Planning a Sabbatical

The Dream Life

How often do you find yourself comparing your life with those “living the dream?” We constantly fill our time with these thoughts. Buy this product and your life will dramatically improve. Take this action and your life will have no worries. One evening while watching TV or one morning while on your way to work, count how many times you hear this message.

Eventually, we buckle to this Chinese-water-torture-style marketing. Even when the messaging does not convince us to buy, we still compare our lives to those living the dream. For example, consider how our society reveres Hollywood stars, the wealthy, and the powerful. We look at them and tell ourselves, “If only I could have this, my life would be complete.” These lives play out with leisure and are full of happiness. Or at least, this is what we think.

How can you get more of these features in your life?Enter the sabbatical. Often, we associate a sabbatical with the college professor who takes time off to study or travel the world. However, many companies provide a sabbatical as an employee benefit. Charles Schwab is one example. For every five years of qualified service to the company, the employee receives one paid month off. The employee may still use his or her normal vacation during the year as well. As you can see, this allows for many possibilities.Still, most companies, primarily small ones, cannot provide this benefit, which keeps the sabbatical at bay.

How about those people who have the dream life?

Take two sailing stories, for example.

Brian Trautman and his crew produce the popular YouTube series “SV Delos” and have had many favorable life experiences. Brian was a software engineer who worked 70-hour weeks (2.) He notes in his blog, “My priorities were a lot different then and I lived to work rather than worked to live (2.)” Bitten by the sailing bug, Brian developed a four-year plan to travel the world that involved reading as many sailing blogs and as much sailing material as he could. The four-year plan included Australia as a destination and a budget to get there.

Once the sailing fund emptied, the crew had to find ways to pay for their adventures. In a popular blog post, Brian lists four of their early practices for continuing the journey.

  1. Brian would work remotely a few hours each day on IT projects (3.)
  2. The crew would work as hard as it could in the off-season, saving money to fund the next season (3.)
  3. Everyone paid his or her own way, including family and friends who visited (3.)
  4. They took advantage of moneymaking opportunities whenever and wherever they could (3.)

Brian also notes that part of the success of the Delos journey originates from the frugal nature of sailors. “… (C)ruisers are incredibly cheap. Imagine the cheapest person you know, then double their level of cheapness. Most cruisers are still even cheaper than this, and for good reason. The majority of people are trying to stretch every cruising dollar- just like you.”

The cost of this lifestyle is great, not necessarily in money terms, but in terms of opportunity by missing time spent with family and friends. Brian notes that if the journey wasn’t this way, it wouldn’t be worth it.

The second sailing story focuses on SV LaVagabonde. The crew of LaVagabonde, Riley and Elayna, are world cruisers like the crew of the Delos. To fund his adventure, Riley notes, “For eight long years, I worked offshore on oil rigs and in the mines of Western Australia, saving every dollar possible to be able to afford a halfway-decent Yacht (5.)” Riley also spent significant time studying where to buy his boat. He found that Europe was much cheaper than Australia.

Here are a few tips from Riley and Elayna to keep things moving.

  1. Research a place before you go.
  2. Let others be generous towards you. You both may enjoy it.
  3. Try to find an internet cafe or library instead of a restaurant.

For purposes of a sabbatical, not only will this help you save money if you are traveling, but it also points out the implied benefit of using the free services you may have access to use.

Today, both crews are gaining support through Patreon, a website through which fans can contribute to supporting a group in creating videos, music, and webcomics (4.) They are doing what they love and are giving back by sharing videos that have turned a sabbatical into a new way of life.

Examine the why for your sabbatical

Taking time off work is valuable in terms of preventing burnout and getting to spend time with family and friends. However, taking extended time away from work does not necessarily make for a sabbatical. Rather, it becomes an extended vacation. A sabbatical requires a cause or purpose for taking time off from work or your current life. The second differentiation between a sabbatical and a vacation is the cost. If the cost is not high, you may be justifying an extended vacation. Think again about the cost our sailors have paid in missed time with family and friends.

The purpose of a sabbatical typically shows up in a person’s core values in the form of goals and objectives. notes, “The most meaningful sabbaticals are planned ones – with specific goals and objectives designed to benefit both you and your company.” Do your core values show up in your reasoning for the sabbatical?

