Financial benefits offered by your company may not initially seem so black and white. Most employees may be generally familiar with their health insurance and retirement plan offerings, but they may be overlooking other benefits that could help them save, or protect them from the financial impact of an accident or illness. Here are some of the most common benefits offerings that could help you build your own personal wealth.
It may seem pretty obvious, but for many Americans, salary and compensation from their employer is their primary source of income. From a financial standpoint, a total compensation package can include base pay, annual bonuses and incentives, commissions, long-term incentives, stock plans, and HSA accounts. Collectively, these forms of compensation can add up to a bigger picture than just a standard paycheck. If utilized correctly, they can also be significant contributors to building wealth currently and for the long haul.
Retirement and Investment Accounts
Retirement plans are one of the fundamental benefits that most companies offer to their employees. However, there are many types of plans out there. These plans can include defined benefits plans (also known as a pension), defined contribution plans like 401(k), 403(b), 457, and SIMPLE IRAs. Your employer may also provide benefits such as deferred compensation plans or supplemental executive retirement plans. All of these plans have the goal in mind to help provide employees with income after they retire.
An event leaving you unable to work may have significant implications in your current and future cashflows. Insurance provides a way to bridge the gap in pay, and provides you with income when you otherwise may not receive any. Beyond health insurance, companies are beginning to offer a variety of insurance to employees including life insurance, disability insurance, hospital insurance, and even pet insurance.
Non-Cash Financial Benefits
Your company may offer a number of indirect pay or noncash perks which can provide immediate financial rewards in addition to salary, bonuses, or incentives. These perks can include a variety of different benefits such as vacation or sabbatical time off, employer-provided vehicles, paid meals and lodging, use of eating and athletic facilities, paid entertainment expenses, participation in educational reimbursement plans, free parking, vacations, country club memberships, cellphones and laptops, and much more. While they may not have a direct impact on pay, benefits like these can help offset expenses otherwise paid by employees, leading to an increase in cashflow.
The true magic happens when all of these pieces play together through holistic financial planning. With many of these offerings there are considerations on how they may impact you. For example, there may be tax benefits if you choose a Roth 401(k) over a traditional 401(k) plan, but those choices should be made on an individual basis, with the guidance of a fiduciary financial professional.
Understanding and appreciating your company’s entire benefits offering is the first step in potentially maximizing the options available to you. By utilizing your company’s available benefits, you can be better on track to building wealth that lasts. A licensed financial advisor can help you make those decisions and help you better understand how they impact your personal financial situation.
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