The holiday season might look a little different this year due to the  pandemic, but another year-end tradition will still be around for a lot  of us to enjoy — open enrollment season. Although everyone’s open  enrollment period can differ depending on their employer, most seem  to fall at the end of the year somewhere during the months of October  to December. If you are currently going through that, or will be  soon, here are some tips to help you maximize the employer benefits  offered to you. Even if your employer’s open enrollment period is not  coming up at the end of the year, you still can find these tips useful  as a check-in for where you stand or suggestions for your next open  enrollment season. 

Retirement Benefits: 

Saving for retirement can oftentimes be low on the to-do list, but  planning for your future should be a top priority. While it may seem  like you have plenty of time, the reality is that most of us need to  consistently save throughout the course of our careers to truly be  ready for retirement one day. The great thing about this, though, is  that the earlier you start, the better off you’ll be, due to the beauty  of compounding returns over time. Even if you’re not as early in your  career as some, there is no time like the present to start maximizing  how much you’re putting away for your future needs. These days,  most employers will offer some sort of retirement savings vehicle like  a 401(k), 403(b), 401(a), or 457(b) for you to invest in. Some may still  offer a traditional pension, but unfortunately, these are becoming less  common in today’s retirement landscape. Below are a few ways to  help you maximize your employer’s retirement benefits.  

1. Take full advantage of your company match.

If your employer offers one of the retirement savings vehicles listed  above, there’s a decent chance they are also willing to put some money  into it for you. While every employer differs in their rules around  matching contributions, most employers offer a match as a way to  incentivize employees to save more for retirement. For example, if  your employer offers to match 100% of your contributions up to 5%,  this means that you must contribute 5% of your salary in order to  receive the additional 5% from your employer. If you only contribute  2% of your salary, then your employer will only contribute 2% as  well. In this scenario, you are missing out on an additional 3% of  free money that you could be getting from your employer, simply  by not contributing enough to receive the full maximum matching  contribution. The bottom line here is to understand what your  employer’s rules are and contribute at least enough on your end to  fully max out how much they are willing to put in for you. Otherwise,  you are leaving free money on the table! 

2. Pick a long-term investment strategy and stick  to it.  

Contributing a portion of your salary to retirement is step one;  step two is deciding how to invest that money once it is deposited into  your account. Again, every employer is going to differ in the options  they make available to you, so it’s important to understand what the  investment options are in your plan. Find a long-term allocation based  on your goals and risk tolerance, and stick to it over time. While  it’s important to monitor your account as time goes by and make  adjustments as retirement draws nearer, the last thing you want to  be doing is trying to time the market. Saving for retirement should  be viewed as a long-term objective, so it’s important you don’t react  emotionally and make poor decisions in times of market downturns.  If you do, it can severely dampen your outlook and your ability to  retire down the road.  

3. Consider Roth contributions if available in  your plan. 

Roth contributions are taxed up front and, assuming you’re at  least 59.5, tax free upon withdrawal in retirement. This can be  beneficial, especially for younger workers who have decades to let  their investments grow or those who expect to be in a higher tax  bracket later in life. If you’re unsure, that’s OK. If nothing else,  combining pretax and Roth contributions will give you flexibility in  retirement when it is time to start withdrawing money. 

Insurance Benefits: 

1. Health Insurance 

There is typically a trade-off between deductibles and premiums  when it comes to health insurance plans. Some plans have higher  premiums but require you to pay little out of pocket. Other plans  have lower premiums but require you to pay more out of pocket.  The latter is typically referred to as a high deductible plan. It’s  important for you to think about your likely health care needs for  the coming year when deciding what type of plan to select. One of the main benefits associated with high-deductible plans is the ability  to contribute to a Health Savings Account (HSA). An HSA is a triple  tax-advantaged account in that it allows you to contribute pretax  dollars, grow those savings tax-free by investing within an account,  and eventually withdraw them tax-free for qualified medical expenses  in the future. If eligible, you can contribute up to $3,600 in 2021 for  single coverage and up to $7,200 for family coverage. If you don’t  have a high deductible plan, you should see if your company offers a  Flexible Spending Account (FSA). You can contribute up to $2,750  pretax in 2021 to an FSA, but these contributions don’t carry over  year to year like they would with an HSA.  

2. Life Insurance 

Many employers offer some type of group life insurance coverage.  You may have a small amount of coverage paid for by your employer  with the option of purchasing additional group coverage. This group  coverage option can be a good deal for some but not for others. If  you are older or have health issues that make you costly to insure, a  group rate may be less than what it would cost to obtain coverage  on your own. If you’re young and in good health, you may be able  to obtain cheaper coverage on your own. You also should consider  how long you plan to stay with this employer when coming to a  conclusion regarding this supplement benefit. Keep in mind, if you  leave your current employer, you likely won’t be able to bring your  group coverage with you.  

3. Disability Insurance 

Employers may offer short-term and/or long-term disability  insurance to employees. Similar to life insurance, a particular amount  of disability insurance may be employer-provided while the employee  may have the option to purchase additional group coverage. Also  similar to life insurance, your individual circumstances may allow  you to purchase cheaper coverage on your own. If your employer  does pay for some disability insurance coverage, you should see if  they are willing to identify the premiums associated with your  coverage as taxable income. This would be especially advantageous  if you were to go on claim because the benefits associated with your  coverage would be tax-free. If the cost of coverage is not identified as  taxable income, the benefits received would be taxable to you. You  should also examine the definition of disability, the waiting periods  associated with coverage and how long benefits would be paid if you  were to go on claim.  

Employers are also getting creative in ways they try to retain  talent by offering ancillary benefits. They may offer options such as  legal help, student loan assistance, education assistance, commuter  benefits and dependent care assistance. It is always advisable to  understand all of the benefits available to you to make sure you are  taking full advantage of them. ❖ 

 

Billy Bruns, CFP®, with MAI Capital Management, can be reached  at 513.579.9400 or by email at billy.bruns@mai.capital. Greg Ross,  CFP®, also with MAI Capital Management, can be reached at the  same number or by email at greg.ross@mai.capital.  

MAI Capital Management, LLC (MAI) is a privately held  independent investment advisor registered with the Securities and  Exchange Commission and headquartered in Cleveland, Ohio with  regional offices in Columbus and Cincinnati, Ohio as well as offices  in California, Florida, New Hampshire, New York and Virginia.  MAI’s Cincinnati office is located at 625 Eden Park Drive, Suite 310,  

Cincinnati, OH 45202. For more information, call 513.579.9400  or visit www.mai.capital. The opinions and analyses expressed  herein are subject to change at any time. Any suggestions contained  herein are general, and do not take into account an individual’s or  entity’s specific circumstances or applicable governing law, which  may vary from jurisdiction to jurisdiction and be subject to change.  Distribution hereof does not constitute legal, tax, accounting,  investment or other professional advice. Recipients should consult  their professional advisors prior to acting on the information set forth  herein. In accordance with certain Treasury Regulations, we inform  you that any federal tax conclusions set forth in this communication,  were not intended or written to be used, and cannot be used by any  taxpayer, for the purposes of avoiding penalties that may be imposed  by the Internal Revenue Service.