Sabbatical benefits

A workforce experiences many benefits from sabbaticals. For starters, when an employee takes a sabbatical during a recession, the company can reduce expenses while the employee takes the time to pursue a lifelong dream. Also, the company may be able to save enough money to avoid layoffs during an economic downturn (6.) While management and executives are away taking their own sabbaticals, someone will need to step into the empty role for a short period of time. There is value in creating impromptu training for the next worker who may occupy the role (6.)

Beyond the benefits to the company, sabbaticals provide an important intercultural financial practice – learning what it’s like to spend the money you saved. Unlike most Americans, who have a spending problem, those who save for decades often develop the habit of reducing their spending while still collecting cash. While such an action is noble, retirees often experience a strong urge to not spend in retirement. They forgo life-changing opportunities. The benefit of a self-funded sabbatical is that it gives you the experience of enjoying your money along the way. Later, when you cannot work or officially retire, spending the money does not become an issue. The biggest benefit involves the fact that saving and planning habits have already been settled. You get to enjoy “retirement along the way.”

How younger workers may use a sabbatical

Millennials have gained a reputation for changing jobs often. noted in an article last year that about 50 percent of Gen Y planned on staying at their current employer (7.). Sixty percent were open to new opportunities (7.) The article also pointed out that only 29 percent of Millennials are emotionally and behaviorally engaged with their jobs or companies.

The reasons for these frequent job changes are not discussed here but are brought up to explain the opportunity that exists in the practice of changing jobs often. The self-funded sabbatical may be a perfect opportunity for this generation to find more happiness and fulfillment while highlighting the financial behaviors discussed above. However, when planning a self-funded sabbatical, it is important to avoid missing any important benefits, like vesting (the schedule of how long an employee must work at a company before the employer’s match becomes the employee’s property) of company matching on 401(k)s. Sometimes, the vesting period lasts up to six years.

Delaying a traditional retirement may be a setback for younger workers who plan on taking several sabbaticals during their professional careers. Time away from work may result in periods of not saving money or, worse yet, dipping into savings earmarked for senior years.

However, while some non-Millennials aren’t willing to even consider the idea of a self-funded sabbatical, younger workers may be willing to take on this risk that may require working later in life. In fact, there are several benefits to working after the age of 65.

-Living longer. An Oregon State University study found that “working past age 65 could lead to longer life, while retiring early may be a risk factor for dying earlier.”

-Employer benefits. You may be able to get health insurance, paid vacations, and other traditional benefits.

– Reduced withdrawals from your portfolio. Because you are earning income, the needed withdraws from your other assets should lessen

– Social. Many people do not realize the importance of interacting with peers. This keeps our minds engaged and can increase happiness.

Mechanics of a self-funded sabbatical

Let us assume that you have completed the process of determining why you want a sabbatical and you agree that you can use this self-created benefit as you advance in your career. Now it’s time to figure out the funding. To complete this, we need a fictional case study to explain the math. Our example will not consider taxes and other important things like health insurance. This is where the benefit of working with a Certified Financial Planner may be realized.

Consider Jan, who is in her early 30’s and has been moving from job to job every few years as she climbs the corporate ladder. Currently, she makes $65,000 a year and would like to take a one-month sabbatical to help a not-for-profit take care of disadvantaged youth. Jan is considering taking this sabbatical in either 36, 48, or 60 months and is interested in determining what she needs to save each month to carry out this goal.

If Jan will need $5000 for use in 36, 48, or 60 months she will have 35, 47, or 59 months to save while she works. Jan will have access to different vehicles to save the money, like CDs, bond mutual funds, stock funds, and money market funds. Jan likes to play it safe and isn’t willing to subject her savings to variations in the stock or bond market. She will be using low-yielding instruments like CDs or money market funds. Jan can save the following amounts every month to amass her $5000.

Time to Sabbatical Required Monthly Savings

60 months-$84.75

48 months-$106.38

36 months-$142.86

If Jan has some flexibility and reasonable outlays, she should be able to accomplish her goal of saving $5000. Even if she runs a tight budget, Jan will likely be able to cut out a low-value cost to live her dream experience.

Let’s take the example a step further. Assume Jan spoke to a friend who recommended she invest the monthly contributions into moderate-risk items like bond mutual funds and a small portion into blue-chip stocks, creating a return of three percent yearly. How would Jan’s required monthly savings change?

