WTOP Interview: How Your Company Benefits Can Protect Your Financial Plan

Interview Transcript:

Hillary Howard: It is 5:12. It’s open enrollment time for many companies, so you can review valuable benefits, like health or life insurance that are provided through your employer. What’s not so widely understood, is how these benefits can protect your overall financial plan.

Shawn Anderson: Joining us live to talk more about it, Dawn Doebler, co-founder of Her Wealth and Senior Wealth Advisor of The Colony Group in Bethesda. Good to have you back.

Dawn Doebler: Thanks, Shawn!

Shawn: How can our employee benefits protect our finances in long term financial health?

Dawn: Well, you know Shawn, many people don’t take the time to review their employee benefits annually. And now is the time because open enrollment is almost closed and we often look at these benefits as part of the rewards of our work, but they really are also an important part of your overall financial plan. So first, employee benefits can put more money in your pocket by cutting your taxes. And we’ve spoken before about maximizing your 401k contribution and how the after-tax cost of that, really isn’t as high as you think. And accounts like the health savings account and Flexible Spending Accounts save you money by allowing you to pay for expenses with pre-tax dollars.

I also wrote about some of the more subtle advantages of these employee benefits and that is that many of our major financial risks in life can be managed or at least partly covered by effectively using your benefits.

Hillary: What are some of the real risks to our finances that these benefits actually cover?

Dawn: Well Hilary, I want to start with a potentially high but more subtle risk and that’s the risk of inflation. 401(k)s are thought of as a way to support our spending in retirement, but we often miss the importance these plans have in maintaining our future purchasing power. Of course, this assumes you invest your plan in equities and other investments where growth outpaces inflation. Our recent market volatility may cause you to feel uneasy about investing for retirement. But moving into a money market, means you may not outpace inflation over the long term. A more obvious risk that can be covered, are health risks that may be covered by the company offered health insurance.

If you go to our blog at herwealth.com, you can find an article about Five Steps to Maximize Your Heathcare Plan. Premature death is certainly another risk and especially if you’re a sole breadwinner if you have children. And two advantages of employer-provided life insurance is that costs are often lower and underwriting requirements are often less stringent. So, if you have a medical history that either prevents you from getting coverage or makes it expensive, it may be your only option. And lastly, certainly, the risk of disability can be covered by employer-provided disability insurance. There’s a real substantial risk to you and your finances if you lose your ability to work and you have higher health care costs.

Shawn: Dawn, we only have 30 more seconds. As we review our benefits, what should we be asking ourselves?

Dawn: Well, two questions that we put in the article to ask yourself:

  • Has anything changed in the past year that might suggest changes in order in your benefits?
  • And do you anticipate anything in the coming year that may warrant different selections?

Stay aware of those open enrollment deadlines and budgets some time to review your options, so, you have time to make those changes. That really may help you protect your financial picture in the coming year.

Hillary: Alrighty, Dawn. Thanks so much. That’s Dawn Doebler, with The Colony Group in Bethesda. Read more at WTOP.com, search Her Wealth.