How to Save for Retirement While Traveling as a Nurse
Travel nursing is more than a succession of 13-week assignments. It's an opportunity to save money for the future.
A third of the people polled in a recent survey said they aren't sure if they're going to meet their retirement goals, according to a July 31, 2002, article on wnbc.com. The poll conducted by St. Louis-based Maritz Research found 27% of those polled said it's not likely they'll be able to retire at the age they wanted to, and 26% said they hadn't saved anything for retirement.
Travel nurses might have had an excuse not to save in the past when travel companies rarely offered retirement benefits. But today's travel companies are emphasizing benefits packages to attract nurses. Not only are many providing the investment vehicles, but some are also giving away "free money," in the form of matching contributions, to those who invest. Combine 401K contributions with another investment option, such as an IRA, and you're paving the way for a comfortable retirement, experts say.
Mary Conaway, senior client manager, Cross Country TravCorps, says that about three-quarters of the company's travelers take advantage of the corporate 401K. A 401K plan is one that is usually managed by an employer. The plans are funded by employee contributions and, often, matching employer contributions.
Conaway adds that many Cross Country travelers also supplement their retirement savings with individual retirement accounts. With traditional IRAs, contributions are tax-deductible and earnings grow tax-deferred. A Roth IRA is an alternative to the traditional IRA vehicle. The Roth IRA is not tax-deductible, although earnings on it are tax-free. In other words, the person investing in the Roth IRA would pay taxes today but enjoy the IRA tax-free at retirement.
Retirement saving is key to the overall financial picture, says Mitchell Kurtz, a certified financial planner and vice president investments, Advest Inc., Garden City, NY.
Kurtz, a retirement planning specialist, says that it's imperative that money be put away for retirement.
He explains that corporations might offer a nonqualified retirement option for employees featuring IRAs or a qualified 401K. The nonqualified option does not require as much reporting and does not have to meet as many requirements.
Kurtz advises travelers to take advantage of investment vehicles even if companies don't match their contributions. Employees might have investment options when making their contributions to a corporate 401K. Kurtz says employees should focus on diversification, which could include purchasing some company stock and investing in mutual funds to offset risk. Travelers can find out more about their options by calling the "broker of record" on the plan, Kurtz says. Using a toll-free number or the Internet, employees can often access basic plan information about where their money might be allocated. They can then — depending on their risk tolerance and goals—set up their portfolios.
"It's easy to say you don't want to take on any risk, but the biggest risk is not investing at all. If we know we have a timeframe, we have to use that to our advantage and not be caught up in the short term," says Kurtz. "History has shown us that time in the market will lower risk and increase returns. So if you're in the equity markets, the longer the better."
IRAs are an option even if travelers are contributing to a 401K. Employees often benefit with being able to deduct the maximum allowed amount on their IRAs. And if travelers are 50 or older, they can contribute more and take advantage of the tax savings.
"For 2002, people are still able to make a contribution of $3,000 for the Roth or traditional IRA. Last year it was $2,000. Participants over 50 can put in $3,500. This is true up to 2004. In 2005, it goes up again," he says.
Kurtz says that for most people, there are three things that will determine financial quality of life after retirement. One is the savings that people accrue throughout their lives — outside of tax deferred and other retirement vehicles. Another is retirement savings. And the third is social security. "So the bulk of savings will come from the retirement savings," he says.
Travelers looking to maximize their investments without assuming too much risk should begin contributing early; lower their risk using diversification; and sit tight, without getting too caught up in the ups and downs of the market.
A snapshot of what some travel companies are offering:
Medical Staffing Network reports on its website that it has a 401K plan with 7% employer match and eligibility after to join the plan after one month of service.
American Mobile Healthcare travelers are immediately eligible to join the company's 401K plan, which includes matching employer contributions of $.50 for each dollar contributed after 1,000 hours of continued service.
Onward Healthcare offers its 401K plan to travelers on their first day of employment. Vesting occurs after 1,040 hours worked with a match of $.50 to every $1 contributed — up to 6% of pay.
Cross Country TravCorps allows travelers the opportunity to enroll after 90 days of employment and defer up to 20% of income tax-free. Cross Country also has a matching program after one year and 1,000 continuous hours.