Time to Sabbatical Required Monthly Savings Earning 3%

60 months-$ 78.75

48 months-$ 100.39

36 months-$ 136.87

As you can see, the power of compounding reduces Jan’s needed monthly contribution. The longer the time until she takes the sabbatical, the larger the benefit from letting the money work. Either savings plan will make Jan happy. The money and regular action of saving are simply the means to the end of Jan being able to work with the disadvantaged children. Both plans are doable.

On a side note, you may even be able to include some of your work benefits, like unused vacation time, to fund the sabbatical. Although this makes the calculation more complex, working it into the picture may reduce your needed monthly savings. However, you may be forgoing the use of vacation time along the way.

How does a self-funded sabbatical affect long-term savings?

Jan’s savings will put her on track for her sabbatical, but she cannot forget about the long-term picture. She will somehow need to make up the missed savings for the month when she will not be working. With moderate increases in her long-term savings (on top of the savings required to fund the sabbatical), she will be able to keep her retirement plan on track as well. Jan can increase her retirement account savings by one of the following amounts to make up for the month she will not be working.

Time Until Sabbatical Required Increase in Monthly Retirement Savings

60 months 1.69%

48 months 2.12%

36 months 2.85%


Next steps

If you plan on working self-funded sabbaticals into your career, make sure you follow the correct steps.

– Identify the why behind your sabbatical.

– Decide how long you want to wait before taking the sabbatical.

– Figure out your monthly savings requirement and the adjustment to your retirement savings plan.

– Start saving and investing.

– Enjoy the sabbatical.

Should you have any questions or concerns, please feel free to contact me at 317-805-0840 or



1.h”What Are Sabbaticals?” What Are Sabbaticals? | yourSABBATICAL., n.d. Web. 19 June 2017. <>.

2. Trautman, Brian-trautman. “How do we afford to sail? (Part 1)–By Brian.” SV Delos. SV Delos, 02 Mar. 2017. Web. 19 June 2017. <>.

  1. Trautman, Brian-trautman. “How do we afford to sail? (Part 2) -By Brian.” SV Delos. SV Delos, 02 Mar. 2017. Web. 19 June 2017. <>.
  2. h”How can we help you?” Types of questions. N.p., n.d. Web. 19 June 2017. <>.
  3. “How I Bought The Yacht and Afford to Sail.” Sailing La Vagabonde. N.p., n.d. Web. 19 June 2017. <>.
  4. “Facts and Figures.” Facts and Figures | yourSABBATICAL. N.p., n.d. Web. 19 June 2017. <>.
  5. Gallup, Inc. “Millennials: The Job-Hopping Generation.” N.p., 12 May 2016. Web. 19 June 2017. <>.
  6. Schlesinger, Jill. “Working past age 65 has many benefits.” Chicago Tribune. N.p., n.d. Web. 19 June 2017. <>.

Leverage Your Work Life Insurance

Life throws us curveballs all the time. Most of these curveballs we navigate easily, but some end in misfortune with a death. Typically, if satisfactory planning is not completed, the bad luck may continue for months, years, or even decades in the form of lost income, medical bills, or final expenses. How does this happen?

Consider your family and how losing an income might change its standard of living. Do you have children? Look at your wishes for your children and ask yourself what will go unfunded if you were to pass away tomorrow. What about your spouse? What plans will go unfulfilled because of your loss? Don’t forget about debt on homes, cars, businesses, and other key items.

As you can see, having enough life insurance is important to a financial plan and risk management. (Click here to learn more about risk management.) People spend extended periods of time remaining underinsured for simple reasons like they don’t know enough about life insurance or they don’t want to go through the underwriting process.

Taking advantage of employer-provided life insurance is a great way to easily provide proper coverage. However, it is not the best alternative for everyone.

Will I have access?

Not all employers provide access to a life insurance benefit. In fact, the Bureau of Labor Statistics news release from March 2016 notes that fewer people have access to a life insurance benefit (55% for private industry) than to medical or retirement benefits (1.) Generally, plans cannot discriminate in terms of who has access to the plan. The insurer commonly requires that 75 percent of eligible employees participate in contributory plans. Also, life insurance benefits may be different based on earnings or employment position. However, the employer will not be able to set benefits for specific employees to prevent discrimination (2.)

How much life insurance do I need?

As with all financial planning, general rules of thumb work only in general, and general advice does not relate to individual circumstances. However, it is a good idea to start with generalities for comparison purposes.

The 10x factor

Simply take your annual income and multiply it by 10. For example, a $100,000 salary needs coverage of $1,000,000. This approach assumes that income and future obligations will be enough with this figure when, in fact, you may need significantly more or less.

