If you’re a full or part-time employee, chances are you have a laundry list of employee workplace benefits to take advantage of. Unfortunately, many people aren’t aware of what benefits they have available to them, and as a result, they’re not maximizing their benefits. This could mean that as an employee you’re leaving money on the table, overpaying your taxes, or putting yourself in risky financial situations both now and in the future by not taking advantage of employer savings accounts.
This isn’t to say that every benefit your employer offers needs to be taken advantage of, but it’s worthwhile to know what you should be looking for, and what could further benefit you and your family.
Life insurance offered through your employer is often significantly discounted, which means it makes sense to take advantage of it! Nobody likes to plan for a worst-case scenario, but life insurance is a necessary part of your financial plan. Being able to take care of your family if something should happen to you is invaluable, and having your employer foot the bill to receive the level of life insurance coverage you need is a no-brainer.
But how much coverage do you actually need?
Unfortunately, there’s no right answer here. The amount of coverage you need is dependent on several things:
- Whether or not you have dependents
- What your current annual expenses are
- Whether your spouse will need to quit their job to take care of your children or an adult dependent
- Whether your spouse will need to go back to work and will need to pay for care for your kids
- How much of your children’s future expenses you want to cover with your life insurance
- How much debt you have
Finding value in your life insurance is all about balancing the premium with the total amount of coverage they provide if you pass away unexpectedly. Typically, if life insurance is offered through your employer, it’s relatively low-cost. Just make sure that your beneficiaries are updated to receive the insurance payout!
Retirement Savings and Employer Match
Does your employer provide retirement savings plan options? Do they also provide an employer match for a percentage of contributions? You’ve probably heard this before, but it’s wise to contribute to your employer’s retirement plan at least up to the percentage that they’re willing to match. If you don’t, you’re essentially leaving free money on the table. Keep in mind that the vast majority of retirement savings accounts are funded with pre-tax dollars. So, if you fund your retirement plan through your employer, you’re more likely to save money on your taxes by reducing your total taxable income this year. You do, however, have to pay taxes on the funds when you withdraw them during retirement.
HSA and/or FSA
If you have an HDHP health insurance plan, you may be eligible to open a Health Savings Account (HSA). This account, funded with pre-tax dollars, is intended to help you save for medical expenses. However, funds in your HSA don’t go away at the end of the year. Instead, they roll over from year to year, so you’re able to use the account like a true savings account that’s been earmarked for medical expenses. This means that if you anticipate rising medical expenses during retirement (which most of us do), you’ll be able to use your HSA now to save for medical expenses that happen later. If you use the funds in your HSA for qualifying medical expenses, you won’t pay taxes on them – ever.
However, if you don’t have an HDHP health insurance plan, you might look at another health savings option – the Flexible Spending Account (FSA). These operate similarly to an HSA, but you do lose your funds at the end of the year. Some employers allow you to roll over a specific amount into the next year, but this isn’t a guarantee. When using an FSA, it’s important to budget your potential yearly medical expenses so that you don’t over-save, but the medical expenses you can anticipate (like doctor copays, etc.) are covered by your savings.
Oddball Benefits to Keep In Mind
Your employer likely offers several additional benefits that you may not be thinking of. Some employers, for example, offer a stipend for child care. Others offer counseling and services that help your family if you’re considering adoption. If you’re wondering what benefits are available to you, it’s worth reaching out to your HR representative to find out. You might be surprised to find benefits that help you to save money this open enrollment season!