much larger than 50%.
Agreed. It's worth noting that Sweden offers generous health insurance for its citizens, but they don't cover routine dental, because anything routine is not insurance.
My employer pays all but a token amount of my premiums ($5) and my copays are also token fees ($20 for an office visit, etc). I basically don't think about healthcare as a financial item.
If instead my employer decided to give me the money directly, my marginal tax rate would take roughly half of it.
The existing system works really well for well-compensated employees, and we vote. That's probably why it's been allowed to be on fire for everyone else for so long.
If instead my employer decided to give me the money directly, my marginal tax rate would take roughly half of it.
The existing system works really well for well-compensated employees, and we vote. That's probably why it's been allowed to be on fire for everyone else for so long.
Where this fails is that most insurance companies have pre-negotiated prices substantially lower than the sticker price.
Sometimes you can get a cash discount that is similar, but not always.
Sometimes you can get a cash discount that is similar, but not always.
The article attempts to define it, but he word "generous" here is a little vague. If I'm making above market rate in salary, I don't really care about 401k match. At a previous employer, I had five weeks of vacation. Salary was lower than what I made when I left, but I valued the extra time off more.
Money in a 401(k) is tax-advantaged, so it counts for more than an equal amount in salary.
In addition to match, other factors that matter a lot (but are harder to find out up front) include what funds are available and if after-tax contributions are allowed. Having access to low-cost funds is a huge plus, and after-tax contributions allow for the mega-backdoor Roth 401(k) strategy.
In addition to match, other factors that matter a lot (but are harder to find out up front) include what funds are available and if after-tax contributions are allowed. Having access to low-cost funds is a huge plus, and after-tax contributions allow for the mega-backdoor Roth 401(k) strategy.
I agree that a 401k match is better than the equivalent salary. Match is often a company policy and non-negotiable. Salary is negotiated per individual and usually more than once over the lifetime of a job, so it's easier to get more salary than more retirement match.
It's the pingpong tables that kill me. Why does this make me want to work there?
It's the pingpong tables that kill me. Why does this make me want to work there?
Ping-pong (foosball, etc.) tables make me less likely to want to work somewhere. At an old job the foosball table was near my desk. Whatever little amusement I got from playing foosball was dwarfed by the annoyance of other people playing foosball while I was trying to work. Ping-pong would be worse because I'd be trying to get things done while balls are flying through the air near me.
I used to work with an old engineer who said that every company he worked for that had a ping-pong table has closed up shop in the years since.
Also nice is the in-service rollover, so you can roll funds directly from the company's 401(k) plan into your self-directed IRA or whatever multiple times per year, instead of when you leave.
Good point. Another nice option is the ability to roll over an existing roll over IRA into a 401(k) -- not all plans have this option. This is important because having basis in an IRA negates a lot of the advantage of doing a backdoor Roth IRA, but if you can move all of those IRA funds into your 401(k) without any tax consequences, then you're golden.
Note that 401(k)-to-401(k) rollovers are generally always allowed.
Note that 401(k)-to-401(k) rollovers are generally always allowed.
> I don't really care about 401k match.
That doesn't make any sense. Even if you value retirement savings at zero, you can withdraw as soon as the match hits with a 10% penalty. Matching is free money.
That doesn't make any sense. Even if you value retirement savings at zero, you can withdraw as soon as the match hits with a 10% penalty. Matching is free money.
Sorry if that was unclear. I do value retirement savings and understand the advantage of a pre-tax retirement contribution.
What I mean to say is that salaryX + 3% 401k match is not as valuable as salaryX + 50% salaryX with no 401k match.
The extra salary you need to ignore a lack of 401k can be debated, but at some salary, I just don't care.
What I mean to say is that salaryX + 3% 401k match is not as valuable as salaryX + 50% salaryX with no 401k match.
The extra salary you need to ignore a lack of 401k can be debated, but at some salary, I just don't care.
The nice part about the match is it let's you get past the 401k contribution limit. YOU can only contribute something like 18k to your 401k, but your total 401k contribution can be much higher (~50k). So if YOU hit your 18k limit, the match is free 401k that you cannot get in another way.
It's hard to generalize without having the complete employee data that companies mostly keep private. Less salary could come with more vacations, a pension plan, better insurance coverage, or other perks. Even when job shopping, it can be hard to compare different compensation packages fairly. In the end though, it's all about negotiating (or lack thereof) your starting salary and knowing how much you're worth in the current market. I found it eye-opening when I discovered that your salary is based mostly on your starting salary and not how well you do in your job.