A thorough calculation will consider future spending by your spouse, the educational needs of your children, health care expenses for aging parents, your current debt, your assets, the liquidity of current assets, your philanthropic wishes, and taxes.

Because of this complexity, it is a good idea to use a calculator or a professional to assess your life insurance needs. If you use the latter, make sure the insurance agent puts your best interests first and clearly explains the policy. Ask, “Could you describe the downside of this policy? May I repeat the policy terms in my own words?” Review the information for which the agent asks in assessing your needs. Did he or she inquire about each area listed above?

Remember, insurance protects you or your family from a low-probability and catastrophic event. (Click here for an understanding of Risk.) Insurance in its purest form is neither a savings vehicle nor a way to reduce taxes. In fact, insurance should be regarded as an expense to transfer risk.

Using your group policy is a great starting point, but comparing costs for more coverage is a good idea.

Cost comparison of university term

Low Load Life Insurance (4) was used as an outside proxy. The information below compares an individual policy with a group policy provided by Purdue University and is for illustrative purposes only (3.)

The chart below shows annual premiums for an added $250,000 of coverage at the ages of 35, 45, and 55. The term limits for the nonunisex nontobacco group (individual policy) provide level term coverage up to age 65, while the unisex group will see rate increases in five-year increments. For example, people age 30 through 34 pay the same premium and a rate increase occurs for the group starting at 35, then 40.

Upon an initial review, it appears that the group insurance is cheaper than buying an individual policy. However, premium increases every five years does influence the total premium paid over time.

Let’s examine the results if we assume that $250,000 of life insurance is purchased for coverage through age 65 and look at the average premium each year to account for the unisex group rate increases.

Quickly, one may see a different story in the average policy premium paid, leaving one wondering about the best strategy or maybe starting one’s career with the unisex policy and later moving to an individual policy. However, one must be careful with the latter notion, as higher ages and changing health conditions over time may result in higher premiums.

What are my next steps?

First, work with free online life insurance calculators to gain a better idea of the coverage you need. Note that the calculators will not use the same assumptions, so you will end up with a range of coverages. However, this should place you in the general area you need.

Second, what is your current state of health? The tables mentioned a best class and standard nonsmoker; the better your health, the lower your rate will be. Upon examining the state of your health, do you think you would be in the best class or the nonstandard class?

Three, start comparing your choices with premium comparisons. This stage may involve conversations with your human resources representative and insurance agent, as well as online research. Be sure you don’t buy policies that don’t meet your needs.

Still feeling overwhelmed? Give me a call at 317-805-0840 or email me at to discuss your specific situation.


  1. US Department of Labor. New Release Bureau of Labor Statistics. N.p.: US Department of <Labor, n.d. Print.>.
  2. GROUP TERM LIFE INSURANCE. N.p., n.d. Web. 19 June 2017. <>.
  3. “Term Life Insurance.” – Benefits. Purdue University, 2015. Web. 08 May 2016. <>.
  4. “Welcome to LLIS.” The Advisor’s Insurance Advisor. Low Load Insurance Services, Inc. Web. 08 May 2016. <>.

Leverage Your Employer Healthcare Insurance

Healthcare plans are important to our quality of life and remain one of the most important benefits employers provide. Healthcare keeps citizens productive. Yet, the issue remains a hotbed for politicians, business owners, workers, and citizens. We see the headlines coming out of Washington from politicians and the posts from our friends on social media. How does the issue affect business owners and workers?

Business owners need healthcare as part of a great overall benefits package to keep and attract top talent. Workers express concern about healthcare benefits as a tool to provide for and take care of their families. This piece will focus on the common differences between a high-deductible plan and a preferred provider plan.

What is the difference between a high-deductible plan (HDHP) and a preferred provider plan (PPO)?

The major difference between these types of plans is out-of-pocket costs. The PPO requires a higher monthly premium and lower deductibles. The high-deductible plan mandates a higher deductible with payment of a lower premium. Also, a high-deductible plan may allow you to set aside funds in a health savings account, health reimbursement account, or flexible spending account. Each of these instruments creates tax savings for approved medical expenses (1).

The number of employers that offer HDHP has increased to 28% in 2016 from 7% in 2006 (2.) As a means of keeping costs low in a healthcare plan, businesses gather information about costs for lab work, specialists, doctors, and other medical services that employees may use. This accounts for the increasing number of high-deductible plans.

