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090926_WTM Get more from your benefits
Alex Roca, Jennifer Bennett, Sasha Heathman
ALEX ROCA: Hello, and thank you for joining Women Talk Money. My name is Alex Roca, and I will be your host for today's conversation. Today, we're talking about ways to help make the most of your employer benefits, whether you're employed now, job searching and evaluating your options, or self-employed and wanting to create your own benefits package. We'll help you identify overlooked benefits, understand ways that they can support you at different stages of your life, and so much more.
To have this conversation with me today, I have Jennifer Bennett, Head of HR here at Fidelity, and Sasha Heathman, a workplace financial consultant. We've got a lot to cover, so let's jump in.
When most people hear "employer benefits," they think health insurance and retirement plans, but they can be so much more. So, Jen, what do you want people to about them?
JENNIFER BENNETT: Well, I'll just start by saying that I think it's important to understand that as an employee, your compensation is so much more than your salary. And that's where benefits really start to come in. These are offerings by employers that help support your overall well-being. You work hard, and you want to make sure that you're taking advantage of what your benefits have to offer. Whether you're employed, evaluating a new opportunity, or self-employed, benefits should be part of your overall financial plan.
They can help provide comfort that you and your family have coverage if you have a health emergency. And they can help you save for the future. They can help support you financially and contribute to your overall wellness. And some employers also offer benefits that might surprise you, like commuter benefits, pet insurance, or even legal assistance. The more you know about what is available to you, the more you can curate and customize your own benefits to fit where you are in life right now.
ALEX ROCA: That's so true, Jen. And today, we're going to talk about four main categories of benefits-- health and wellness, retirement, additional financial benefits-- so think protection like life insurance and disability insurance, or even things like tuition assistance and reimbursement-- and work life benefits. But before we dive into each of these, for many of you out there, you're either in or entering enrollment season. And it's funny, because we spend all year using these benefits, but many of us only pay attention to them when those enrollment emails start coming in. This leads me to my next question. Jen, I'll start with you-- what are some of the biggest mistakes that you see people make during enrollment season?
JENNIFER BENNETT: Oh, gosh. Alex, I'm so glad you asked this question. So assuming that all of your benefits are good to roll over year after year is the biggest mistake that I see people make. Your benefits are simply not a set it and forget it item. So don't assume that next year's offerings are identical to this year's.
It's very common for employers to add new benefits, enhance programs, and sometimes retire old ones that aren't being utilized well. So you really want to take the time to revisit your benefits in a proactive way each and every open enrollment season. I recommend taking a purposeful pause to think about things like, how have your circumstances changed during the past year? Are you planning to grow your family, for example? Did a child recently go off your health plan?
Whether or not you took advantage of your benefits in the last year is also a consideration. And if not, was it because they weren't the right fit for you? So if your employee offers a benefits fair or education sessions, I would also recommend taking advantage of them. A lot of people don't, and it's a great way to get updated information about current benefits offerings. You may also want to check in throughout the year to see if you're leaving anything on the table.
And I will just add one reminder-- open enrollment isn't the only time you might need to re-up your benefits. Life events can also trigger a need for a review. Examples here could include things like getting married, having a child, losing a partner, or changing jobs.
ALEX ROCA: Such great points. And I'd like to add that you want to be aware of your deadlines as well. Life moves fast, so make sure that you know key dates in your calendar so that you don't miss out on the opportunity to choose the benefits that work best for you. Now, Sasha, I want to hear from you. Anything you'd add?
SASHA HEATHMAN: Yeah. I really loved Jen's advice about taking a purposeful pause to think about how your life might have changed within the year so that you can take a proactive approach to enrollment season. So what I'll add is if you're not sure where to start, then there's no better mirror than your paycheck. It's important to know what you're currently paying for and what you might anticipate paying for in the new year.
So, currently, maybe you're paying for a fitness app, student loans. If you're like me, you've got glasses and contacts you got to get every year, or maybe it's a parking garage that you pay for to get to the office. Your employer may have programs that can subsidize or reduce and discount those costs. And then on the flip side, for anticipated costs, maybe your next promotion requires more education or certification, so looking for those tuition assistance programs is something that you'll want to look for during the next enrollment season.