Very true. I know a lot of people who work at Mobileye (which Intel is purchasing for several billion dollars). They aren't allowed to leave the office for lunch.
The amount of abuse and low-quality-of-life we'll put up with in exchange for the fantasy of becoming rich is shocking. It's like buying scratch off lottery tickets for "intelligent professionals."
I don't think it is just money. I think that many of startups sell themselves to employees via "we are special and superior" feeling. That is way it works best when their employees don't socialize outside of work due to long hours. It is the same in games industry: people like the sound of "I am working on a game", so they put up with worst conditions and pretty much any position - interesting or not.
I don't think that's legal.
I've seen this behavior at work environments. It's not explicitly enforced, but if nobody else is leaving the office for lunch, then you don't want to be seen as one who does. Also works with staying late at the office, weekends, etc.
And then sometimes someone goes out for lunch and nothing bad happens. If the management are not psychopaths, it might be worth trying.
I understand how social pressure works and that there might be punishments for breaking unstated rules, but oftentimes someone has no choice, don't give a fck or is asperger enough not to get it aaand nothing bad happens.
Assumes you are not slacking the rest of the time obviously.
I understand how social pressure works and that there might be punishments for breaking unstated rules, but oftentimes someone has no choice, don't give a fck or is asperger enough not to get it aaand nothing bad happens.
Assumes you are not slacking the rest of the time obviously.
For some reason, our generation (GEN Y / Millennials) don't seem to care much for their pensions or retirement planning.
I think personally it is because of our atttitude towards retirement planning that majority of the companies today offer either no pension or almost-entirely employee-funded direct contribution based pension system.
My Dad drilled one concept into my head in my early days of career - everybody gets old and every old person wish to retire with pension.
I don't exclusively rely on my employer's pension plan for my retirement planning -- on top of it, I contribute to my state defined (bank managed) retirement funding.
I think personally it is because of our atttitude towards retirement planning that majority of the companies today offer either no pension or almost-entirely employee-funded direct contribution based pension system.
My Dad drilled one concept into my head in my early days of career - everybody gets old and every old person wish to retire with pension.
I don't exclusively rely on my employer's pension plan for my retirement planning -- on top of it, I contribute to my state defined (bank managed) retirement funding.
> For some reason, our generation (GEN Y / Millennials) don't seem to care much for...
I see a version of this statement all the time from us old people, sometimes it ends with "purchasing homes" or "full time long term careers at one company" say, or "retirement saving" as in your example.
I'm starting to suspect the reason just might be that the new generation doesn't actually have any fucking money or stable jobs. Just a theory.
I see a version of this statement all the time from us old people, sometimes it ends with "purchasing homes" or "full time long term careers at one company" say, or "retirement saving" as in your example.
I'm starting to suspect the reason just might be that the new generation doesn't actually have any fucking money or stable jobs. Just a theory.
This is mostly anecdotal, but I don't know anyone outside the SF bubble that has a good, stable job they're happy with and who I see working there for more than a decade. It's all entry-level jobs these days. Can't make a career out of that.
Respectfully, I think that's an unrealistically high standard to set. Having a job that is stable and engaging with long term potential is an exceedingly rare find for any generation. And entry-level jobs are how you make your career - you work your way up.
> "I'm starting to suspect the reason just might be that the new generation doesn't actually have any fucking money or stable jobs. Just a theory."
possibly in other contexts, but obviously not in this one. if what the article states is true, they are paid pretty well at these companies, but seemingly at the cost of no matching retirement plans.
possibly in other contexts, but obviously not in this one. if what the article states is true, they are paid pretty well at these companies, but seemingly at the cost of no matching retirement plans.
>For some reason, our generation (GEN Y / Millennials) don't seem to care much for their pensions or retirement planning.
Perhaps it is because they don't wan't to pour what little money they have into what could likely be a black hole. $3.4 trillion[1] in retirement savings were swindled in the Big Short of 2008, and no justice was done despite the massive amount of fraud going on. And then there is Social Security, which they will never see a penny of.
There's a reason Millennials typically aren't buying houses, having kids, and investing in retirement funds. It's because they can't afford it and/or the risk is too high.
[1]http://www.pbs.org/wgbh/frontline/article/how-much-did-the-f...
