How to Navigate Benefits at Your First Job Out of College

Starting your first job out of college is exciting—a major stepping stone into adulthood. For a first-timer, the benefits that come from your new company can be confusing. You can navigate all of the benefits offered at your new job by understanding 401(k)s, choosing the right health insurance, and capitalizing on travel rewards.

All About 401(k)s

If your employer offers a 401(k) plan, you can choose to contribute a portion of each paycheck to your plan. According to the NARPP, the benefits of investing in a 401(k) include creating retirement savings that you can deduct from your taxes. However, when you take money out of your 401(k), you are taxed the current income tax. There are penalties for withdrawing from your plan before 72, so keep in mind you must hit the sweet spot to maximize your benefits. Investing early in your 401(k) will start a snowball effect on the road to wealth and establish a comfortable lifestyle when you retire.

Choosing Health Insurance

When starting, it is important to ask what, if any, insurance plans they offer. According to Insurance Center Associates, after 26 you’ll no longer be eligible to stay on your parents’ insurance. Hence why it is important to start exploring options early on.

Insurance plans include indemnity of fee-for-service (POS) plans where the insurance company pays for a set portion of your medical bills and you pay the rest. Health Maintenance Organizations (HMOs) is an association of healthcare professionals and medical facilities that have a fixed health care service package. Preferred provider organizations (PPOs) allow you to go to any healthcare professional outside of your network when necessary, although your benefits will be less.

Travel Rewards

If your job currently requires or will require traveling in the future, it is a good idea to get a credit card that will help you redeem points on your travel purchases. According to Money Crashers, signing up for frequent flyer miles will also help you stockpile rewards for seating upgrades and potentially free flights in the future that you can use to go on vacation. While most travel expenses are reimbursed, it helps to take advantage of the money you do spend to reward yourself in the future.

Your first introduction to the professional work environment is crucial for your career success. Maximizing the benefits offered is crucial for your financial success. Understand 401(k)s, choose health insurance, and capitalize travel rewards to gain the most from your first job.

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