Financial Planner Q&A: How Do I Maximize My Employee Benefits?

A commenter asked what financial planning questions you wanted to see answered. This week I answered the question, "How do I maximize my employee benefits?"

I love this question, because we would never say we want a salary cut, but if we don't take full advantage of our employee benefits, it's as if we're doing just that. To get the most out of what your employer offers, start by asking human resources for a benefit plan summary. They usually have a document they can email you or can provide you a company benefits website with personal login information. The benefit plan summary gives you an overview of what is offered.

Here are some of the more common benefits that might be available to you.

Health and Dental Insurance - This is a benefit most of us are familiar with. Many companies have healthcare optimizer quizzes. It asks you questions about your health, the medications you take, number of doctor visits a year etc., and matches you with a plan. Be aware of open enrollment periods (often in the fall). If you anticipate an elective medical procedure, plan ahead and pick the insurance coverage that is most beneficial to you.

Sick Days, Short-term Disability, Vacation Days and Other Paid Time Off - You want to have an understanding of when you'll be compensated even when you can't be at work, and how these days accrue. Be aware of whether or not vacation days are "use it or lose it" so you don't miss out.

Life Insurance - Many employers offer a minimum amount of life insurance. Make sure to choose a beneficiary. This will ensure the policy is properly paid out if something were to happen to you.

Retirement Plan - Most commonly, this is a 401(k). In most cases you will be required to contribute your own funds. However, if you leave the company, you can roll that money over into an IRA; in other words, take it with you! If a company offers a match to your retirement account, make sure to contribute the necessary amount in order to receive the full match. You'll also want to choose the appropriate investments within your 401(k) as well as the percent of your salary that you'll contribute each pay check. Be aware of IRS contribution limits. Although it's becoming less and less common, you might also be offered a pension. Be sure you know the qualifications and payout as they can be detailed and restrictive.

Stock Options - These give you the opportunity to purchase company stock. They are often misunderstood or valued incorrectly. There are a number of important considerations to take into account, including risk vs. reward, time value, diversification and taxes. If you don't feel you have the resources or time, work with a financial professional who can help create a strategy that is effective for you.

Sometimes even the benefit plan summary can be a long and intimidating document. I've reviewed summaries for clients that stretch over 100 pages. Ask HR to clarify how benefits work and if there are additional costs for those benefits. There are many other benefits that could be offered to you.

Here are some examples:

You might get a gym membership (or discount on one). A flexible spending account (FSA) is another one to look out for. Remember you need to spend the funds on qualifying expense within a specific time period. Some companies offer long-term care and/or disability insurance or additional life insurance at a discount. Free or discounted psychological and other counseling services or legal aid are other possibilities. You might find that some education expenses are covered, like continuing education in your field or even tuition assistance for the children of employees. Industry-specific benefits are another potential perk. Be aware of discounts on products or services offered by your company.

Benefit plans can vary widely, so be sure to request information on the specifics of what is offered to you.

Good Places for Seniors to Get Financial Planning Advice

Seniors as much or more than anyone can benefit from assistance with their personal finances. With age can come a slowing down, a greater forgetfulness, and a general lowering of capacities in certain areas, including those relevant to making sound decisions about one's finances.

There are certain signs that one who cares about an elderly person-or a self-aware elderly person himself or herself-might spot that indicate a reason to consider seeking assistance with personal finance matters.

Are things being left undone? Unpaid bill notices, letters from the Internal Revenue Service (IRS), etc. could mean the person is having a problem keeping up with their financial responsibilities. It could be forgetfulness, a tendency to make mathematical errors, vision problems, physical difficulties writing checks, or other issues.

Is there evidence of financial scams? If a person receives way more than usual junk mail or telemarketing calls, it could be an indication they're on a "suckers" list because they've responded to such scams in the past. If a person has written checks to unrecognizable companies and individuals out of state or worse yet out of the country, if they speak favorably about supposed investment opportunities that earlier in their life they surely would have been wary of as too good to be true, there's a good chance their judgment is impaired and they're being taken.

Is there a new "friend" on the scene, a little too eager to "help" an elderly person with financial matters? Very few elderly folks are lucky enough to have an Anna Nicole Smith to enjoy for a few years in exchange for a chunk of their money-more often it's a garden variety con artist who's insinuated himself or herself into their life and gradually gained more and more influence over them and their financial affairs.

There are a number of steps that can be taken to safeguard an elderly person's personal finances.
Many processes can be automated, such as bill paying directly from one's bank account, or having Social Security and pension checks direct deposited. The "no-call" telemarketing list, caller ID, and a good e-mail junk mail filter are among the measures that can cut down on scam solicitations. If you care about an elderly person, you can stay on the alert about newcomers to their lives (or even less than scrupulous family members and such) who are showing just a little too much interest in their finances, and you can warn the person early before the newcomer fully has their hooks in them.
However, though of course an elderly person should be protected from turning their financial affairs over to a con artist, at the same time it may indeed be advisable for an elderly person to turn over some or all of their financial affairs to someone more appropriate as they become less able to handle them themselves. Or if not to turn over the actual decision making, at least to seek financial guidance and advice from someone knowledgeable about their situation.

One option is to rely on a family member or friend. This should only be done with great caution. The person relied on should have proven over the course of a long relationship to be trustworthy and to be knowledgeable and responsible about money matters. It should also be someone who will handle the affairs in as open as possible a manner, so that other friends and family members are always aware what's being done and thus can provide an additional safety check.

