The views expressed in Economy Matters are not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System.
Editor's note: Throughout Economy Matters, "Southeast" refers to the six states that, in whole or in part, make up the Sixth Federal Reserve District: Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee.
Financial Tips from the Atlanta Fed: Employee Benefits—More Than Just Perks
Nota del editor: Este artículo también está disponible en español.
Are you a new graduate entering the job market? Re-entering the labor force or looking for a different career? Many jobs offer benefits in your overall compensation package that can have a big impact on your current and future financial well-being. Even if you are currently enrolled in a benefits plan at work, these tips can help you navigate several types of benefits offered and how they can help you build wealth and safeguard your money.
- Health insurance can lower your risk from a loss due to an unexpected emergency such as an illness or injury, but it’s important to know what questions to ask when choosing a health care plan. If you are 26 or younger, it may make sense to stay on a parent’s plan if coverage is available.
- Flexible spending accounts can help you cover out-of-pocket health care costs, and some plans also allow funds to be used for expenses such as childcare, parking, and transportation. The money set aside in these accounts is not taxable, which can save you money.
- Ask if your employer offers a defined contribution retirement plan, such as a 401(k) or 403(b) plan. Employers usually match a percentage of your contributions, and you should check if enrollment is automatic or if you need to take action to enroll. At the minimum, try to participate at the level of your employer’s match so you don’t leave money on the table. If you can’t reach this level yet, make it a goal when you receive a salary increase or a bonus.
- Some employers also provide a traditional defined benefit (pension) plan, which might require an employee contribution. Small employers might contribute to an Individual Retirement Account (IRA) on your behalf, or you may start one on your own. The key to success in any retirement plan is to start early to give your savings the most time to grow.
- Salary increases and bonuses (including hiring bonuses) can seem like permission to splurge, but they are great opportunities to save. Extra income provides the opportunity to pay down debt (including student loans), increase retirement savings contributions, and save for long-term goals, such as a down payment on a home.