Do's and Don'ts of Employee Benefits

By Kerrie Beene, CFP®

During October and November a majority of people will be having open enrollment for benefits.  We encourage you to take the time to thoroughly review your benefit options. Make sure you pick the best options for your situation and do not leave any benefits on the table.   Below are some do’s and don’ts when reviewing your employee benefits.

Do

1. Take the time to compare the medical, dental, and vision plan options.  While it may be easiest to pick the plan with the lowest premium, that plan may not be the best option for your situation.  Some factors to consider when reviewing your plan are:

   1. Premiums

   2. Out of Pocket Expenses

   3. Prescription drug coverage

   4. Networks (Before switching plans or signing up for a new one, check the availability of doctors within that network) 

2. Sign up for disability coverage.  It is easy to think nothing will happen to us, however, a 35 year old has a 50% chance of becoming disabled for a 90 day period or longer before the age of 65.  While you can purchase a policy from an outside source, employer options are often the best place to start.

3. Sign up for life insurance.  Your personal situation will depend on how much life insurance you need but your employer is often the lowest cost provider.  Take the time to analyze how much life insurance you may need and maximize the benefit available to you through your employer and then seek outside insurance if needed. 

4. Take advantage of employer sponsored retirement plans. This could be a 401k, 403b, 457b, Simple IRA, etc.  Most employers offer a match, such as 3% of your salary.  This is money you do not want to leave on the table.  Be sure to contribute at least the percentage your employer matches to ensure you receive the full benefit.

5. Ask questions.  If there is a benefit you do not understand, reach out to your human resources manager and ask questions. 

Don’t

1. Wait until the last minute to enroll in your benefits.  Review your benefits as soon as possible and make sure you understand the options available.  If there is a benefit you don’t understand, reach out and get clarification.

2. Sign up for benefits based on your co-workers choices.  Make sure you are picking the best options for your personal situation.

3. Rule out supplemental disability options.  Some employers offer a supplement policy that will add coverage above and beyond the basic policy. Think about how much of your pay you would need if something were to happen and you needed to file for disability.  If the policy covers 60% of your salary, will you be able to manage without the other 40%?

4. Rule out the high deductible plan.  While signing up for a policy with a higher deductible can be scary, the health savings account available with this plan makes this a very attractive option.  For more information on health savings accounts, check out this article.

5. Rule out “other” benefits available.  Sometimes employers offer benefits such as dependent care spending accounts and legal plans.  If your employer offers a legal plan, this is something you could take advantage of if you need Estate Planning Documents set up. 

5 Ways to Get your Financial Life in Order

By: Kerrie Beene, CFP®

Happy New Year!  With 2020 in the rearview mirror, we are hoping for a great 2021.  

January is a great time to think about getting all of your financial paperwork organized.  Organizing will create a calm space, save time in the long run, and help prepare for tax season.  Below are 5 ways to help get your financial life in order.

Organize all your Paperwork and Accounts

• Organize all documents that are kept in physical form.  While we like to think we live in a digital world, often we still have important documents that need to be kept in a file in our home.  Take the time to get these files organized appropriately.  

• Organize all documents stored online.  Some documents can be stored in an online storage system such as google drive.  We recommend creating a secure organized folder system for this as well.  

• Utilize a password app for all of your passwords.  One of the biggest struggles clients have is remembering the password for all of their accounts.  We recommend utilizing a system such as LastPass to create a secure place to store all of your passwords.  Just remember to create a secure password for your password app login.  Once you have your passwords in one place, it is a lot easier to stay organized when you need to login to those accounts.

Create a Financial Snapshot of where you are Today

• Create a list of all of your assets and liabilities. Assets are anything you own and liabilities are anything you owe.  

Assets Liabilities

Checking Accounts             Mortgage

  Savings Accounts             Auto Loans

Retirement Savings         Consumer Debts

Investment Savings              Personal Loans

      Real Estate           Student Loans

Autos

• Calculate your Net Worth.  Net Worth = Assets - Liabilities. 