Which plan should I choose?

To answer this question, you’ll need to consider many factors. Here are a few to start:

–    Your current state of health: Consider how much you have paid in and the cost of care. Estimate how costs may change as you move from one plan to another.

–    Future healthcare needs: Like a retirement analysis, planning for future healthcare can be done with a health savings account. As we get older, we need more healthcare, so why not save money to cover future obligations? If needs are less than expected, the funds can be used later for retirement (click here for more information).

–    Cash flow: Monthly cash flow varies from household to household. Funding a PPO alternative may be desirable when compared to the larger deductibles of an HDHP with an HSA.

Once enough accumulation has taken place in an HSA, it may be a good fit for additional asset accumulation while taking care of current healthcare needs. If it is a participant’s first year in an HDHP plan, one may jump-start an HSA account with funds from an IRA (click here for more information).

Additional resources

For many companies, healthcare benefits go beyond basic healthcare. Wellness programs help employees change habits and behavior, such as losing weight or stopping smoking. Maybe your plan provides a lifestyle coach (3.) At some universities, healthcare benefits also may be provided with special onsite facilities, with the goal of reducing time spent waiting, traveling, and interacting with medical professionals

Wrap up

As you look ahead to the next benefit enrollment period, you will be able to track your expenses for the previous year and gain a better understanding of what to expect in the future. Look at your healthcare spending the same way you look at retirement spending. The way you spend and save – and the savings vehicles you use – will likely change over time. The right plan for one household may not be the correct plan for another. Use Dinky Town healthcare calculators to compare healthcare plan costs.

If you have questions about your healthcare planning, contact your human resources representative or an advisor, send me an email at, or call me at 317-805-0840.


  1. “HDHP vs. PPO Plans.”HDHPs vs. PPOs. Web. 18 Apr. 2016. <>.
  2. “Employer Health Benefit Survey 2016 – Kaiser Family Foundation.” Employer Health Benefits Survey 2016. N.p., 24 Sept. 2016. Web. 12 Apr. 2017. <>
  3. “Employer Health Benefit Survey 2016 – Kaiser Family Foundation.” Employer Health Benefits Survey 2016. N.p., 24 Sept. 2016. Web. 12 Apr. 2017. <>


Leverage Your Employer Disability Insurance

What is disability insurance?

Disability insurance replaces income if an employee becomes ill or injured and can no longer work. Like with life insurance, individual and group (employer-sponsored) policies exist. Here we discuss the general qualities of disability policies.

Benefits of disability insurance

Disability insurance coverage may provide several benefits, including:

-Replacing most income

-Preventing the erosion of amassed assets

-Helping pay medical bills while you are not working

Importance of disability insurance

If you regularly read my blog posts or view my videos, you likely have seen a discussion of Personal Benefit Buckets. Workers must realize that the buckets do not produce equal amounts of benefit. For example, a younger worker must protect his or her capacity to produce income by working. This working potential is the largest asset owned. If this potential drops, the worker must have a replacement in line to help cover any lack of income – thus, the importance of disability insurance.

Also, the odds of a 35-year-old worker using disability insurance before life insurance before age 65 are 3.5:1 (4.) This statistic reflects the same concern of Gen X and Gen Y. In fact, 70% of Millennials and Gen Xers worry about disability as a financial concern (8.) However, only 33% of employed consumers have disability insurance (8.)

Below, the discussion continues with details about and terms of many disability policies.


Occupational vs. non-occupational

Occupational coverage applies to injuries or illnesses related to the job, while non-occupational coverage is not related to one’s work. The former may constitute coverage originating from multiple sources, like a group disability plan through the employer or an individual policy and government programs such as Workers’ Compensation or Social Security.

Non-occupational and occupational coverage should not be confused with own-occupation versus any-occupation terms. Own-occupation and any-occupation as described by

An own occupation policy typically needs the insured to be unable to perform the material and substantial duties of his or her particular occupation to be considered “totally disabled.” The disability need not render the claimant totally helpless; rather the claimant must be rendered unable to perform the material and substantial duties of his or her particular occupation…an “any occupation” standard to qualify for disability benefits. These policies typically define disability in terms of the insured’s inability to engage in any gainful occupation that the insured is reasonably suited for based on his or her education, work experience, and other individualized factors (1).

Group disability policies may start providing benefits under an own-occupation provision and later move to an any-occupation (1).

