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Travel nursing is perfect for the wandering soul, but even the most adventurous spirits hope to settle into retirement someday. In order to accomplish this, many of years of planning and saving must be done, starting as soon as possible. And because travel nurses take a non-traditional career path, beginning and ending employer relationships more frequently than many others, a high degree of vigilance is necessary. Read below for some tips on how to stay on top of travel nurse retirement planning.
Please note: While we have some of the most experienced recruiters and other staff members in the travel nursing industry, we at TNAA are not licensed financial advisers. The advice below is for informational purposes only and we suggest consulting a professional before making any decisions about your financial or retirement planning.
It’s Never Too Soon to Start
We know travel nurses come in all ages, but many are between the ages of 25-29. Although retirement couldn’t sound any farther away to this age group, it’s very important to begin saving as soon as possible. Why start socking your hard-earned money away when there’s fun to be had now? Compound earnings, that’s why. The money you save will earn more money over time, so you want to give it as much time as possible to get to work!
For example, contributing $200 per month to a retirement account from age 25 until age 65, a total of $96,000, would yield a total of $402,481 assuming 6% rate of return compounded monthly. Contributing $200 per month to a retirement account from age 35 until age 65, a total of $72,000, would yield a total of $203,112 assuming the same conditions. Many factors vary over time, including contribution amount and rate of return, but this simple example shows the power of compound earnings and why it pays to start as soon as you can.
What Retirement Resources Are Available to Travelers?
Each agency offers different retirement resources to its travelers, so check with your recruiter to find out more. Some offer 401(k) plans, which allow both the employee and the employer to make tax-deferred contributions. Tax-deferred plans do not require participants to pay income tax on the money they contribute until they withdraw it. Some agencies offer a 401(k) matching program, where the company matches each employee’s contributions up to a certain percentage.
This basically gives you “free” money from your employer in the form of a match, but one thing to watch out for is something called the vesting schedule. Being “vested” in the plan means that 100% of the money in the plan belongs to you, no matter if it was originally contributed by you or the employer. Many times, employers will set a vesting date of one of more years to encourage employees to stay with the company. For travel nurses who don’t plan to stay with the same agency for long, this means forfeiting any matches you’ve received when you leave the agency.
At TNAA, we offer our nurses personalized guidance through Principal Financial Group. Principal’s licensed advisers are available through a dedicated help line to assist our travelers in setting up a variety of Individual Retirement Accounts (IRAs) suited to each traveler’s unique needs. The IRA is yours to contribute to, regardless of employer, and all contributions belong 100% to the traveler.
Managing Multiple Accounts
Once you’ve held several jobs with different companies, you may find that you have a number of different retirement accounts open. What should you do with your money? In most cases, you have four options:
1. Leave the money where it is.
There’s nothing wrong with having multiple accounts open, and many times you can choose to leave your money alone. In some cases, you will have to move your money to another account if your employer will no longer allow you to stay in the plan.
2. Move the money to your new employer’s plan.
If you’re working with a company that offers an employer-sponsored retirement plan and you’ve opted to participate, you can transfer money from other accounts into this new account. Always check with your plan’s advisers for the best way to do this.
3. Move the money to an IRA account.
You can also choose to move your money to an IRA with the investment options of your choosing. By using a “direct rollover” to transfer your money, you can avoid getting hit with taxes.
4. Cash out and take the money as a distribution.
Most people agree that this is a bad idea because of the steep tax penalties you’ll pay if you make a withdrawal before retirement age. But, it’s an option!
Saving for retirement can make anyone’s head spin – no matter what career you’ve chosen! As a travel nurse, it pays to stay on top of your savings plan as you move from place to place. Even though it may seem a long way off, setting aside a few dollars from each paycheck now is a painless way to prepare for one of life’s biggest adventures – retirement.