Track your Expenses

Create a Spending Plan (a.k.a. Budget).  This may be one of those dreaded things but getting control of your spending can be one of the most calming exercises you can do this year.  There are a lot of resources available to assist in creating a spending plan. 

• There are online tools such as mint.com and YNAB. These connect to your accounts and do some of the tracking for you. It will allow you to change how transactions are classified and create an online budget.  This may be a good option for you.  

• We have found the most success with clients who utilize an excel spreadsheet or google sheet.  This allows you to become more aware of your transactions and categorical spending because you are doing the categorizing yourself.  As we enter those expenses, we are rethinking whether the purchase aligns with our goals.

• We are very excited to announce that we have created a very easy to use google sheet called the Mindful Spending Plan.  This is available for our current clients and can be a service by itself as well.  We are also creating a course that includes the google sheet and videos on how to use it that comes out on January 15th.  

Create Savings Goals and a Debt Paydown Strategy

• Savings Goals allow us to have the cash available when needed and not use credit cards for those expenses. Below are a few example savings goals;

  1. Emergency Fund - 3 to 6 Months of Living Expenses in case of an emergency such as a job layoff or temporary disability

  2. Larger Expenses - Prepare for larger expenses such as auto expenses, home repairs, etc.

  3. Holidays/Vacations - Begin saving for holidays and vacations as your priorities allow.  Planning out how much you can save each pay period will allow you to create an appropriate spending plan for these expenses

• Debt Paydown - creating a debt paydown strategy will allow you to focus on getting rid of the unnecessary debt.  This will free up cash flow to fund some of the fun savings goals.  As part of our Mindful Spending Plan, we have included a debt paydown plan.  You can also find resources online to assist in creating a debt paydown strategy such as debt snowball or debt avalanche utilizing this calculator.

Automate, Automate, Automate

• The more you can automate bills, transfers to savings, and debt paydown, the more likely you will accomplish your goals.  

• Most bills can be set up to be automatically taken out of your checking account. Make sure you have prepared your spending plan and the money will be in the account. 

• Transfers can often be set up through your online banking website.  Once you have created your savings plan, calculate how much time until you need the money and create a weekly, bi-weekly, or monthly transfer to meet those goals

Happy New Year and Cheers to 2021!

Tips to Prepare for your Teenager's First Car

By Kerrie Beene, CFP®

Since Oprah stopped giving cars away in 2011, we recently had to face the challenge of getting our daughter a better vehicle.  While her getting older and purchasing this car should have come as no surprise, it came faster than we wanted (we should have started earlier!!) and I wanted to share a few things we did to prepare for the purchase of the car.   

• Utilizing Savings

  • Fortunately, when she was younger we started saving money she received for Birthdays and Christmas.  At the time, we did not designate it as car savings but we knew one day it would be used on her.  Consider this option when children receive cash as a gift.

  • We eventually designated this account as the car savings. This decision helped us save even more and gain the momentum needed. It is easier to save for something when there is a specific goal in mind.

• Throwing all Extra Funds into the Savings

  • Since she was able to work while going to school, she has been able to save money.  Any extra cash she had, she threw into the savings account.    

  • As parents, we decided to participate in the momentum and began matching her savings. We were able to encourage her by adding to her savings when we were able.   

• Create a Physical Savings Chart

  • There are a ton of printable savings trackers online and you can fill them in as you go to track progress.

  • It is also a constant reminder of the end goal and will help maintain unnecessary spending on other things

• When the time arrives to Purchase, Choose a Budget!

  • There is no right or wrong here, everyone is different. But it is important to decide ahead of time or that new car smell will play with your emotions. 

    • One school of thought is: the total value of all your vehicles should not be more than half of your annual income. (If you own 2 vehicles that are worth $20,000 each, or $40,000 total, your annual income should be at least $80,000.) 

  • As a couple, we sat down and talked about what we agreed was a fair amount to spend on a car for a 17 year old student.