Now, your current expenses can help guide your focus on which employer benefits to proactively look for that can support your life, both inside and outside of work. Fidelity has a simple budgeting guideline that we call Plan Your Pay. This simply helps you think about how to maximize your take home pay after deductions-- like retirement, health insurance, flexible spending accounts, and taxes.
We'll put a link to the resource in the chat that walks you through how it works. But knowing your budget and how it's impacted by the benefits that you take advantage of can help with your decision making during enrollment time. For example, you may decide to contribute a little bit less to your flexible spending account so that you have a little bit more take home pay for those essential expenses or your other savings goals-- and vice versa. Next year, you might anticipate a medical procedure, so maybe you choose to contribute more to your FSA flexible savings account in preparation for that expense.
Of course, you're never alone in figuring it out. As Jen mentioned, you may have a benefits hub or a landing zone that can walk you through all the options available and contact information for who to go to for questions. And when it comes to retirement savings, you may also have access to a financial professional like me who's connected through your employer's retirement benefits. And we can help answer questions about how your retirement plan works and how you can make changes.
ALEX ROCA: I couldn't agree more, Sasha. This time of year can also be a good time to check in with a financial professional about how your benefits are fitting into your overall plan. Now, you both have mentioned that benefits should reflect what's happening in your life, but sometimes that's starting a new job. When you're evaluating potential job opportunities, how might this benefit factor into your decision, Sasha?
SASHA HEATHMAN: Sure. So Jen mentioned something earlier that compensation is so much more than salary. And the other benefits that are offered can play a huge factor in comparing new job opportunities. So, for example, a girlfriend of mine and fellow mom of two was telling me that she was evaluating two new roles. She told me that one company who offered the higher salary, which would go a long way in helping with her household expenses, but it only had one week of PTO. And that really wouldn't provide her the flexibility to be a way to disconnect and regroup, but then also be flexible for her kids and her family life.
She told me the other company that she was considering offered 25% less in salary, but had six weeks of PTO. Ultimately, she decided to go with the company with the lesser salary because that extra PTO built in the flexibility for her to manage both her home and work life. So there's so many new things that you want to factor into when you're evaluating a new job opportunity that go beyond salary. So when you're job searching, make sure that you do read through any additional benefits that are available to you.
So, in addition to paid time off, some other examples of benefits that could tip the scales include a strong 401k match and profit sharing, the ability to work both in office and remote, student loan help, maternity leave, or even family planning support. So you want to think about what your life might look like when you do start the new job, and if that company offers benefits that can help support that.
ALEX ROCA: Such a good point, Sasha, and such a huge difference. Balancing those benefits and thinking about what you want your life to look like is such an important part of making that decision. I think one challenge with benefits is that sometimes you don't know a benefit exists. And then you don't know to ask about it.
So let's talk about some of the benefits people may not realize they have access to, starting with work life benefits. Now, Jen, can you walk us through what we even mean by work life benefits and then some of the trends that you're seeing in this area?
JENNIFER BENNETT: Sure. Happy to. And for many people, these are a really important part of their benefits package. So an easy way to think about work life benefits is that these are the benefits that can help you make time for your priorities outside of work. And so we've got a slide here, but you can see that these include benefits like paid time off, or PTO, which we've already talked about, parental leave, and other types of family paid leave, and then also other items like charitable giving.
These are benefits that are centered around giving back, like volunteer opportunities or matching donations. And these give you the opportunity to support causes that you care deeply about and also spend time with colleagues outside of your job. Other examples include flexible work arrangements like flexible hours or hybrid remote positions.
And then the last one I'll call out includes something like concierge services. And for those that may not be familiar with these, these are services that can help free up time by helping you do things like coordinating travel, booking appointments. The things that typically, if you're like me, fall to the bottom of to do list, but are so helpful when you're trying to, again, plan for life outside of work.
So for many of us, these priorities outside of work include being a caregiver to a child, an aging parent, or other loved ones. As a matter of fact, three out of five caregivers are women. And I know that this is one that personally resonates for me. I have three young adult children that are in the process of hatching from the nest. And I also have aging parents. And so, oftentimes, the need to balance between the two, and also take care of myself, is a real challenge.
