With October and November just around the corner, selecting and updating your benefits for the coming year will be time. If nothing has changed in your situation, this is just a great time to confirm that what you originally selected still applies to you. If there have been changes in your situation and you have not made any changes, this is your time to do so. With certain employer benefits changing from year to year, it is important to understand what your options are so that you can best take advantage of what is being offered to you. The most common employer benefits are 401(k) plans, Health Insurance, Life Insurance, and Disability Insurance. We will also hit on a few more in this article as well.
Most employers, especially larger ones, offer their employees a 401(k) plan to help them start saving for retirement. The biggest benefit here is the tax-deferred growth that you get from saving into the 401(k) plan. Most employers also offer a match that varies based on the plan. Meaning that based on whatever you put into the account, they will match that up to a certain amount. If you are able, it is always best to put in at least up to the match because they are essentially giving you free money. With the 401(k), if you are able, it is best to put in as much as you can comfortably afford, up to the maximum allowed, as it is one of the easiest ways to save for your goals down the road.
With the cost of healthcare consistently increasing, it is wise to take advantage of your employer's group health plan if they offer it. Typically, they even help to cover some or all of the cost of the premiums. Depending on your overall health affects what type of coverage you need to put in place. If you are healthy, you can probably utilize the base plan. But, if you are on a different prescription or use certain medical devices, it is best to look into any additional coverage offered because there is probably a discount as it is a group plan.
Life & Disability Insurance
Some employers, especially larger ones, also offer life insurance and disability coverage. For life insurance, they almost always offer about 1x salary for free, which is always smart to take on. If you have trouble getting other life insurance on your own, this is also an easy way for you to get coverage because it is offered on a guaranteed basis and almost always at an affordable rate. For disability, it is the same thing. On its own, it can be expensive insurance to get. But through a group employer, it is issued on a guaranteed basis and at better pricing. A group plan is a great way to take care of life and disability insurance needs for just a few dollars a month.
Other Employee Benefits
Depending on your employer, they may offer other benefits such as Health Savings Accounts, Flex Time, Pensions, or Wellness Benefits, to name a few. It is always important to understand what is available to you so that you can take advantage of the benefits. If you are unsure of who to speak to, the best place to usually start is with your HR department. Reviewing and understanding your employee benefits on an annual basis is always recommended because as your life circumstances change, so will the benefit choices most important to you.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Myles Zueger and not necessarily those of Raymond James. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.