By ELIZABETH AYOOLA of NerdWallet
Benefits are one of the most attractive aspects of a potential job and can determine whether you take an opportunity or leave it. When you decide to take the job, are you maximizing the benefits?
Otherwise, you can leave money on the table. And in this time of high inflation, you need all the money you can get to offset the rising prices.
In the spirit of focusing on what you can control, let’s talk about benefits and how you could use them to your advantage in these uncertain times.
KNOW YOUR BENEFITS
Before you can maximize your benefits, you need to know what they are, says Samantha Gorelick, certified financial planner at Brunch and Budget, a New York-based financial advisory firm.
“A lot of people don’t really know how much their employer will give them the same amount, or what their employer even offers in terms of 401(k), contributions to (a health savings account) or (a flexible spending account ), or even a short- or long-term disability,” she says.
Gorelick says knowing what you have access to can affect your financial situation.
FYI, this is also open enrollment season for some companies, so it’s a great time to better understand your benefits. Open enrollment gives you a limited window to opt in to benefits you may not be receiving, evaluate your plan and its costs, and unsubscribe from benefits you may no longer need. It usually takes place between October and January, depending on your company.
THINK OF THE HEALTH SAVINGS ACCOUNT
Evaluating your health care options isn’t always the most glamorous task, but it can have financial rewards.
For example, if you realize you haven’t used many health care services in the past year and are in relatively good health, it may be more cost effective to contribute to an FSA or HSA. health care than paying a high monthly premium.
HSAs and FSAs mimic bank accounts that allow you to pay for your healthcare expenses out of pocket. Sometimes your employer will also contribute to these accounts. To contribute to an HSA, you must have a high-deductible healthcare plan.
Both accounts may present opportunities that employees can take advantage of, particularly around tax benefits, says John Campbell, senior vice president and senior wealth strategist at US Bank.
“When you look at their HSA or FSA accounts, it’s an opportunity for them to put money aside on a pre-tax basis that they can leverage to cover qualifying or qualifying medical expenses and any deductibles that might be there. “, he says.
With HSAs, the money you contribute grows tax-free, and qualified healthcare withdrawals are also tax-sheltered.
Note that FSAs and HSAs are different in that with the former, you have to spend the money in the account by the end of the year. However, with HSAs, you can carry over any money you don’t spend to the next year. You can also invest with your HSA, just like you would with a brokerage account, says Campbell.
“So it’s not just about getting a money market rate, but they may even be able to take some of those funds and put some of them into mutual fund-type investments there. inside the account itself,” he says.
Campbell says HSAs are a savings and investment vehicle that people can use to keep pace with rising health care costs in the future.
If you decide to use HSAs or FSAs, keep in mind that they have different contribution limits. FSA limits are $2,850 for individuals and $5,700 for families in 2022 and can be used with many health plans. People with a high-deductible health plan can contribute up to $3,650 to HSAs; if you have a family health plan with a high deductible, you can contribute $7,300.
PULL ON EDUCATION BENEFITS
It is unclear what might happen with the labor market if inflation continues to rise. One way to improve your CV, so that you are in a good position no matter how the job market changes, is to use education-related benefits such as tuition reimbursement or stipends. learning.
Consider using this benefit to take a course or earn a qualification that develops your skills and increases your earning potential.
“If your employer offers tuition reimbursement, it could help you by freeing up money that you could have spent out of pocket on tuition, allowing you to save or invest that money,” says Campbell.
NEGOTIATE A SALARY INCREASE OR ACTIONS FOR EMPLOYEES
Consider negotiating a raise or employee actions to improve your financial situation.
As the end of the year approaches, consider evaluating your performance throughout the year and building a case to renegotiate your salary. If you have salary reviews coming up, even better.
“A pay raise can help you offset some of the cost-of-living increases due to inflation and maintain your purchasing power and ability to save,” says Campbell.
Everyone’s risk tolerance is different when it comes to investing, especially when the market dips.
If you can bear it, consider increasing your contributions to retirement accounts beyond your employee match if you get one, Gorelick says.
If you’ve maxed out your 401(k) limits, after-tax 401(k) contributions can be another investment strategy if your employer offers it. You can contribute up to $61,000 after-tax to your 401(k) in 2022, giving you more tax-sheltered growth on your investments.
On the other hand, you may be too financially stressed to increase your dues, and that’s understandable. Other options, in this case, are to replenish your cash reserves or reduce your retirement account contributions.
“We’re in a time of inflation, which means most people can choose to keep more money in their pocket instead of putting it in an investment account,” Gorelick says.
This article was provided to The Associated Press by personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Elizabeth Ayoola is a writer at NerdWallet. Email: [email protected]
NerdWallet: differences between HSA and FSA and how to choose https://bit.ly/nerdwallet-employer-offers-hsa-fsa-whats-difference