Week 42: Reduce Expenses, Tactic 11

What can you do this week?

• Evaluate your employer’s open enrollment options.

• Is there opportunity to save on your benefits and get more to your bottom line next year.

Review Your Retirement Plan Expenses

• For many people, beside their home, their company retirement plan is their largest investment asset.

• The small percentage that makes up investment fees compound like returns do.

  

  Maximize Your Matches

• Every dollar matched is one less you have to contribute out of pocket.

• Beyond your 401k, you may have other benefit plan matches you should maximize.

• For example, a client of mine has an HSA where $1,000 is matched, so she contributes towards that match though she’s only 22, won’t use in the near future but knows it will compound for her future.

• While not at true match, ESPP plans discount shares of company stock you purchase which is another form of company money in your pocket when you sell shares for a gain.

• Finally, don’t forget to increase your contribution percentage at a regular interval. When you get an increase or bonus is a great time as well as open enrollment if you couldn’t make it happen earlier in the year.

Don’t Overlook Deductions Available

• Employees with dependents can use Dependent Care FSAs to pay for childcare or eldercare with pre-tax dollars, lowering taxable income and offsetting caregiving costs.

• Health Savings Accounts also provide opportunity to reduce taxable income.

  

  Medical Plans May Offer Savings

• Compare plan costs and features, including deductibles, copays, and maximum out-of-pocket expenses.

• Short-term and long-term disability insurance often supplement income in case of illness or injury. Look at both the employer-paid options and any additional buy-up options to decide if you need extra coverage or if the base coverage is sufficient.

• A high-deductible health plan (HDHP) paired with a Health Savings Account (HSA) may offer lower premiums and tax benefits for those who don't expect high medical expenses.

• Confirm you need the coverage before enrolling. For employees who don't need extensive vision or dental work, it might make sense to skip or opt for the lowest-cost plan.

• If enrolled in an HDHP, consider contributing to an HSA. Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. Unused funds roll over, building a healthcare nest egg.

  

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