Did you know that there are certain amounts of money that you can take advantage of through your employer? Now I am not talking about your well-earned paycheck, but other benefits that you could be tapping into. It just takes some proactiveness to access this money.
“Where can I find these funds?” For one, you can find this money in the matching of your retirement account, which most workplaces offer. A second place you can find this money is through a health savings account that the employer contributes to. Unfortunately, most people are either unaware of these benefits, or they do not take initiative in creating retirement accounts or signing up for health insurance plans. Both the earlier and the latter are at a loss because they are leaving money on the table.
If your employer is matching the contributions to your retirement account up to a certain amount, make it a point to reach that maximum contribution that will be matched so you can get that same amount of money in return. It is available to you, but if you don’t contribute to your retirement, then you will not receive that money. The first step begins with you.
Some people would rather pay off debt before they start saving toward retirement, and there is nothing wrong with that. However, I urge you to consider making just enough contributions to your retirement account to get the employer match– which would not be a bad thing to do while paying off debt. Remember: contributing to your retirement means you’re contributing to yourself!
Some employers may match up to a certain dollar amount to employee 401K accounts, regardless of income. For example: an employer may decide to match only the first $5,000 of your employee contributions. In this case, it would be worthwhile to contribute $5,000 in order to take full advantage of the offer.
Some employers match 100% of your contributions each year, up to a maximum of 3% of your annual income. For example- if your yearly income is $60,000, the maximum amount that your employer will match is $1,800.
Let’s shift to health insurance benefits. Having a health savings accounts (HSA) is way better than having a flexible spending account (FSA) because you are allowed to keep your money in the HSA for as long as you want. FSAs have a “use it or lose it” model: if you don’t use the funds in the account within a year, you lose it. I once lost $3,000 in an FSA and that was a hard pill to swallow. The reason I had so much money in the account is because I saved it with the expectation of using it toward the delivery of my first child, but my new insurance ended up financially covering everything. Most people jump for joy when their insurance covers costs but in my case, I was at a loss; and it was a hard lesson learned.
When it comes to HSAs, most employers contribute a certain amount to it annually. The average amount that companies contribute to employees with families is $1,500. Although that is the average, they can contribute up to $3,500 for employees with families and $1,750 for employees who are on their own. Employees who are 55 years of age or older can receive an extra $1,000!
So let’s recap and calculate everything for perspective: if you have a retirement account and you make $60,000 a year with an 100% employer match up to 3% of annual income, you can get $1,800 toward your retirement; and If you have an HSA as an employee with family, your employer can contribute the maximum of $3,500 to it. Combining the retirement match and the health insurance contribution brings us to a total of $5,300! Can you imagine leaving $5,300 on the table, annually? That amount can add up, quickly. I don’t know about you, but I’m taking my free money and running with it!
I hope that you have learned something valuable in this post, and I encourage you to reach out to your employer to learn more about the offered benefits. Trust me, you don’t want to leave your money behind on the table!
P.S.: I help physicians get out of debt and live wealthy lives. If you’re interested in this, click this link to book your free coaching consultation with me.