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Take Advantage of Financial Opportunities You May Already Have

Will MullinNovember 15, 2019

Group Benefits

In less than a week, the holiday season officially begins. Stores are filled with gift options for everyone from pets to grandpa. In October, the National Retail Federation (NRF) estimated 2019 seasonal sales would total between $727.9 billion and $730.7 billion. Investopedia reports that the average American will spend $920 per person on holiday gifts. Add in parties, travel and décor, and the budget brims over. Wouldn’t it be wonderful if you won that huge lottery prize or an uncle you never knew bequeathed you a huge inheritance just in time for Christmas and Chanukah shopping? Dream on!

Especially this time of year, we all fanaticize about ways to obtain free money. Good news! There are opportunities with financial allowances that you may not be taking advantage of, such as benefits from your company. They often come with favorable tax outcomes, so don’t overlook this chance to enhance income in 2020 to help pay holiday bills.

Many companies offer a match in retirement plans, including 401(k), 403(b) to encourage employees to participate.  Often, they will match your Contributions, dollar for dollar or on a percentage basis, up to a certain amount. These savings options, too, have tax benefits.

Financial planning reimbursements is another program that may be available in your company.  Many large firms reimburse senior executives, often $5,000 to $10,000 on an annual basis, for individual financial planning. Countless top-level employees have had this benefit for years, but ignored it because they were managing investments themselves directly at a fund company. In other cases, a broker managed their money with no planning; therefore they were ineligible for reimbursement.

Stock purchase plans are another possibility to add money to your bank account.  Employees who work for large public companies may be offered a chance to purchase company stock at a discount (Often between 10-15% provided they hold the stock for 6-12 months.)  That discount is higher than the returns of many indexes on an annual basis if you look at their averages over the course of time.  And – that is before any potential market appreciation (or possible loss) of the stock price. If an employee doesn’t have the free cash flow necessary to participate, there may be an option to purchase stock at a discount available inside their retirement plan. Our firm does not recommend using all your assets, but this could be a smart part of an overall diversified portfolio.

Insurance is another source of money to think about. Numerous larger companies provide employees with some ancillary insurance in their benefits plan. An example is the possibility to receive 1 times your salary in life insurance paid for by the company. This is right there on the table, yet we see many cases where people simply do not sign up. Many of these same people cannot find affordable insurance outside their company, but fail to investigate this great benefit at work that can be theirs for the asking. Additionally, the employer’s insurance is frequently more cost efficient and attainable than individual insurance. Some plans even offer insurance to employees’ spouses. A good risk management plan should always include and review each spouse’s insurance benefits.

A Health Savings Account (HAS) is a sound way to save for medical expenses and reduce your taxable income if you are enrolled in a high deductible insurance plan.  The tax advantage of having a HAS combined with the ability to roll over your balances from year to year have significant financial savings and opportunities. You can often invest the money you save in mutual funds to earn a return that can include tax benefits.

A loan is a much-discussed topic replete with pros and cons. But, if you participate in a 401(k) through your employer, and loans are allowed, sometimes borrowing money provides benefits. There are, naturally, some limits, risk, and rules associated with taking loans from your plan, so you should talk to your accountant, and review all plan documents before making a decision.  However, if you are paying over 20% on credit cards or an emergency occurs when you have no other access to cash, they can be a short-term lifeline.

Tuition reimbursement can account for a big financial boost. This is an employee benefit you should investigate for many reasons. The employer pays for (or reimburses) you if you earn education credits, take college courses or other learning associated with a degree or accreditation. According to an article in the Princeton Alumni Weekly, Able and Richard Deitz of the Federal Reserve Bank of New York, estimated the average return on investment from a college degree … at between 9 and 16 percent per year for a lifetime.  This investment increases substantially when the company pays the tuition. No one can ever take education away from you, you become a more valuable employee and you position yourself for greater challenges and rewards.

This holiday season and in 2020, seeking more ways to save and earn money is as important as it has ever been.  Start your quest by taking time to review your company benefits and take advantage of the opportunities that are already provided. If you are too busy with work, holiday activities and life, a financial planner can help.