I’m starting a new job soon and we just found out my wife is expecting. The company offers some paternity leave but I want to try for more. What are some negotiation tactics for making this happen? A friend suggested one option, if it comes for it, is ask for a smaller percentage bonus in exchange for more leave. But what are some options I have? — Steve, via email
The new baby and new job are both exciting developments – the only unfortunate bit is that they’re so close together. If you had been at the company for a full year before your little one arrived, you might be eligible for 12 weeks of leave – albeit the unpaid variety – under the Family and Medical Leave Act. Since you’re new to the job, however, your company isn’t bound by that provision.
It sounds like your new employer’s policy, like that of many businesses, is fairly stingy when it comes to time off for new dads. There are certainly ways to negotiate for more, although your friend’s idea may not be the best strategy.
Bonuses are, by their nature, performance-driven. So, trading that form of compensation for extra paternity leave reinforces the mistaken belief that you’ll be less valuable because you want to help your spouse manage a very exciting, but stressful, period in your lives.
“Spending quality time with your family should not detract from your worth as an employee,” says Ferne Traeger, president of Beyond the Boardroom, a consulting firm that helps individuals and employers navigate life transitions.
A growing body of research suggests that the opposite is actually true. In a study of California’s groundbreaking Paid Family Leave program, for instance, 89 percent of employers reported that the law had either a positive effect or neutral impact on productivity.
A separate study found that companies with more generous paternity leave policies achieved greater employee retention and job satisfaction levels. So the truth is, you taking time off is really in the company’s best interests.
Instead of trading off benefits, Traeger suggests meeting with your HR department and seeing what your options are. Often, the organization might be open to arrangements that aren’t formally codified in its benefits literature – especially if other dads have already pushed for similar flexibility. “If you’re fortunate enough to join a group where there are new parents, that’s typically better than if you’re the pioneer,” says Traeger.
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For example, your employer might be open to you working from home a couple days a week for a given period of time, especially if you can prove that your output isn’t suffering as a result of the new locale. That way, you’re able to spend more time at home, but can still feel like you’re contributing to your company. Whenever you can present these things as a win-win for both you and your employer, your odds of success will only improve.
It’s great that you see the value of bonding with your child at this crucial stage in their lives. Studies have linked paternity leave with better educational outcomes and improved social and psychological development for children. Men taking time off also does a lot of good for their wives, who are shown to have greater overall well-being and fewer instances of postpartum depression as a result.
Congratulations on the pregnancy, and best of luck securing reasonable accommodations from your new company.
I’m turning 37 next month and my wife and I are pretty far behind in our retirement planning. By that I mean we have next to nothing. Now, we did have some investments — 401(k), savings — but we took them out to buy out house (it was a good investment, because, all told, our monthly payments only grew $200 more than our monthly rent). We also have about $35K left in student loans. My company matches 401(k) and I put a percentage of my paycheck in each month. But: small potatoes. How can I get up to speed on my retirement? Should I pay off the debt first? Should I just hope to win the lottery? — Chase, via email.
That house might have seemed like a great deal at the time, but if it stripped you of your retirement savings and prevents you from putting more than a few bucks into your 401(k), it sure sounds like you have a financial albatross around your neck. You can wiggle free, but it’ll take some sacrifices.
Let’s back up a bit and address the big question here: how much you need to save in order to make up for lost time. To get an accurate read on that, you really need a sit-down with a financial advisor. But for the average investor, the rule of thumb that Fidelity Investments offers is pretty handy. According to their model, you should have three times your annual salary by the time you reach age 40. In your case, that’s a mere three years away.
If you start investing early in your career and don’t touch your account, putting away roughly 15 percent of your gross income should keep you on pace to retire in your mid-60s. Since you’re restarting from basically zero, however, you have to find a way to be even more aggressive in your saving (a good investment calculator, like this one from Bankrate can help you figure out your target savings rate). That means carefully eliminating any fat from your budget, like a butcher carving out a prime filet.
For most people, housing represents the biggest monthly expense. So the obvious move – and, admittedly, the most painful – is to downsize or find a neighborhood that’s a little less expensive. Then take the money you save each month and tuck it into your workplace plan. If you can find another expense category that’ll free up a big pile of cash, more power to you. But for most folks, cutting down on mortgage and rent payments is where it’s at.
Keep in mind, it’s not just how much you put away, but how you invest. At your age, you can afford to be on the aggressive side with your investments. Vanguard’s 2050 retirement fund, for example, is 90 percent stocks (including 35 percent in international stocks). You’ll gradually want to ween off the equities as you get older – converting about one percent of your portfolio a year into bonds – but for now you have time to ride out the inevitable ups and downs of the market.
Of course, you also want to stick with tax-advantaged accounts if you can. As of 2019, your 401k contributions are capped out at $19,000. But if you’re able to contribute more than that, you can tuck another $6,000 a year into a Roth IRA that offers tax-free withdrawals in retirement.
As for sacrificing retirement contributions to eliminate your student debt? I probably wouldn’t. I don’t know the specifics of your situation, but a lot of people are paying down federal loans with interest rates under 5 percent. And because you can deduct up to $2,500 in student loan interest whether you itemize your deductions or not, you’re effectively paying a lower rate than that.
Even if the stock market doesn’t live up to the 10 percent average return it’s given us historically, your investments are, over the long haul, likely to grow at a faster rate than your loan interest. You’re better off paying the amount that’s due each month and diverting whatever you can into the 401(k). Good luck.
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