So while this can be a fulfilling role and one that we really love as caregivers, being both an employee and a caregiver can be challenging and very stressful. Oftentimes, I know it feels like I've got two or maybe three full time jobs. So that's just an example of why it's good to be aware of what your employer may offer to help you free up some time, save a little money, and, honestly, just let you exhale a little bit, knowing that you have some support helping the people you care most about.
SASHA HEATHMAN: And, speaking of feeling like you have two or three full time jobs, I do want to call attention to one of the extra benefits that Jen mentioned, which is the dependent care FSA. Many of the clients I meet with who are parents, and me included, tell me that daycare costs often cost more than their mortgage and almost equivalent to rent. So a dependent care FSA can help with those costs. It may not cover everything, but it is something.
So if a dependent care FSA is new to you, it is a pre-tax benefit that you can contribute to that you can use for pre-school, you can do summer day camp, before or after school programs, and then not only child daycare, but then also adult daycare, if you are caring for an aging family member. It can not only help you take care of your loved ones, but then also save you money at the same time because it does help lower your taxable income since you are saving money in that account with pre-tax dollars. So keep in mind that these funds are typically used it or lose it, meaning that they don't roll over each year. So you can either reimburse yourself as you incur the cost, or you can save your receipts for the end of the year and request a reimbursement at that time.
ALEX ROCA: Thank you for that, Sasha. Hearing about the dependent care FSA is just such a great reminder to look deeper into your benefits and ask questions about what's available. And it's also a great transition to a big one-- health and wellness benefits, starting with health insurance. This is often where we have the most questions. So, Sasha, can you get us going?
SASHA HEATHMAN: Yeah. So health insurance is so important because there are a few different plan options that you can choose from. And, specifically, health insurance is important to women because we incur 18% more in health care costs over time, which can equate to a large expense, higher than our male counterparts. And so we're more likely to also take time off from our careers to care for loved ones-- maybe it's our kids, maybe it's a family member-- and that not only can impact our financial health, but then also our mental health as well.
So understanding your health insurance options can help you take care of yourself while you're taking care of others. So the most common types of health insurance plans are here on the screen. And each give you access to a network of health care providers with different levels of flexibility.
So, for example, a PPO plan tends to be the most flexible, allowing you to visit any providers, both out-of-network and in-network. Now, which type of plan you choose will likely depend on your needs and your budget because each of these different plans have different premium costs that go along with it. So, to better understand how much you might pay for health insurance and expenses, you will want to get more familiar with these key terms.
So we don't have time to go into detail, since we have a lot of other topics to cover today, but you'll want to consider your current health needs and compare those costs to help you determine which option not only fits your health needs, but then also your budget. One thing that I will call out is health savings accounts, so HSA. So when you are comparing your health care needs and the costs, even though a health savings account does prevent an opportunity to save advantageously for health care, you also want to better understand how that might impact your budget overall.
ALEX ROCA: Thank you for that, Sasha. What you choose really depends on you and your unique situation. Sometimes we want a one-size-fits-all or just a quick answer. And there isn't, because it's going to depend on what's important to you. And I can't say this enough-- it's worth the time.
You're going to want to take the time to think about what is going to work best for you and what your employer is offering. Now, we've talked a lot about paying for health care. Now, let's talk about a couple of my favorite accounts, because they can help you save on taxes while you're paying for those qualified medical expenses. Jen, can you share a bit about the HSA and the FSA?
JENNIFER BENNETT: Sure, Alex. And I think Sasha gave us a great intro, a couple of comments here. But let's start with the Health Savings Account or the HSA. And so, again, you must be enrolled in an HSA eligible plan. if you are, you can open and contribute to an HSA as long as you aren't enrolled in any disqualifying health coverage. So that is one requirement.
One decision that I often hear from people is that sometimes it's hard to balance today's paycheck with tomorrow's goals. And the HSA is really a powerful tool that can help you use tax advantaged dollars today while saving and investing for future health care expenses. So these are triple tax advantaged accounts that are funded with dollars you haven't paid taxes on yet.
The HSA's also offer the potential for tax free earnings while invested, and tax free withdrawals when used to pay for qualified medical expenses. So that's the triple tax advantage.
