Being your own boss might seem like a sweet deal, but one of the advantages of working for a company is the employee benefits package you’ll usually get. Typical benefits include a retirement plan, life and disability coverage, and health, vision and dental insurance.
But many people don’t take full advantage of these options. I review hundreds of packages with my clients each year. In the next week I would like to discuss steps you should take to maximize your employee benefits and avoid the most common mistakes I see people make:
SAVE ENOUGH TO GET MATCH MONEY
Many employers offer to match 401(k) savings up to a certain percentage of your income if you do the same, but one in four employees leaves match money on the table by not deferring enough of their income, according to recent research from investment firm Financial Engines. A typical match is 3% of your income. This is free, “extra” money from your employer.
Here is what you need to do:
1. Enroll in your employer’s retirement plan, 401k or 403b.
2. Find out what your employer’s match criteria are and start saving at least that much, if not more, to take advantage of this benefit.
If you already saving, make sure you save enough to utilize the matching contributions.
3. Don’t know what investment to pick, defer to Target Date funds. Choose one that is closer to your target retirement date, for example 2030 or 2040. These funds typically consist of 3, 4 or 5 funds underneath, so you get diversified portfolio with automatic rebalancing.
And finally....It’s time for you to double check if you are not leaving “free” money on the table.