Maximizing Your Workplace Benefits
Some of you might have heard me say this before, but you need to make sure that you’re getting the most out of the benefits that your employer is offering you. Some of these things might not cost you a dime, and others might cost you MORE if you don’t pay attention to how to maximize them! There are three areas that I’ll focus on: your employer-sponsored retirement plan, healthcare plan, and the “extra” goodies that you’ll want to watch out for.
Retirement Plan
Most employers offer a retirement plan for at least some of their employees. Your employer might offer a 401(k), 403(b), 457, pension or SIMPLE plan.
· Employer match
Whatever plan your employer offers, find out if your employer matches the contributions that you make to the retirement plan. If they do, figure out how to achieve the maximum amount of match because that is completely free money! Getting more money just for saving money? Cha-ching!
· Tax savings
Unless you’re making a Roth contribution, your contribution to your employer-sponsored retirement plan is a dollar-for-dollar reduction of your taxable income. So saving more potentially means paying less in taxes (which means more money stays in your pockets).
· Plan loans
The money that you’ve saved in your account is yours. There are age restrictions on when you can take a distribution, but if you get in a bind and need some cash you can borrow money from your plan balance instead of from the bank. The best part is that you pay yourself the interest on the loan!
Healthcare Plan
For some reason in this country we’ve tied our health insurance in large part to our job. It might surprise you to find out that your employer pays for a portion of your healthcare premiums.
· Compare cost of being on one spouse’s plan vs separate
Some families don’t know this, but it’s most likely cheaper for both spouses to be covered by one partner’s healthcare than for the two partners to have their own plan. Also, keep in mind that you don’t necessarily need to be married to share a health plan. Check with whomever is in charge of managing your health plan (usually Human Resources) to find out what the rules and costs are for your plans.
· Don’t fear the High Deductible Health Plan
When High Deductible Health Plans or HDHPs came on the scene, they took some getting used to. What we’ve discovered is that lower monthly premiums with higher deductibles, and moderate out of pocket maximums has meant more money in the pockets of low- and high-utilizers of healthcare.
· HSAs are a savings vehicle
With HDHPs we’ve received Health Savings Accounts or HSAs for short. HSAs are tax-advantaged savings accounts that let you put away pre-tax money that is never taxed as long as it is used for medical expenses. Like an IRA, contributions to an HSA can be made until the tax-filing deadline for that year (e.g. contributions for 2022 can be made until the tax-filing deadline in April of 2023). The best part? You get to keep any unused balance at the end of the year. Pretty rad, huh?
The Other Goods
Every employer has a different policy on the below benefits. If you’re considering offers from multiple employers and you can’t decide, be sure to understand which employer is more competitive in these areas.
· Life Insurance
Group term insurance is the cheapest way to get life insurance and standard death benefits often do not require proof of insurability. What does that mean? It means that even if you have an illness that would prevent you from qualifying for a life insurance policy, you’d still be able to get some coverage.
· Location, Location, Location
If you’re the type of person who enjoys remote work, be sure to understand your company’s remote work policy. The initial lockdowns from COVID showed employers that we could maintain if not improve efficacy while working remotely. Many employers are changing their policies to allow employees to work from home. This might mean lower costs for commuting, less time spent on trains or in cars, and a better work-life balance.
· Time Off
Need I say more? Make sure that you understand how much time off you get, what it can be used for, and how much of that time you can carry over each year. You don’t want to lose any of that sweet time off to which you’re entitled!
There you have it: nine tips for maximizing your workplace benefits. If you have an interesting benefit through your employer or want to talk about maximizing your benefits, let’s connect. You can email me at jhowe@gencapmgmt.com.
Until then, stay curious!
John Howe-Wemett, CFP®, M.S.