And keep in mind that these accounts can also help you pay for more than you might think, especially for women-- things like family planning, like fertility treatments, pregnancy tests, breastfeeding related expenses. They can also be used to help pay for menstrual care products, menopause relief, and things like hormone replacement therapy.
Your employer might also contribute money to your HSA every year. That's a great benefit. And the money is yours to use or invest forever, even if you switch jobs or take some time off from work. But if your employer doesn't offer an HSA, it's important to know that you can still open one on your own as long as you are eligible.
ALEX ROCA: Thank you for that. Jen, I'm going to stay with you. What about the health care FSA? How is that different to the HSA?
JENNIFER BENNETT: Yes, we get this question a lot. It's a lot of acronyms in this space. So the Health Care Flexible Spending Account, or FSA, also allows you to use pre-tax dollars on qualified medical expenses. But there are two important ways that the FSA is different. The first is that funds are typically use it or lose it by the end of the year. So they do not roll over from year to year.
And the second important difference is that contributions cannot be invested. You also can't have an HSA and an FSA at the same time, with one exception. And that is the limited purpose FSA, which is limited to qualified dental and vision expenses. The key here really goes back to looking into all of your options when you're selecting your health care for the year.
ALEX ROCA: Luckily, we did a full event on HSA's in June. And you can find the replay on the Learn Hub. Now, Sasha, what other health and wellness benefits should we be on the lookout for?
SASHA HEATHMAN: So it's becoming more and more common for employers to offer benefits that support women men beyond the traditional health insurance plan. So some examples include family planning, like Jen mentioned-- so adoption, fertility, infertility treatments, surrogacy, and then even post-family planning-- so menopause support, mental health, emotional being support, and fitness reimbursements.
Which, this year, I discovered that Fidelity has a backup dependent care benefit as well, which came in handy because last week I forgot that our daycare was closed. And I was traveling for work. And so had a quick panic attack, but was able to quickly utilize the backup dependent care benefit, which allowed me to drop off my kiddos at daycare free of cost.
So many employers do also offer a benefit called the employee assistance program, which that can offer confidential support in some other areas, like legal concerns, even estate planning-- so just being in contact with a lawyer to help with drafting legal documents like wills and trusts. You could also do guardianship-- excuse me, I couldn't remember, but guardianship for young kids if they're under 18. So that's just one of the benefits that a lot of people don't realize that they have until it's an emergency. So highly encourage you, again, be proactive in reviewing all of the new benefits or enhancements that your employer provides, because you might be surprised that when you do start looking, there's many options that are available to you that, again, can help give you discounts and subsidize the costs.
ALEX ROCA: Thank you for that, Sasha. Now, we're going to switch gears and talk about one of the benefits that can have the biggest long term impact on your financial future.
Many employers offer a retirement savings plan, something called a 401k or a 403b, if you work for a nonprofit or a charity. Sasha, can you share how you talk about these plans with your clients?
SASHA HEATHMAN: Sure. So when I'm talking with clients about their employer savings plan, the first question I often start with is, what do you remember about how your retirement benefits and plan work? And, surprisingly, some people, because it's been so long since they were hired, and maybe they set something up and never looked back, or there's so much to digest during your enrollment or onboarding, that, oftentimes, to retain everything is hard.
So how I start the conversations about the retirement plan is really educating on the three ways that your employer can help with your 401k or 403b. So the first is understanding what your employer match is, because you always want to contribute at least the minimum to receive your full match. And you'll also want to understand the vesting schedule-- so how long do you need to work at the company in order for those employer contributions to become 100% yours?
So while you're making your contribution decision, you want to aim to save at least 15% between you and your employer in order to stay on track for a retirement goal. And then the third piece is automation. So time definitely flies by. And you want to make sure that your savings keeps up with your lifestyle. So automating an increase of your 401k retirement contribution each year can make a huge difference in terms of your retirement readiness.
And if you're self-employed, you can apply some of these same principles to IRAs and self-employed 401k plans. So if your retirement plan is through Fidelity, you can log in to NetBenefits to view or update your contribution percentage, enroll in an annual increase program, and access different tools, calculators, and resources to help make sure that you are staying on track.
