If you work for a midsize or large company, you may soon be able to review your employee benefits package, as we are entering the open enrollment season. So, consider your options carefully, with an eye toward making changes appropriate for your needs.
Here are some of the key areas to look at: Retirement plan – Depending on your employer, you could change your 401(k) or similar retirement plan at any time of the year, but you might want to use the open enrollment season to review your contribution amounts. If your salary has gone up over the past year, you might want to boost your pre-tax contributions (including catchup contributions beginning at age 50). At a minimum, try to put in at least enough to earn your employer’s match, if one is offered. At the same time, look over how your contributions are allocated among the various investment options in your plan. You’ll want your investment mix to reflect your goals, risk tolerance and time horizon.
Life insurance – If your employer offers group life insurance at no cost as an employee benefit, you may want to take it – but be aware that it might not be enough to fully protect your family should anything happen to you. You may have heard that you need about seven to 10 times your annual income as a life insurance death benefit, but there’s really no one right answer for everyone. Instead, you should evaluate various factors — including your mortgage, your income, your spouse’s income (if applicable), your liabilities, the number of years until your retirement, number of children and their future educational needs — to determine how much insurance you need. If your employer’s group policy seems insufficient, you may want to consider adding some outside overage.
