First Job: Financial Planning

Maximize your compensation and benefits package

As you begin your career, optimizing your compensation and benefits can fuel your financial plan.

Compensation
 

Every job comes with a unique pay schedule and structure that’s important to understand as you update your financial plan.

Paycheck
 

Some employers pay every two weeks, while some pay on certain dates each month. The timing of your in-flows will impact how much you receive each month. As you begin your new job, be sure to reflect the timing of your pay in your budget so you can plan for how to cover your expenses and other priorities.

Bonuses
 

If you are eligible to receive bonuses, having a plan can help you make the most of this additional income.

How are bonuses structured?
 

If your company pays out bonuses at a specific time each year and determines the amount based on a formula, you may be able to estimate your payout in an annual cash flow plan and earmark the funds for specific savings or spending goals.

If your company bases bonus amounts on company performance and/or individual merit, it may be harder to predict. Because the exact amount may be uncertain, it’s best to hold off on planning for specifics until you know more.

How are taxes withheld on bonuses?
 

Bonuses are taxable as ordinary income, but the tax withholding on your bonus payment may be different from your regular income. Bonuses are treated as “supplemental wages” and are subject to special tax withholding rules.

For most bonuses, your employer may provide your payment in a separate check (which would be withheld at 22% for federal income tax purposes) or they may issue your bonus as part of your regular wages (in which case, it would be taxed based on the information in your W-4).

Your Goldman Sachs team can help you review your circumstances and ensure your tax plan accounts for any additional tax liability caused by your bonus.

Benefits package
 

The benefits available through your employer are part of your overall compensation package.

Many companies offer a variety of benefits to help attract and retain their employees. These may include:

• Paid time off
• Parental leave
• Insurance (health, life, disability)
• Retirement plan
• Relocation package
• Child care or back-up child care assistance
• Wellness perks (fitness centers, fitness reimbursement, counseling)

Retirement savings plan
 

The most common employer-sponsored retirement account is a 401(k). This account can support your retirement planning strategy and have tax planning benefits.

Many employers match employee contributions, up to a certain amount or percentage of your compensation. Some employers may also make an additional contribution to your account.

In most cases, you can set an amount to contribute from each paycheck and it goes in automatically. Contributing at least the amount your company will match ensures you are maximizing this benefit. Keep in mind, there are annual limits to how much you can contribute.

Health insurance
 

Your employer may offer a number of different health insurance plans that come with their own benefits and considerations. The specifics will depend on your employer’s plan design. As you review your options with your advisor, consider:

• Monthly premiums: The amount you pay every month (or every paycheck) to maintain your insurance coverage.
• Deductibles: The amount you must pay before insurance starts covering costs.
• Out-of-pocket maximums: The total amount you have to pay in a year (including your deductible, copays, and coinsurance) before insurance will cover 100% of costs.
• Copays: The amount you pay for a doctor’s appointment or a prescription.
• Coinsurance: After you hit your deductible but before you reach your out-of-pocket maximum, you are responsible for a certain percentage of each healthcare cost. 
• In-network vs out-of-network coverage: Insurance companies secure preferred rates with their own network of healthcare providers. Plans often set separate, higher copays and deductibles for out-of-network providers, hospitals, and other health systems. Typically, you save money by using in-network providers as much as possible. Some plans might not even provide any coverage for out-of-network providers.

Health savings account (HSA)
 

With some plans (typically a high-deductible health plan or “HDHP”), you have the option to fund an HSA to help cover costs before you hit your deductible. Some employers also  contribute to employees’ HSAs to help off-set the higher out-of-pocket costs associated with an HDHP.

In addition to helping you cover healthcare expenses, an HSA can be also used for wealth planning.

• Tax advantage. Automatic payroll contributions to your HSA are made before federal tax is taken out and reduce your taxable income. The funds in your HSA grow tax-free and withdrawals remain tax-free as long as you use the funds for a qualified medical expense.  
• Investable funds. Once you hit a certain amount in your HSA, you have the option to invest the money.

Additional benefits
 

Your employer may offer other benefits. Some common offerings include:

• Paid leave (e.g., paid time off, sick time, parental leave, bereavement leave)
• Life insurance
• Group legal benefits
• Accident insurance
• Employee assistance program or EAP (which can include benefits like mental health care and gym memberships)

Aligning your compensation and benefits with your goals

Consider your priorities and goals for the future as you develop a plan for your compensation and benefits. Your Goldman Sachs team can help you pinpoint your short- and long-term goals and look at your benefits through those lenses. 

Retirement strategies for early in your career

Saving and investing by contributing to your retirement accounts can become a financially healthy habit and you can benefit from compounding over a longer time frame. 

Retirement planning as you start your career

Time is on your side and the more you save early on, the more compounding will work in your favor.

Adopt a saving mindset

• Build a cash-flow plan to help you track all your sources of income, your expenses and your monthly savings.
• Make saving and investing part of your monthly plan to support your long-term goals. 401(k) contributions are made automatically through payroll deductions. If you also contribute to an IRA or other type of account, consider setting up automated contributions to keep yourself on track. 
• Balance your short- and long-term priorities. A financial plan works best when it works for you today and set you up for a successful future.

