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Individual Retirement Account
“IRA”; a savings retirement account that can be opened and managed by an individual.
net salary
the amount received in a paycheck after deductions are taken for benefits and taxes; take home pay a type of retirement plan where an employer makes contributions toward a pool of funds set aside for an employee’s future benefit. “SDI”; a state-established compensation plan supporting employees unable to work due to an illness or injury, available in six states and Puerto Rico. a federal entitlement program of social insurance maintained by the U.S. government through employer and employee payments providing benefits for old age and disability. a retirement plan funded by contributions from the employee, employer, or both.
pension plan
State Disability Insurance Social Security
401K
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I. Compensation Isn’t Just a Salary! This lesson continues with the theme of earning an income . In your lifetime, your primary source for earning an income will be your employment — your job. The payment you receive for work is called compensation . Compensation consists of two things: salary and employee benefits . In employer-speak, these are rolled up into a compensation package . Let’s take a look inside typical and not-so-typical compensation packages. PRODUCT PREVIEW Salary The first thing you’ll find in a compensation package is a salary. Salary is the monetary portion of your compensation . It is usually referred to in annual terms such as “the salary for this position is $50,000 per year.” Salary is generally paid biweekly (every two weeks) in 26 even paychecks over the course of the year. There are different uses of the word salary. As a financially literate person you should know the distinctions between base salary, gross salary and net salary. Base Salary. Some jobs pay a salary plus the opportunity to earn additional money called incentive pay . This can be in the form of a bonus, overtime, or sales commission. Base salary is what the employee earns, not including incentive pay. When a salary is referred to in terms of base salary, it usually indicates there is the possibility of earning money over and above that amount. Many employers guarantee a COLA , which is a periodic cost of living Some sales jobs don’t include even a base salary. They are paid 100% on commission. If you don’t sell, you don’t make any money. Pass the Salt Please The word salary comes from the Latin word salarium which was the quota of salt given to Roman soldiers along with their pay. Fin Lit Trivia Fin Lit Trivia Fin Lit Trivia Fin
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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