• Involve your Teen in the Purchasing Process

  • Begin by looking both online and in person.  You want to teach your teen how to make an informed decision on type and price.

  • Researching ahead of time plays an important role in the safety of the vehicle and the purchase price.  

  • Starting early helps control an emotional purchase.  When you are not in a hurry, you can make more informed decisions. 

• Utilize a Teachable Moment

  • As a CERTIFIED FINANCIAL PLANNER™, I know the importance of teaching money lessons to kids at an early age. Use this opportunity to teach them about the true cost of vehicle ownership.

    • Teach about auto loan interest and financing options.

    • Share your philosophy on borrowing.  Include co-signing, who makes the payments, and what happens if you do not make the payments.

    • Don’t forget to talk about the forgotten costs of vehicle ownership, such as insurance, maintenance, and fuel.

CARES Act Part 3 - Unemployment Benefits

By Kerrie Beene, CFP® and Amy Irvine, CFP®, EA, MPAS®, CCFC 

Those who are unemployed or cannot work for coronavirus related reasons will be eligible for benefits under the new Cares Act passed on March 27, 2020. 

What is Unemployment?

There are several terms being passed around that all meet the qualifying definition:

1. Termination of employment

2. Layoff

3. Furlough

Who qualifies for the Pandemic Unemployment Insurance?

There are 3 qualifications that must be met

1. Ineligible for any other state or federal unemployment benefits

2. Unemployed, partially unemployed, or cannot work due to the COVID-19 public health emergency

3. Cannot tele-work or receive paid leave

4. Self-Employed individuals who have had to “close their doors” and are unable to qualify for the small business loans offered through the CARES Act

This will include employees who have tested positive for the corona-virus, as well as, those who must leave their job to provide full time care for a family member or other relative but do not have access to paid leave benefits. 

The new law has 2 approaches to assist the normal state-based unemployment programs:

1. A pandemic unemployment assistance program which matches the normal state unemployment rate plus $600 for unemployed workers who would not normally be eligible 

2. An extension of unemployment compensation by 13 weeks beyond the eligibility time states provide under current law

Differences from Regular Unemployment Benefits

Includes workers who are:

• Self-Employed

• Independent Contractors

• Gig Economy Workers

• Those who do not have sufficient work history to qualify for regular benefits

Waiting Periods:

States normally have a one week waiting period and there is now federal financing for states without the waiting period.

Benefit Amounts and Time Frame

The amount varies by state, is subject to a minimum, and is increased by $600 from the Federal Pandemic Unemployment Compensation Program.  

Unemployment benefits are based on prior wages, often on the last 4 quarters. 

If you are already receiving benefits at the state level, the $600 weekly increase will be provided as a supplement.  

Self employed workers will have to have proper work and pay documentation. The benefit amount will be calculated using a formula from the Disaster Unemployment Assistance Program.

How to Make the Holidays Full of Emotional Wealth

In this week’s blog, Financial Planner Kerrie Beene, CFP® shares ideas on how to make the holidays more meaningful.

As I was preparing to write this article, I had many different ideas; ways to save money while shopping, ways to reduce holiday stress, and ways to find the perfect gift.  However, if I am being honest, that really isn’t what I want the holidays to be about. When I think about the holiday season I have many different emotions; excitement, stress, joy, overwhelm, sadness.  However, as I get older and learn to cherish time more than anything, I realize that the Holidays are a very special time that should not be taken for granted and I do not want the negative emotions to overshadow the positive emotions.  

So this year I am choosing to do the following 3 things and encourage everyone to consider doing them also:

Suggestion #1: Don’t get caught up in Consumerism 

Consumerism is the preoccupation of society with the acquisition of consumer goods. Basically, we like buying stuff… more than we should. The National Retail Federation conducted a study that breaks down American spending on gift buying during the holidays:

• 33% expected to spend at least $1000 on gifts.

• 22% expected to spend between $500 and $999.

• 29% expected gift spending to be between $100 and $499.

• 3% planned to spend less than $100

• Remaining unknown

It is really easy to overspend trying to find the perfect gift for everyone. We live in a time where most people have the things they need and a majority of people have most of the things they want. 