Perhaps it is because they don't wan't to pour what little money they have into what could likely be a black hole. $3.4 trillion[1] in retirement savings were swindled in the Big Short of 2008, and no justice was done despite the massive amount of fraud going on. And then there is Social Security, which they will never see a penny of.
There's a reason Millennials typically aren't buying houses, having kids, and investing in retirement funds. It's because they can't afford it and/or the risk is too high.
[1]http://www.pbs.org/wgbh/frontline/article/how-much-did-the-f...
The only way to lose your retirement savings in a crash like 2008 is to follow a maximally wrong investment strategy like cashing out the whole thing at the bottom of the market.
People who left their 401k investments alone, or drew them down slowly, have more value in their accounts now than they did before 2008.
People who left their 401k investments alone, or drew them down slowly, have more value in their accounts now than they did before 2008.
I think you have the cause reversed: I frequently hear millennials express interest in retirement planning but it's usually couched as an impossible dream after paying off student loans, housing, healthcare, etc. with jobs which are on average lower paying and less secure than even the previous generation. Pensions sound great but how many jobs offer them at all now, and with the financial stability to make that a safe long-term bet?
Student loans are being paid off first and everything retirement related I've ever been offered vests after 3+ years. In my experience companies seem to be absolutely against giving raises that even match cost of living every year. That means that I am pretty much garunteed to be out before anything vests, just to keep my quality of life stable
Yah but you can still put in your own pre-tax money. You are stuck in the BS high expense ratio funds that some slick "benefits consultant" sold to HR/management for those 2-3 years, but as soon as you leave, you can roll over those 401(k) funds into a self-directed Roth IRA.
For me personally and for a few others I know, we have loans with 6%+ rates. For one of my loans its over 8%. I've looked at refinancing, which ends up with me paying less money overall but paying a higher amount each month.means I would need more money saved up in my emergency fund and have a higher risk of not making payments if I lost my income.
This has led to me just taking the money I would have put into a 401k and using it to pay off loans, which provide a financial benefit equivalent to having an investment grow by the same rate as the loans interest rate. That lets me snowball my payments and pay off the debt faster and eventually I will move the debt payments over to retirement. I probably would be better off overall putting the money into a 401k or Roth IRA if I could guarantee I would never be out of a job, but having graduated into the workforce during the Great Depression Ive become pretty averse to holding any significant amount of debt after seeing people lose everything
This has led to me just taking the money I would have put into a 401k and using it to pay off loans, which provide a financial benefit equivalent to having an investment grow by the same rate as the loans interest rate. That lets me snowball my payments and pay off the debt faster and eventually I will move the debt payments over to retirement. I probably would be better off overall putting the money into a 401k or Roth IRA if I could guarantee I would never be out of a job, but having graduated into the workforce during the Great Depression Ive become pretty averse to holding any significant amount of debt after seeing people lose everything
The Roth IRA, at least, can be a part of your emergency fund strategy. Contributions can be withdrawn without penalty (not earnings) at any time. I have an actual e-fund (cd ladder, though the rates on renewal will be even worse so I need a new plan), but for a true catastrophe, that's part of my strategy. It also gives you tax free growth. I've only had one investment pan out well, but it hurt to see 15% of the gains go to taxes. If it had been in my IRA I could've kept that money for reinvesting.
> For some reason, our generation (GEN Y / Millennials) don't seem to care much for their pensions or retirement planning.
I don't think the average American is any different.
http://www.cnbc.com/2016/09/12/heres-how-much-the-average-am...
Nearly half have no retirement savings at all.
I don't think the average American is any different.
http://www.cnbc.com/2016/09/12/heres-how-much-the-average-am...
Nearly half have no retirement savings at all.
> For some reason, our generation (GEN Y / Millennials) don't seem to care much for their pensions or retirement planning.
Really, the generation that normalized the concept of FI/RE (financial independence/retire early) has no interest in retirement? I find that hard to believe. I think it's more to do with the segment that is burdened with high debt loads. Those with the income seem excessively interested in retirement, while those of more modest means just want to get ahead.
Really, the generation that normalized the concept of FI/RE (financial independence/retire early) has no interest in retirement? I find that hard to believe. I think it's more to do with the segment that is burdened with high debt loads. Those with the income seem excessively interested in retirement, while those of more modest means just want to get ahead.
> I think personally it is because of our atttitude towards retirement planning that majority of the companies today offer either no pension or almost-entirely employee-funded direct contribution based pension system.
