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2 ways to prioritize health & financial needs when considering a career change, from the head of global total rewards for one of the world’s leading asset managers

November 12, 2022, 12:00 PM UTC
Alexandra Gotts
Alexandra Gotts, Vanguard Head of Global Total Rewards.
Vanguard

For the past few years, we’ve all weathered 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 individuals unemployed 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 so important in determining whether we continue to stay with our current employer, or join the millions that have sought out a new job in a labor market that is flush with opportunity. In my role leading Vanguard Global Total Rewards since 2019, I’ve seen firsthand the value that a range of employee benefits can have in making a profound impact during the moments that matter most to our crew (employees), such as managing mental health issues, becoming a parent, or embarking on retirement. 

While the sparkle 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 move, also recognize and consider benefits that will have a significant impact on your health and financial wellness. Out-of-the-box perks may have some allure and can certainly be additive to our lives, but it’s important to avoid getting swept up in the moment without also considering the long-term value of “traditional” benefits such as industry-leading retirement packages and health savings plans. Indeed, failing to do so could have a lasting effect on your future financial freedom.  

Looking for the right (retirement) match 

Contrary to today’s popular belief, stellar employee benefits aren’t just about solving for present-day needs – they’re also about setting you up 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 pay to meet retirement goals.  

So, what does this mean if you’re considering a career move? It’s critical to understand that while many prospective employers offer a retirement savings plan, not all plans are created equal. In fact, employer matches, non-matching contributions, eligibility, and vesting schedules can vary greatly.  

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%. Out of those retirement plans, only 36% provide both an employer match 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 deliver on your long-term financial goals.  

As a company whose mission is to help investors achieve investment success, Vanguard, for example, offers our crew (employees) a generous match and contribution program which has resulted in retirement savings plan balances over 2.5x the national average, according to How America Saves 2022. 

Maximizing flexibility and savings with an HSA 

While no one wants to think about future health needs, thinking proactively will help ensure you’re well prepared when the time comes. It’s expected that an average couple will need nearly $300,000 in retirement to pay for out-of-pocket healthcare expenses alone, according to Employee Benefit Research Institute. As rising healthcare costs and inflation continue to be a cause for concern, a health savings account (HSA) can be a great option if you’re looking to avoid dipping into your retirement accounts to fund healthcare expenses.  

An HSA operates as a tax-advantaged savings account outside of a workplace retirement plan where you can save money to pay for medical costs now and in the future. Importantly, all interest earned is tax-deferred, and withdrawals are tax-free for eligible medical expenses. These tax advantages, combined with an HSA’s continuous rollover and the ability to invest the balance, make it a great vehicle to supercharge your retirement savings. 

But similar to a company’s retirement benefits, the value of an HSA can depend on a few factors, including employer seed contribution and match. Both can boost your ability to fund healthcare expenses and long-term retirement savings goals.  

While HSA contributions are on the rise, you should increasingly be asking prospective employers how their health benefits will set you up for future success. According to Willis Tower Watson’s 2021 Best Practices in Health Care Employer Survey, of financial services firms that contribute to an HSA, only 9% offer an HSA contribution match. To note, Vanguard contributes up to $2,450 in annual HSA contributions to individual enrollees, which is approximately 5X the median contribution provided by other financial services firms, according to the Willis Tower Watson 2021 survey.  

Benefits for your future 

As this newfound focus on overall well-being shows no signs of slowing down, benefit packages and perks will assuredly remain a critical factor in the decision to remain with a company, or sign the dotted line with a prospective employer. Factors such as company culture, compensation, vacation days, and unique perks are important considerations when considering your next career move — but they should not come at the expense of your future health and financial needs.  

While retirement could seem to be a far-away concern — effectively planning and financially preparing for it can (in most cases) only be accomplished in advance, and is often fundamental to fostering sound physical, mental, and financial well-being now and in the future.  

Amid a robust and deliberate talent market, it’s mission critical to consider retirement when making a final decision. Understanding your all-inclusive benefits, both now and for your future can help provide peace of mind now, plus safety, security, and fulfillment for years ahead.  

[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.]

Alexandra Gotts is Vanguard’s head of global total rewards. This article is not intended as investment advice.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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