Getty Images With our New Year’s celebrations just behind us, now’s a great time to take a look at the benefits you get at work — and to make sure you’re squeezing every penny of value from them. Here’s how to do just that.
1. Save smart in your retirement plan.
Most employers no longer offer traditional pensions. So, if your employer offers a 401(k) plan or a similar defined-contribution retirement plan, it’s largely up to you to make the most of it.
In 2014, the limits on 401(k) contributions remain the same as in 2013: People younger than age 50 may contribute up to $17,500 toward their retirement. Those 50 or older can contribute $23,000. That gives most people plenty of room to raise their contributions.
If you can’t max out your 401(k), at the very least make sure that you’re contributing enough to take advantage of any matching funds your employer offers. Many employers will match your contributions up to a certain amount, typically between 3 percent and 6 percent of your salary, top give you an incentive to save. Contributing that much toward your retirement earns you free money. Take it — all of it.
Finally, take a look at your investments to see if your portfolio balance is in line with your preferred level of risk. After the big rise in the stock market — such as the one we saw in 2013 — you may find that stocks account for a bigger portion of your retirement assets than you’re comfortable with, in which case rebalancing would be a smart move. On the other hand, if you’ve been too conservative in your picks, diversifying to add more stock exposure could increase your upside potential, even if it comes with somewhat higher risk.
2. Don’t let your Flexible Spending Account go to waste.
A flexible spending account lets you set money aside on a pre-tax basis toward medical expenses. Usually, you establish at the beginning of the year how much you want to save, and then it’s up to you to submit bills throughout the year to get reimbursed for co-pays, doctors’ visits, dentists’ bills, and other medical expenses you incur.
If you still have a balance in your 2013 account, you should check with your employer to see how long you have to spend it. Many employers give their workers until March to use up money from the preceding year before they forfeit it. Alternatively, just this year, the IRS changed the rules governing flex plans to give employers a choice of allowing their workers to carry forward up to $500 from their 2013 flex-plan money to 2014. But not all employers adopted this new rule, so be sure to check with your employer to make sure your money doesn’t go up in smoke.
3. Make the most of your insurance coverage.
Many employers give their workers various types of insurance coverage at work, including health insurance, life insurance, and the option to choose other types of voluntary insurance policies. It’s important to understand what coverage you have, even though at most companies the open enrollment period during which you can actually make changes to health insurance plan options has already ended.
What you can do, though, is to look closely at your benefits with an eye toward avoiding any misunderstandings about what’s covered during 2014. You don’t want to incur a voluntary medical expense that ends up not being covered by insurance, leaving you footing the bill. Similarly, making sure you have the correct beneficiaries listed on your life insurance, and that any special insurance coverage you’re paying for actually makes sense for your situation is always a smart move.
Also, keep in mind that if in 2014 your family situation shifts — if your marital status changes or if you have a child — you can generally make changes at that time, even if it’s not during the open-enrollment period.
Don’t Waste a Penny of Your Benefits
Employers constantly try to cut costs, and benefits are a logical place to reduce costs in a way that’s not as visible as a pay cut. Stay on top of your benefits, and you’ll make sure you’re getting the most you can from whatever is available to you.
You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+.