ALEX ROCA: Thank you for that, Sasha. One thing I want to add is that you can change your contributions and your investments, typically, at any time during the year. You don't have to just wait for enrollment season. So make sure if you want to make changes, if you want to look at your accounts, that you are updating them. Also, keep in mind your age.
If you're 50 years or older, there is the potential for a catch-up contribution which allows you even more savings into your account. There are a lot of different ways that you can save more money and make sure that you're invested in the right way.
We actually did an event earlier this year. It was Six Steps to Help Maximize Your Retirement Savings. With that, Jen, what other retirement savings benefits do employers sometimes offer?
JENNIFER BENNETT: Well, while the defined contribution plans, like the 401k's and the 403b's that Sasha talked about, are the most common, you might also see a couple of other things in this space. One is something called a defined benefit plan. These are also widely known as traditional pensions. They're less common today, but a really nice benefit if you work for a company that has one.
You might also see just a straight up profit sharing plan. So those are all retirement savings vehicles that should be taken into account in your planning. And then the other thing I'd call out here is that beyond that, some employers offer retirement benefits and services around retiree health care savings accounts and Medicare Services. Often, these are critical decisions as you approach retirement age. So there may be others that your employers offer in this space as well. And so my recommendation here is to reach out to your benefits team or HR and ask what they offer.
ALEX ROCA: Thank you, Jen. We've spent most of today talking about employer benefits, but maybe you're self-employed or thinking about taking that leap someday. Either way, it's worth understanding how you can build a benefits package for yourself. Sasha, can you take this one?
SASHA HEATHMAN: Sure. So you can still create your own benefits package that works for you. The biggest difference is you'll have to be proactive about it since there's no HR department sending you friendly email reminders about open enrollment. To help you get started, consider breaking up your benefits package into three sections-- health insurance, retirement plans, and supplemental insurances.
Supplemental insurances include things like life insurance, disability insurance, dental, vision, just to name a few. If you don't have any straightforward options for health care, like Cobra or joining your spouse or domestic partner's health insurance, then there are marketplaces out there that you can find affordable options. So that's health insurance.
And for the freelancer or self-employed for retirement plans, you also have several options depending on your situation. So a few to name out-- you can open up your own self-employed 401k, maybe a SEP IRA, traditional and/or Roth IRA. And then if you are enrolled in a high deductible health plan, you can also open your own HSA, health savings account.
Supplemental insurances-- as I mentioned earlier, life insurance, vision, dental, and disability, which short term and long term disability is huge, especially for the self-employed. Because the thing about self-employed is if you're not working, how is your business and how are you going to make money. So having disability insurance, in case you are not physically able to do your job, is a big factor to help make sure that you maintain some form of income coming in that can help support your household.
And, as we know, even though this is potentially adding more to do list, Fidelity does have great resources to help guide you and point you in the right direction. And specifically for the retirement plans, we do have a small business retirement team who can ask you a few questions related to how your business is set up so that they can help on which retirement plan would make most sense for you.
ALEX ROCA: Thank you for that, Sasha. There is so much more that we could talk about here, but I want to make sure that we touch on our last category-- those additional financial benefits. These are the benefits that people often overlook until they need them. Jen, can you walk us through a few of these?
JENNIFER BENNETT: Yes, of course. Happy to. So I will say this is a bit of a catch all, because these benefits do vary employer to employer. But here we've split them into two distinct categories just for example purposes. So I'm going to start with the financial security and protection grouping. And so we've already touched on a few of these.
Life insurance and disability insurance, these can help protect your finances in case of unexpected events like sickness, injury, or death. They can provide more security by ensuring that you and your loved ones will be taken care of if you experience something like a prolonged illness or a serious health event. You may be able to choose your level of coverage for both life, short term, and long term disability. Many employers will offer you baseline coverage, and then you can opt in to additional coverage at an additional cost to you if that is appropriate.
If you're self-employed, these are insurance policies that you can buy independently. And then there are some employers that offer things like legal assistance and estate planning support. These would include things like creating a will or establishing a trust. Using legal benefits like these can help you save money and also gain some more certainty about your estate plan. The last thing I'll call out here is that many employers also offer budgeting and retirement savings tools. So, again, this is a good time to remind you to think about your full financial picture as you're thinking also about your benefits.
