Congratulations on your first professional job. Working full time means you’re probably earning more pay than you’re used to and you may have benefits for the first time. Employee benefits education is important to help you make the most of your new opportunity. In honor of financial literacy month in April, take the time to educate yourself to help you plan a secure financial future. Keep these tips in mind.
Understand what benefits are available to you.
Be sure to review the employee benefits package offered by your employer. This typically includes health insurance, retirement saving plans, life insurance, disability insurance and more. Make sure you understand what benefits are available and how to enroll in them.
Know the enrollment deadlines.
Your employer may have specific dates for enrolling in various benefits programs. Make sure you know when these deadlines are and make a plan to enroll before the deadlines pass.
Review your health insurance options.
Health insurance can be one of the most important benefits offered by your employer. Be sure to review the options available to you, including the different types of plans and their associated costs.
Consider a retirement savings plan.
If your employer offers a retirement savings plan, such as a 401(k), consider enrolling as soon as possible. Even small contributions make a big difference over time.
What percentage of your salary should go toward retirement savings? A good rule of thumb is to put about 10-15% of your salary toward retirement. Most companies offer 401(k) plans which are important to start investing in early. A percentage of your paycheck will go straight toward your 401(k) to help build your retirement savings. Some companies offer an employer match for your 401(k) plan. In other words, they’ll match the amount you contribute to your retirement plan up to a certain limit. Employer matches count toward the percentage of your salary that should go toward retirement savings. The sooner you can start saving for retirement the better.
Learn more about employer matches for your retirement savings.
Understand your paid time off benefits.
Many employers offer paid time off benefits, including vacation days, sick leave and holidays. Be sure to understand how these benefits work and how to request time off.
Think about life insurance.
Another common benefit is life insurance. It will pay a set amount to your beneficiary upon your death. You may be wondering, what is a beneficiary? A beneficiary is the person who will receive the money. People often select a spouse, parent or other family member. Your beneficiaries may want to use this money to help cover funeral costs. Sometimes a certain amount of life insurance (often one times your salary) is included as part of your benefit package. You may have the opportunity to purchase more coverage. It is important to know that if you leave your job, your coverage most likely will not go with you.
You can learn more about what is a beneficiary and how to choose yours.
Consider disability income insurance.
Disability income insurance may be available through your employer. It comes in two forms: long- and short-term. It protects your ability to earn an income and can be used to support you and your family when you cannot work by replacing a portion of your income and giving you time to get better.
One common myth about disability income insurance is that you won’t need it right now because you are young and healthy. The chance of becoming disabled is greater than you might think. In fact, 1 in 4 of today’s 20-year-olds will become disabled before they retire.1 Did you know that accidents typically aren’t why one would need disability income insurance? Back injuries, heart disease, cancer and other illnesses cause most long-term absences.
Learn more about the long- and short-term disability coverage.
If you still have questions about your benefits, don’t hesitate to reach out to the person who coordinates benefits where you work. A trusted financial professional can also provide information and guidance as you grow in your career.
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While you can learn more about our products on this website, this information is no substitute for the guidance of a qualified professional. If you’re serious about assessing your financial wellness, contact a financial professional.
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