But depending on one's circumstances, the better option could be to hire an actual financial planner.
If you go this route, however, it's important to hire a reputable, licensed individual or firm. Don't respond to slick marketing from people calling themselves "financial planners" who may have no credentials and who may indeed have far greater skills at marketing than financial planning.
It is advisable instead to find a financial planner through a professional association or regulatory body. Good places to start are the Certified Financial Planner Board of Standards, Inc., the Financial Planning Association, and the National Association of Personal Financial Advisors.

Any of these can help connect an elderly person with an appropriate financial planner, rather than someone who will take advantage of them.

Personal Financial Planning: Excellent Tool for Individual Money Management

Personal financial planning is a part of managing your income according to your financial management. Nowadays, it is one of the most important aspects of any individual's life. Everyone positively thinks about personal financial planning directly or indirectly.

Personal financial planning is an instrument to carry out some principles of finance regarding money matters of an individual or family. It positively assists you in keeping all records of your earning, spending and saving. It requires a little sensible approach from your side to be successful in your money management. It will not happen overnight. Because individual financial planning is a continuous process. It has flexibility to change with time.

Personal financial planning is in contrast with hiring a financial advisor -- with personal financial planning, you do it yourself.

To be good in your financial management, you need to know basic information about it. Planing is the key factor of your financial management. It requires daily observation and reassessment of your income, spending and savings. Below are few points which can be useful for your financial planning.

1. Current financial position - Know your current financial position. Consider you're all income sources, spending and savings. This includes calculation of your income sources and expenses. Calculation of income sources includes your post tax income, spouse's income, investment income and any other. Calculation of expense includes spending on grocery, medical, laundry, house, lifestyle etc. Thus, you should consider fixed expenses which are house rent, children's fees, loan repayment, insurance premium, etc. It will assist you in drawing out an outline of your money management planning.
2. Setting financial goals - After reviewing your financial position, figure out your financial goals. Remember, you should draw out goals within your income limits. Your goals should be achievable. Consider how much you are going to earn in the period of completing your goals. This will aid you not to fix your financial goals blindly.
3. Action plan - Create an action plan to achieve your goals. Brainstorm possible ways which are suitable to your plan. While making an action plan, you should not neglect above two points. Make more than one action plans. Those should be drawn out with the help of your financial facts. Choose that action plan which will positively help to your success.
4. Plan implementation - Now it is working time on your action plan. You have selected the best plan which guarantees your maximum success. Be flexible about your plan. You may be required to make slightly changes if there is any necessary demand of time. Carefully made a plan should be carefully followed.
5. Progress observation - Keep daily observation on your plan's progress. Because, times and circumstances change. That time you may not be able to work on your action plan. Review your progress and do adjustment as well as changes. If the action plan is doing considerable progress you want, then go ahead with it.

Personal financial planing is an excellent tool to control on your financial life. However, it needs to bring it in reality with true commitment. Then you will get true results of personal financial planning.

Making Up for Gaps in My Financial Planning

I am behind when it comes to saving for retirement. Paying for my student loans in my 20s put me behind on saving for my children's college. According to a recent article by Manilla.com, there different stages of financial planning by age. At age 40-something, I've missed at least half of financial milestones I should have met. I don't think life is a competition to see who dies with the most money in the bank. Still, I would like to plan for my family's financial future, making up for many of the gaps in my financial planning through the years.

Working as soon as possible

One of the best things I did was start working at the age of 16 and never stop. I was able to pay part of the cost of my private college tuition, which reduced the amount of money I owed in student loans. I'm going to try to improve my financial situation by working until my full retirement age of 67 or even beyond. Unlike in my teens and 20s, I can save a portion of my earned income for retirement.

Staying out of credit card debt

According to the Manilla.com article, by age 25 a person should have good credit by establishing low-interest credit cards and making regular payments. I ran up credit cards in college, which left me with tens of thousands of dollars of consumer debt in my 20s. I can't turn back the hands of time, but I can stay out of debt by making micro payments on my credit card throughout the month with my online banking. Even if I only spent $7 on my credit card, I go online and transfer money from my checking to my credit card.

Contributing to my retirement

The article suggests people contribute to a 401(k) in their 30s if they have not started doing so already. I didn't have a full-time job in my 20s, but still contributed to a Roth IRA when it was introduced. I saved as much as I could to my 401(k) in my 30s, but made the mistake of taking out 401(k) loans. I'm hoping to make it up by making catch-up contributions when I become eligible to do so. My goal is to max out my Roth IRA each year.

Retiring in place

At age 70, the article recommends people downsize their home or move to a less expensive area. By paying down my mortgage in my 40s, I'll be able to retire in place in my Florida home. Most of the people I know who are struggling on a fixed income in retirement have to juggle the costs of their medications and food costs with mortgage payments. Without a mortgage, I'll be able to compensate for the nest egg I could have built in my 20s if I wasn't bogged down with student loan and credit card debt.

In a perfect world, people could save for retirement, their children's college and emergencies while simultaneously paying off their mortgages. In the real world, it's hard to stick to a financial planning timeline. I learned from my financial mistakes at earlier stages of my life, which I'm hoping will afford me a second chance at financial security if not prosperity and abundance.