I think it's a _little_ bit of that and a whole lot of "the government will take care of me." I mean it's a legitimate strategy to a lot of young voters. Too much student loan debt? Vote for Bernie, he'll nullify it. Broke at retirement age? Vote for Bernie 2.0, he's promising a healthy "basic income" for seniors, indexed to inflation.
I think it's a _little_ bit of that and a whole lot of "the government will take care of me." I mean it's a legitimate strategy to a lot of young voters. Too much student loan debt? Vote for Bernie, he'll nullify it. Broke at retirement age? Vote for Bernie 2.0, he's promising a healthy "basic income" for seniors, indexed to inflation.
Or they believe the Republic propaganda that the Social Services are broke and unsustainable, that anything they save is going to be stolen from them through taxes anyways, so there's no use saving.
As is usual, the answer is somewhere in the middle, which is being lost in this increasingly polarized world.
As is usual, the answer is somewhere in the middle, which is being lost in this increasingly polarized world.
Probably pre-occupied with paying off all of our debt.
We don't think that we'll live long enough to collect a pension. Social Security will be unfunded long before we ever get a chance to draw from it.
That's an even better reason to do additional retirement savings where possible, though.
I saw my parents' retirement funds gutted by a bunch of cokehead psychos in 2008. Its very difficult for my generation to have any faith in current systems functioning or even existing 10, 20, 30 years down the road.
If the current system doesn't exist in 10, 20, 30 years then you've lost very little by contributing a meager 10% of your income (assuming middle class incomes, 10% isn't much), to retirement contributions.
And if it is still around, then you'll be ahead of most of our peers.
Regarding your parents' funds, were these pensions or investment accounts? Pensions got screwed, yes. But unless your money was being managed poorly, IRAs and such should've been fine, though temporarily low, you didn't lose any shares in your investments, just value.
And if it is still around, then you'll be ahead of most of our peers.
Regarding your parents' funds, were these pensions or investment accounts? Pensions got screwed, yes. But unless your money was being managed poorly, IRAs and such should've been fine, though temporarily low, you didn't lose any shares in your investments, just value.
Yeah, I think an important thing is to get your eggs our of one basket (your employer). Especially with how often this gen moves between them.
401k -> IRA -> Low cost index funds are a reasonable stepping block.
401k -> IRA -> Low cost index funds are a reasonable stepping block.
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Don't pensions tends to have issues with behind underfunded?
I'd rather not have risks just swept under the rug.
I'd rather not have risks just swept under the rug.
Some people on this thread are using "pensions" (which typically refers to a defined benefit pension based on number of years of service at a company) to also mean 401-Ks (defined contribution). Pensions have become pretty uncommon in the private sector and they're largely unknown in US tech companies at this point.
401-Ks have no underfunding problem. Of course, they expose you to market risk directly.
401-Ks have no underfunding problem. Of course, they expose you to market risk directly.
No, this is your money. 401k (including matching $) is paid into an account you control. You can use it anytime, but if you do before some age (65?) there will be tax penalties.
59 1/2. For Traditional 401(k), you owe the taxes on it and an additional penalty if you withdraw early. You're required to take distributions from it starting at 70 (69 1/2?), because the feds want their tax dollars.
Roth 401(k) plans are less common, you'd owe a penalty but not taxes since it's pre-tax money. No mandatory distributions because they've already gotten your money.
IRAs are the same. HSAs (mentioned elsewhere) are tax-free if distributions are spent on medical costs. For non-medical costs, you owe taxes and a penalty. After age 65 you'd only owe taxes.
Roth 401(k) plans are less common, you'd owe a penalty but not taxes since it's pre-tax money. No mandatory distributions because they've already gotten your money.
IRAs are the same. HSAs (mentioned elsewhere) are tax-free if distributions are spent on medical costs. For non-medical costs, you owe taxes and a penalty. After age 65 you'd only owe taxes.
After seeing the collapse of so many pension systems in the news, I would run not walk away from any employer-funded pension system.
Give me the money so I can put it someplace where you won't spend it on this year's budget shortfall, thanks.
Give me the money so I can put it someplace where you won't spend it on this year's budget shortfall, thanks.
Proper title:
Highly valued startups aren't generous employers (when viewed along a single axis)
Highly valued startups aren't generous employers (when viewed along a single axis)
I liked the clickbait title, why did it get changed to something more neutral :(
Super surprised to see that tech employees aren't funding their 401K the full $18,000 per year. :(
The conventional wisdom is to first max your 401k up to your employer's match, then max your Roth IRA contribution if you're eligible. After that, the optimal savings path depends on your priorities.