Two components of your retirement plan

• Your retirement account options. Two of the most common retirement accounts are 401(k)s and Individual Retirement Arrangements (IRAs).
  • 401(k)s plans are company-sponsored. Typically, you contribute a portion of each paycheck and your employer may match some or all of your contribution up to a specified percentage of your income. These plans typically have a limited selection of mutual funds that you may invest in.
  • IRAs are individual accounts, just as the name suggests. You may have more flexibility with your investment options, but, depending on your income, may not be able to contribute as much with the same tax benefits that 401(k)s offer.
• Investments. Review your portfolio with your advisor to make sure it has the right mix of aggressive (stocks) and conservative (bonds) investments that align with your personal risk tolerance.

As your life and finances evolve, work with your Goldman Sachs team to adjust your retirement strategy as needed. 

Guide to 401(k)s

A 401(k) is a retirement savings vehicle, sponsored by many employers as a company benefit. With investment and tax planning benefits, your 401(k) can support your overall financial strategy.

Contributing to your 401(k)
 

You can allocate a portion of your paychecks (usually a certain percentage) to your 401(k). These contributions will be taken out automatically by your employer.

Considerations around contributions:

• Contribution limits. The IRS sets limits on how much an individual can contribute to a 401(k) each year. For 2025, the individual annual contribution limit is $23,500.
• Employer match. Some employers may offer to match your 401(k) contributions up to a certain amount or percentage each year. The matching formula will vary from company to company. There may also be a vesting period on employer matches.  
• Automatic contribution increase. Your employer may offer an auto-escalation feature for your contributions. With this feature, you can set the percentage you would like to increase each year up to a maximum percentage of pay. For example, you could set your 401(k) contributions to increase by 1% each year until you reach 15%.

Tax treatment of 401(k)s
 

Traditional 401(k)

With a Traditional 401(k), you contribute pre-tax dollars through automatic payroll deductions. Your contributions are taken from your paycheck before taxes are calculated and taken out, which can help lower your taxable income.

Those pre-tax dollars are then put into your 401(k) where the money can grow tax deferred. You won’t have to pay taxes on your contributions and potential earnings. When you make a qualified withdrawal, the amount you take out will be taxable as ordinary income. Typically, a qualified withdrawal is one you take after you turn age 59 ½. You may be subject to an early withdrawal penalty if you take money out before then.

Roth 401(k)

A Roth 401(k) essentially operates the opposite way. You contribute to your 401(k) account with after-tax dollars. Because you paid taxes on the money up front, withdrawals from your Roth 401(k) are typically tax-free starting at the age of 59 ½ (so long as you’ve had the account for five years).

Prior to the age of 59 ½, withdrawals of earnings are generally subject to income tax and a 10% penalty.

401(k) investment options
 

When you set up a 401(k), you can usually choose one or more investment options from a limited menu. The number and variety of options will depend on your plan sponsor. If you don’t make an active decision, your employer may enroll you in a default option like a lifecycle or target-date fund, which automatically adjusts your mix of investments as you get closer to the “target date” for your retirement (typically the year you turn 65).

You can stick with the default option or choose to invest in other types of funds from the plan’s menu based on your risk tolerance and investment timeline.

Some 401(k) rules to keep in mind
 

Some 401(k) plan details, such as eligibility requirements, investment options, and vesting timeline, will vary from company to company.

401(k) withdrawal rules

You can generally start to withdraw from your 401(k) — Traditional or Roth — penalty-free when you’re 59 ½ or older. With a Roth 401(k), the account must also have been opened for at least five years.

In many cases, if you take money out before the age of 59 ½, you may have to pay federal income tax (and state, if applicable) and the 10% penalty on top of it.

401(k) RMD rules

A required minimum distribution (RMD) is the minimum amount of money you have to withdraw from certain types of retirement accounts each year after you’ve reached a specific age.

401(k) plans are subject to RMD rules. Starting in 2024, RMD rules no longer apply to Roth 401(k) plan participants while they are alive (but their beneficiaries may have to take RMDs after the account owner’s passing).

Keep in mind that RMDs are required by the IRS, and failure to take RMDs may result in penalties.

Your Goldman Sachs team can help you review your options to help you determine how a 401(k) could fit into your overall financial strategy. 

Guide to IRAs

Retirement may feel a long way off, but the earlier you start saving and investing, the more time your investments have to grow and compound. Individual retirement arrangements (IRAs) are a type of tax-advantaged account that may be part of your plan.

Overview of IRAs

Here is an overview of the three common types of IRAs — Traditional, Roth, and SEP. 

 

Keep in mind

• The annual IRA contribution limit refers to the total amount you can contribute across all of your IRAs in a year. In other words, for 2025, the total contribution you can make to any Traditional and Roth IRAs combined can’t be more than $7,000 ($8,000 if you’re 50 or older).
• For Roth IRAs specifically: Generally, you can withdraw your contributions tax-free and penalty-free at any time because you’ve already paid taxes on the funds. Withdrawals of your account earnings (which grow tax-deferred) before the age of 59 ½ or before the account is five years old are generally subject to income tax (unless it’s a qualified distribution) and to a 10% early withdrawal penalty (unless you qualify for an exception).
• For SEP IRAs specifically: Generally, as an employer, if you contribute to a SEP IRA for yourself and your eligible employees, you must contribute to everyone’s account equally (based on a percentage of salary). That means if you want to put 20% of your own salary into a SEP IRA, you must contribute 20% of any eligible employee’s salary to their SEP IRA, too. Contributions to SEP accounts are always 100% vested, or owned, by the employee.

 

Choosing an IRA that’s right for you

Depending on your priorities, you may wish to open more than one type of IRA. If you have questions about choosing an account(s) or your retirement strategy, speak with your Goldman Sachs team.