ALEX ROCA: And I'll add that for life insurance, open enrollment can be your opportunity to increase your life coverage at group rates and sometimes with fewer medical requirements-- a great opportunity to revisit some of the things that you may already have in place. But what about tuition reimbursement and student debt? Sasha, I'll pass this one to you.
SASHA HEATHMAN: So this is definitely a benefit to be on the lookout for, especially since student debt is top of mind for everyone, but definitely women, because we know that women are getting more undergrad and graduate degrees and now carry about 2/3 of the student loan debt in the country. So it's great to see that employers are now offering an array of benefits to help manage that debt and also help prevent you from taking on too much in the first place.
So one benefit that I'll bring up related to student debt is something called the student debt 401k match, which this one is a little bit newer, but more employers are starting to offer. What this benefit does is it allows you to still capture your 401k match even if your budget does not allow for you to contribute to the retirement plans. So this one really helps when you are prioritizing your financial goals-- so paying off student loan debt, but also wanting to save for retirement-- the student debt 401k match, as long as you are making your payments to a student loan, then if your employer provides this benefit, then they will still honor their match to your 401k, which allows you to still be actively contributing to your retirement.
Other employers offer free or subsidized continuing education, tuition reimbursement if you are pursuing another degree or certification, and then also, if you are currently paying off student loans and your employer does not offer that student debt 401k match, then maybe they do help you make an extra payment to your student loans. You also may be able to work with a financial consultant or coach through your employer that can help you come up with a plan to help pay down your debt while also working towards your savings goals.
ALEX ROCA: Thank you so much. And we are doing so good on time that, Jen, Sasha, if you will allow me, I'd love to take some of the questions from the audience and bring them to the conversation. Awesome. So, Jen, I'll start with you. How can I find out whether my employer offers caregiver support benefits?
JENNIFER BENNETT: This is actually a pretty easy one. And I would say you could change what benefit you're asking about here. And my answer would be the same-- just ask. Take advantage of your benefits team, your HR partners, any online information that your company posts to ask the question.
Most employers make this information very readily available. They offer benefits because they want you to take advantage of them. And then the other piece I'd offer here is once you have the information, use the great resources that Fidelity has available online to help you understand them as well.
ALEX ROCA: Great. Jen, thank you so much. Now, this one is for Sasha. This is a question regarding the HSAs. Let's say an individual underestimates their HSA deduction at the beginning of the year. Can a lump sum contribution be made, or can an adjustment to the current payroll deduction be made during the year?
SASHA HEATHMAN: Sure. So, yeah, the good news about the health savings account is that you can adjust your contributions throughout the year. So if you do have an employer who has an HSA directly linked to the payroll system, you can make adjustments throughout the year to increase or decrease your HSA contribution.
On the flip side, if you have a separate health savings account outside of your payroll, then, yes, you can make lump sum contributions whenever you do have the money to contribute towards it, as long as you're staying within the IRS contribution limits. And, as a reminder, you do have to be enrolled in an HSA eligible health plan.
ALEX ROCA: Thank you for that, Sasha. I'm actually going to stay with you because there's a lot of HSA questions coming in through the chat. Can I continue withdrawing from my HSA for health expenses once my benefits end after I'm laid off?
SASHA HEATHMAN: So that is the beauty of the health savings account is that it is not use it or lose it. Which, to answer that question, yes, you can continue using your HSA forever to help you pay for your health insurance costs, whether or not you are with the same employer.
ALEX ROCA: Excellent. Thank you for that. Jen, when should I start thinking about estate planning and whether my employer offers those benefits?
JENNIFER BENNETT: This is a great question. So I think the first thing I'd want to share here is that please, for all of you that are tuned in today, start with completing beneficiary designations for all of your key accounts and insurance policies. It sounds like such a basic thing, but you would be surprised how many people don't do this. And it can really complicate things when you pass on. So please start with that important step.