What is an elimination period?

Think of an elimination period as a deductible. This is the time period after the illness or injury during which benefits are not paid. The longer the elimination period, the lower the premium is. The period may be a few days to 30, 60, 90, or 180 days.

Depending on the time period, coordinating your emergency fund to help cover expenses during the elimination period is a great practice. There are, however, circumstances in which this may be difficult. An example is a person who has landed his or her first job but who has not yet saved enough money to cover three to six months’ worth of living expenses.

Short-term versus long-term

Disability insurance will be either a long-term policy or a short-term policy. While the classifications suggest differences in time, this comparison will review more information.

Short-term disability policies are normally provided only through employers. A few states (California, Hawaii, New Jersey, New York, and Rhode Island) require employers to provide such a benefit (2). The benefits coverage may start a few days after the illness or injury and will last only a few weeks to a few months. Because the coverage duration is short, premiums are affordable. Workers may also use sick or vacation time and emergency savings to accompany short-term policies. (Please speak with your HR department for more information.)

Long-term disability policies are more important from a planning perspective, as the duration of coverage may last from months to years. This makes such policies more expensive than a short-term disability product. The elimination period – the time during which benefits are not paid – may be anywhere from 60 to 180 days. During this period, the employee must provide the means to cover expenses. Individual long-term policies may be customized to suit the specific needs of the person.

How much coverage do I need?

Like life insurance, a host of factors influences the coverage needed for a disability policy. The general idea, however, remains the same in terms of managing risk: replace the income lost because of the inability to work. Start by gathering your monthly outlays and add retirement account contributions, philanthropic giving, and health insurance premiums. Next, evaluate coverage provided by your employer. If the employer does not provide coverage, seeking an outside policy may make sense. Third, look for ways to cover a shortfall. This may depend on other income sources available. For example, a worker who is close to retirement may not need as much coverage because of his or her access to income sources like Social Security or a pension. Online calculators exist to help discover coverage gaps.

Also, private policies are more expensive than group policies; premiums are influenced by health, age, income, and terms of the policy.

Incorporating employer disability insurance into your financial plan

Depending on the time period and coverage of a short-term disability policy, coordinating your emergency fund to help cover expenses during the elimination period is a great practice. There are, however, circumstances in which this may be difficult. As previously noted, a new young worker starting her career or a worker who has little to no savings may not be able to bridge the gap.

Another technique involves using other benefits to cover short-term needs before the long-term coverage benefit begins. For example, use vacation or sick time as a possible funding source. The benefit will be complete coverage of your salary, but taxes may be taken out.


Taxation of disability benefits depends on who pays the premium and whether it was with pre- or post-tax dollars. Individual policies normally bought with after-tax money, making the benefits nontaxable. However, employer-sponsored group plans may be different. If the employer pays the premium or a portion of the premium that is not included in the employee’s taxable income, the benefit becomes taxable. Any portion of the premium paid by the employee with after-tax dollars will create a nontaxable portion of the matching benefit (3).


  1. Evaluate how much coverage you need.
  2. Examine your current disability coverage and see if a shortfall exists.
  3. If a shortfall does exist, can you buy extra coverage through your employer? If so, how long will it be before your benefits enrollment period opens? Contact your HR department for more information about policy details, or contact me for planning questions.
  4. Examine outside policies, if needed.
  5. Call me at 317-805-0840 with financial planning questions and to help coordinate your work benefits.


  1. “Own Occupation v. Any Occupation.”  com. Alan C. Olson & Associates, 2011-2016.  Web. 5 Mar. 2016.<>
  2. Walters, Chris. “Long-term Disability vs. Short-term Disability Explained – PolicyGenius.” PolicyGenius. 2014. Web. 05 Mar. 2016. <>.
  3. “Taxation of Disability Insurance.” Financial Planning Advice and Financial Advisors. Ameriprise Financial. Web. 05 Mar. 2016. <>.
  4. “Death vs.Disability” 06 Mar. 2017. <>

How do I make the most of my employee benefits?

Today’s business environment changes quickly as innovations create efficiencies like being able to have a meeting with participants across the globe. Even amid change, one fundamental truth remains the same: namely, that businesses need people to run. After all, business reflects a relationship between people. Because people are involved, employee benefits to keep workers healthy, happy, and engaged require adaptation as the world changes.

How have benefits changed over the past 20 years?