So, I encourage you to not get caught up in consumerism.  Take the time do buy fewer, more meaningful gifts. 

Suggestion #2: Focus on the Little Things

Christmas is celebrated to remember the birth of Jesus Christ. Christmas is now celebrated by people around the world, whether they are Christians or not. It is a time for family and friends to come together and remember the good things. The gift giving part is to remind us of the gifts given to Jesus by The Wise Men. While, sometimes the gift giving is out of control, I do believe those we are buying gifts for are out of love. 

With the suggestion of “focus on the little things,” I am not telling you to buy people “little” gifts, I am saying focus on getting to know those you love. Feel free to buy them the smallest or biggest gift you prefer, however, spend the quality time to actually get to know them and find out the little things that they love or are important to them. Better yet, focus on them with the “little” amount of time you have with them during the Holidays. 

This leads to the 3rd Suggestion.

 Suggestion #3: Have Meaningful Conversations

Two things drive me crazy when talking to others: 1) While you are talking to them, they are looking at their cell phone, and 2) They are looking at you, but you can tell they are not actually listening to you. Sadly, this is the majority of the conversations I have.  Once you start paying “real” attention to people, you notice that most people are not paying attention to anyone, ever!

To listen intently, is to not only listen to what they are saying, but also to not be thinking about what you are going to say “next.”  Take the time to really listen to people. This is something we should definitely be doing during the Holidays, especially because we normally do not get to spend this type of quality time with the ones we love. 

P.S.  Put your cell phone down! If your excuse is that you use it for your camera, then treat it like a camera.  Take the picture and then put it away. All of those social media posts can be made later, when you are alone and away from the ones you need to be spending time with. 

Medicare Part D - Parts and Pieces

In this weeks blog, Financial Planner Kerrie Beene, CFP® digs into the parts and pieces of Medicare Part D - Prescription Coverage:

What is Medicare Part D?

Medicare Part D is an optional U.S. federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs through prescription drug insurance premiums (most professionally administered prescriptions are covered under Part B)

Do you have to have Medicare Part D?

Medicare Part D is optional.  However, if you do not enroll, you may pay very high prescription drug coverage costs.  Additionally, if you do not enroll when you first become eligible at age 65, you may pay a lifelong penalty if you decide to sign up later. 

For those that choose to sign up, understanding the differences in the plans is very important. In general, the higher the tier, the higher the member’s out of pocket cost for the covered drug.   

Tier 1 - Preferred Generic

This is the lowest tier.  This is the least expensive drugs your plan covers, includes preferred generic drugs. 

Tier 2 - Generic 

This tier includes preferred generic drugs that have proven to be the most effective in their class. 

Tier 3 - Preferred Brand

This tier includes preferred brand drugs and non-preferred generic drugs.  

Tier 4 - Non-Preferred Drug

This tier includes non-preferred brand drugs and non-preferred generic drugs. 

Tier 5 - Specialty Tier

This is the highest tier. It contains very high cost brand and generic drug, which may require special handling and/or close monitoring. 

When trying to decide which plan to choose, it is important to think about the following factors:

• How often you take prescription drugs

• Do you take generic, brand name, or a combination of both

• Deductible preferences, such as, a $0 deductible plan with a higher cost-sharing or a higher monthly premium

• Your copay and coinsurance options

• Know what happens if you go into the Donut Hole

What is the donut hole? 

Most Medicare Part D plans have a coverage gap. This coverage gap is called the Donut Hole. This is the time period after you and the drug plan have spent a certain amount of money for covered drugs, then you have to pay all costs up to the yearly limit. Once you have hit this limit, your plan will help pay for covered drugs again.  For 2020, the gap starts when you’ve spent $4,020 on covered drugs.

In 2020, the donut hole will close for generic drugs.

Picking a plan can be frustrating and confusion.  Just be sure to take the time to understand which tier/plan is best for you and do not hesitate to reach out for guidance.