The next thing I would recommend is consider a basic will to help protect what you've earned. Many employers offer a legal benefit-- again, just ask, and the benefits teams would be happy to help you with that. And then, really, it's once your needs become more complex, that's when you should begin to evaluate if an estate plan makes sense for you and your family on a go forward basis.
ALEX ROCA: Thank you for that, Jen. Great advice so far. I have another question I'm going to pull up. If I'm self-employed, what is the first benefit I should put in place? Sasha, for you.
SASHA HEATHMAN: Yeah. So for self-employed workers, remember you're creating your own DIY benefits package. And reviewing the short term and long term disability should be the first area that you explore. Because, remember, you still want to make sure that you have income coming in even if you're unable to do the work on your own.
ALEX ROCA: Thank you for that. Now, Jen, I have a question here for you. If I have life insurance through my employer, do I also need it through a private company?
JENNIFER BENNETT: Oh, that is a really-- that is an "it depends" situation. Part of it will be how you evaluate the life insurance that is available through your employer and if you are able to actually step up the coverage as your needs may evolve over time. In many cases, you can obtain the life insurance, sufficient life insurance, through your employer, if they allow you to do that step-up, which would come in additional cost to you.
There are occasions, though, where you may want additional insurance coverage for reasons that are very specific to you and your family situation, or if your employer does not offer as much flexibility in this space. And, in that case, looking at buying a policy outside of your employer may make perfect sense.
ALEX ROCA: Excellent. Thank you, Jen. Sasha, how do I decide whether to contribute to a traditional or Roth on my 401k or 403b? That's one of my favorite questions, so I had to bring it up when I saw it pop up.
SASHA HEATHMAN: Yeah. Well, just like the life insurance question, pre-tax versus Roth contributions is also going to be an "it depends" situation. But I will give you two items to think about when you are deciding between pre-tax and Roth or a combination of the two. So the first consideration is, what is your current tax situation?
So if you're looking for tax deductions to help lower your tax bill year-to-year, then that's where the pre-tax or traditional contributions are going to come in handy. And on the flip side, if you don't need any tax deductions, then Roth contributions are going to offer you tax free income later in retirement.
So evaluating your current tax situation-- and the other consideration that I always talk to clients about is let your budget also tell you what makes sense for you. So, for example, a pre-tax benefit effect allows you to save what you need to save, but also keeping a good amount take home pay for you to be able to use towards your other savings goals.
So if your budget feels a little bit tight but you do want to keep saving for retirement, pre-tax contributions can give you that flexibility. And then on the flip side, if your budget feels fine and you have extra money, then, again, looking toward that tax free income for future tax diversification is a positive thing.
ALEX ROCA: Thank you for that, Sasha. OK, so one last question to wrap up today's session. What is the one thing that you want to leave the audiences with when it comes to benefits? Jen?
JENNIFER BENNETT: Oh, gosh. If I had to-- I love benefits, kind of goes with my job-- but if I had to go with one thing I'd want to leave this audience with, please take the time to evaluate your benefits offerings year over year. And don't set it and forget it. Ask your employer what has changed, reflect on your life needs, any expectations of change you have in the coming years, and make an informed decision every year.
ALEX ROCA: Thank you for that. And, Sasha?
SASHA HEATHMAN: I'd say don't overthink it. So Jen mentioned earlier that, as your life evolves year to year and even in between the year, if you have a life event, you're going to be able to make adjustments to some of your benefits. And then if you change your mind, open enrollment happens every year, and so you can always adjust what you sign up for. So don't overthink it, and give yourself grace to make adjustments as your life changes.
ALEX ROCA: Excellent takeaways. I'll say that mine is very reminiscent to something Jen said earlier-- ask. If you don't know, just ask. And if it feels overwhelming, just start with one thing that makes sense for you right now. And do that every year, and you'll have the best package that you can while really taking advantage of every benefit that your employer is trying to offer.
Jen, Sasha, this was such a great session. Thank you so much for joining us. I know we covered a lot today. We'll have a slide that we're going to pull up so that you can access all upcoming events and to remind you on how you can get help.
You can now register for our special annual Fall Event Series. We've got an all-star lineup this year, and we're covering everything from getting started with your career and finances to planning your next chapter in retirement. To all of you watching, thank you for joining. And we'll see you again next month. Have a great day.