An employee benefits survey released in 2016 by the Society for Human Resource Management discussed five changes in employee benefits over the past 20 years. The survey highlighted a few changes, like how telecommuting and wellness benefits have increased while other once-popular programs like access to credit unions have declined. Here are the top five trends noted by the survey (1.)

1. Professional and career development benefits- A higher percentage of employers now pay for professional memberships or offer professional development workshops.
2. Wellness Benefits- In 1996, 54 percent of employers offered wellness resources. Today, the number has increased to 72 percent.
3. Retirement Benefits- The survey discussed the nuances of retirement plan benefits (i.e., whether a Roth 401k is offered), but one of the most important reasons, offering retirement preparation advice, has not changed, at 45% (1.) Why is this important? A 2015 Retirement Confidence survey noted an increase in confidence from a low between 2009 and 2013, saying that 58% of workers are very or somewhat confident that they will have a comfortable retirement (2.) While better than half, confidence levels have a lot of room to grow. Additionally, “only about half of private-sector workers participate in a retirement savings plan, Bureau of Labor Statistics data show.” (3.)
4. Flexible work arrangements- Only 20 percent of employees were allowed to work remotely in 1996. Today, 80 percent of employers allow this activity (1.)
5. Financial and compensation benefits- While covering a range of perks, the employee benefits survey notes large decreases in programs like employee discounts and credit unions (1.)

As benefits change, employees must draft a game plan to maximize the key features of employer plans. The best way to start this task is by understanding the basics of financial planning.

Basics of Financial Planning

Most people engage in some form of financial planning, whether they know it or not. For example, the FICA taxes withheld from your pay go toward programs like Social Security (not all workers pay into this program) and Medicare. Both address retirement needs like cash flow and senior healthcare. Current citizens must have medical insurance as part of the Affordable Care Act. Disability insurance is available as a benefit through the Social Security program.

Beyond retirement and healthcare, consider estate planning. States have rules in place to divide assets if you die and do not have a will.
To attract a qualified workforce, companies improve benefits with programs other than those social initiatives previously discussed.

As people work, we take advantage of the programs, expressing concern when benefits change or close, when premiums rise, or when our retirement plan matching stops. Concern surfaces when the change affects our daily lives. What about our wish to heighten and live the best life possible? This is where most people fall short. They live in the daily grind, existing in a comatose state from Monday to Friday, only to have it start over the following Monday. When the employee approaches the subject from the perspective of using benefits for improving his/her life and as a means of taking care of family, he/she finds that benefits address most financial needs. Following are a few common areas that work benefits may address:
• Retirement – Most workers have three avenues to pursue retirement savings. The first is Social Security. We have taxes taken from our paychecks and we expect to receive a benefit at retirement. The second choice is saving through a work-sponsored plan like a 401(k.) The last alternative is saving money on your own through a Roth IRA, a Traditional IRA, or an investing account.
• Healthcare Insurance – As mentioned earlier, the requirement to have health insurance has changed the way you must address part of your financial plan. Add in new vehicles like Health Savings Accounts, and the issue becomes even more complicated.
• Long-Term Care Insurance – Some employers provide long-term care. This is not a benefit to which everyone has access. Mid- to late-career employees find this a valuable benefit.
• Disability Insurance – This insurance replaces income if a worker is no longer able to conduct the duties of his/her position. Policy features vary for each institution but address an overlooked topic in the planning world.
• Life Insurance – Group life insurance is typically provided to employees at a low cost with a cap on coverage.

Three of the four topics listed above focus on insurance. Employers and employees should understand the purpose of insurance, transferring risk from the employee to another entity. In this case, the loss of income, long-term care expenses, and current healthcare costs are the transferred risks.

Your Financial Plan

You understand the idea behind the benefits and already have an elementary plan in place, but you wonder how your benefits may be leveraged.

First, we should gain perspective on directing the plan. Great plans start with an understanding of what is important and why it is important. Core value exercises, statements of purpose, and reflection on past events and future experiences all help create a fulfilling and happy life. After all, it is the point of leveraging our work and money.
Once you paint a clear picture of what a fulfilling and happy life looks like, address your current asset base and start asking questions. Are you saving enough? Are you exposed to unnecessary risks? If you die, how will your family be affected?

What better place to start addressing these questions than with your employee benefits? You don’t have a salesperson pushing you to buy a product. Your employer completed a competitive analysis, making the benefit economical. Access is normally easy to achieve upon employment; all you need to do is fill out the forms. The major pitfall comes in coordinating the benefits across your plan.