If you're living in a high COL city for work, a Roth seems silly. My marginal tax rate (keeping roughly 55% of my bonuses) is decidedly out of whack with my standard of living (barely affording a 1BR). I'll do whatever I can to tax-shelter money in this environment.
In retirement, I can raise my standard of living while halving my spending by relocating to somewhere that's not a high-end job center. That would mean a much lower income tax bracket.
In retirement, I can raise my standard of living while halving my spending by relocating to somewhere that's not a high-end job center. That would mean a much lower income tax bracket.
Whether you put money in a Roth account (Roth IRA or Roth 401k) depends on your future earnings potential. If you think you will earn more in the future than you do today, it makes sense to contribute to a Roth. The reason is that you pay less taxes now than you will in the future, and money inside Roth accounts grows tax-free.
I don't quite understand how your current city's cost-of-living factors into this equation. At the end of the day your investment choices are primarily governed by your income tax bracket now vs. in the future. This holds true regardless of whether you are planning to retire in a low cost-of-living city - which is something everyone should plan to do anyway regardless of the type of retirement account they have.
I don't quite understand how your current city's cost-of-living factors into this equation. At the end of the day your investment choices are primarily governed by your income tax bracket now vs. in the future. This holds true regardless of whether you are planning to retire in a low cost-of-living city - which is something everyone should plan to do anyway regardless of the type of retirement account they have.
I expect my 401k withdrawals in retirement to be much smaller (in real terms) than my present income, and therefore taxed at a lower rate, as my salary is heavily inflated above what my standard of living would require due to 1) local rents, and 2) my savings rate.
With sane housing priced and no need to save, I could live the same way on about $45k/yr less.
With sane housing priced and no need to save, I could live the same way on about $45k/yr less.
A Roth is often the only option for high-income workers (after maxing out a 401(k)). Traditional IRAs have an income limit of $72k for individuals and $119k for families in 2017; if you make more than this, none of your contributions are deductible or in any way tax advantaged.
Roth IRAs have income limits as well for contributions, but as long as backdoor contributions are allowed, you can still manage to contribute regardless of your income. Saving some on taxes coming out is better than not saving anything on taxes whatsoever.
In this situation though, a 401(k) is almost certainly a higher priority. But once that's maxed, an HSA (as a retirement vehicle) and Roth IRA are still very good.
Roth IRAs have income limits as well for contributions, but as long as backdoor contributions are allowed, you can still manage to contribute regardless of your income. Saving some on taxes coming out is better than not saving anything on taxes whatsoever.
In this situation though, a 401(k) is almost certainly a higher priority. But once that's maxed, an HSA (as a retirement vehicle) and Roth IRA are still very good.
Any reasonably good employer-offered 401(k) plan will include a Roth option.
Company managers have a responsibility to consider numerous factors when designing a total rewards strategy (pay + benefits + career opportunities/work environment). Among these is to deliver rewards using as efficient a currency as possible. When the perceived value of a pay element (or benefit program or perquisite) exceeds the economic value, then a company should deliver more of the total reward opportunity using such currency. Many companies have determined that perquisites are valued more highly by employees than the economic cost to deliver such perks. (Same for the perceived value vs. economic value of equity compensation.) By "underweighting" employee benefits, perhaps companies are actually choosing to deliver their total reward opportunity more efficiently than those companies which have more "market competitive" benefit programs.
Differentiation of HR strategy is not automatically wrong.
These charts are just bad data visualizations, the legends are uninformative, and this article is very light on commentary. While I can see how one could argue these support the author's brief conclusions, overall this looks like too simple and shallow of an analysis to say anything really valuable.
The deal is stock options, a 4 year vest and a clear IPO at the end. All of the companies doing/did well (tech wise) IPO'd < 10 years after founding.
Amazon (3 years), Microsoft (9 years), Google (6 years), Facebook (8 years), Yahoo (1 year), Netflix (5 years).
We may disparage Yahoo but the initial formula was right.
Amazon (3 years), Microsoft (9 years), Google (6 years), Facebook (8 years), Yahoo (1 year), Netflix (5 years).
We may disparage Yahoo but the initial formula was right.
You'd be crazy to buy into a de luxe health plan by yourself if you're self-employed. I go for something minimal: no drugs or routine dental, just emergency dental and medical: for situations you pray won't actually happen.
It's so much cheaper to just pay for the massage or to have a cavity filled, it's not even funny.