Points of Consideration for Benefits
• Here are a few points of consideration as you review current benefits and examine new possibilities for next year:
• Retirement – How much should you be saving? Does your employer have a 401(k)? If so, can you save enough to max out your contributions ($18,000 for 2017)? Can you make Roth contributions to your retirement plan? If so, it may make sense to create tax diversification by having some tax-deferred contributions and Roth contributions. How will you manage the assets? Will you use a manager, target date fund, or self-direct? Pay attention to the cost of the funds you use. The more you pay, the less you might play.
• Health Insurance – What plans are provided in your benefits package: PPO, high deductible? Estimate your costs for use of the plan. If you use a high-deductible plan, explore your health savings account (HSA) choices. If coordinated properly, you may be able to use the HSA as a retirement supplement. Review the benefits section of your employer’s website. Often, human resources (HR) will provide details about the plan. Do not hesitate to contact HR with questions.
• Long-Term Care insurance – Long-term care remains one of the most complicated financial planning topics. The industry has experienced significant changes, from increasing premiums on existing classes of policies to creating hybrid policies (usually a life insurance policy or annuity with long-term care riders). How much does care cost in your location? How long do you think you will need the care? If you use the group policy, will you need to be underwritten? Are you in good health? What care do you want? Does the group policy have a conversion provision? Do you plan to self-insure?
• Disability Insurance – Many young and mid-career individuals do not consider disability coverage, yet it may be one of the riskiest areas (i.e., not being able to work) of your life. Late-career parties worry less about disability because retirement is often close. Does your employer-sponsored policy cover short-term, long-term, or both types of disabilities? Does the policy cover occupational or non-occupational injuries? How long is the elimination period? Will your emergency fund cover the elimination period? Does the policy have a conversion provision in case you sever relations with your employer?
• Life Insurance – You likely already have basic coverage, usually one to two times your salary. What amount do you need? Do you have large amounts of debt or college funding needs? Be aware that most group policies are term and the cost of insurance increases as you age. Are you in good health? If so, extra coverage may be cheaper if you buy an individual policy. Does your group life insurance have a conversion provision to a permanent or individual policy?
• Other Possible Benefits
• Childcare – Does your employer provide childcare benefits? If so, is the facility close to work? Is the facility accredited? Are the staff employees of your employer? When does the facility open and close? Do summer programs exist?
• Spousal Career Aid – A few employers help spouses find jobs and seek employment. If your employer provides this service, talk to the program directors and find out what connections they have with the local community. This helps shorten the search.
• Sabbatical – Some businesses provide the opportunity for workers to enjoy additional paid time away from work outside normal vacation time. Do you understand your sabbatical requirements? Have you reviewed personal duties related to taking a sabbatical, such as renting your home or home maintenance while you are away (if you are taking an extended leave)? Will your work benefits be active during your absence?

Next Steps

Remember, you profit from employer benefits with no pushy sales tactics, economical prices, and easy access. The difficulty remains in coordinating the benefits across your financial plan. Here is a list of next steps:
1. Review what a fulfilling and happy life looks like for you.
2. Identify your financial progress toward goals that support your fulfilling and happy life.
3. Review your benefits to heighten and promote your goals.
4. Review your plan and benefits three months before open enrollment. This gives you time to evaluate changes to benefits, circumstances, and needs.
On a parting note, be aware that your human resources department will not likely provide advice about which specific benefit or service you should use. Your retirement plan provider, while likely providing great service, will also be limited in addressing some of these issues as well.

If you still feel overwhelmed, use the “contact me” link and let’s schedule a time to answer your questions.



  1. Dealer, Olivera Perkins The Plain. “5 ways employee benefits have changed in 20 years: SHRM survey.”com. N.p., 21 June 2016. Web. 11 Feb. 2017. <>
  2. By Ruth Helman, Greenwald & Associates; and Craig Copeland, Ph.D., and Jack VanDerhei, Ph.D., Employee Benefit Research Institute. The 2015 Retirement Confidence Survey: Having a Retirement Savings Plan a Key Factor in Americans’ Retirement Confidence, No. 413. April 2015. 11 Feb. 2017.
  3. Puzzanghera, Jim . “America isn’t saving enough for retirement. Can that be fixed before it’s too late?”Los Angeles Times. Los Angeles Times, 27 June 2016. Web. 11 Feb. 2017. <>