Open Enrollment is Here Again!

It’s October and that means pumpkin spice lattes, Halloween decorations and…open enrollment time. 

For many of us, this is the month when we have the chance to make decisions about our health insurance, life insurance, FSA/HSA accounts and more. How do you sort through all of it, and more importantly, how do you make sure you’re taking full advantage of your employee benefits?

401(k) match and the After-tax 401(k)

First and foremost, I hope you’re taking FULL advantage of your company’s 401(k) match. This is something you can’t afford to miss out on. If your company matches 3%, make sure you are contributing at least that much, or you’re leaving money “on the table”. Of course, I’d like it if you were saving the maximum amount to your 401(k)/403(b) but this is a bare minimum.

Many companies are now offering an after-tax 401(k) option as well: Facebook, Microsoft, Amazon and Salesforce all do (to name a few). I wrote a recent article on how this option works. If you’re already maxing out your 401(k) contributions, I highly recommend taking advantage of the after-tax option (with an in-plan conversion to Roth). 401(k) contributions can be changed at any time, so this one isn’t tied to open enrollment (it’s just a good reminder to double check your contributions).

Health Insurance

You’re faced with multiple options regarding medical, disability and life insurance. The decision around which health care option to choose can be complex, and depends on your health status. That said, if your company offers a high deductible health plan (HDHP), it’s worth considering. If the HDHP is an option, it is usually accompanied by a health savings account (HSA). HSAs are a fantastic way to save and the account balance can be invested with NO future tax due. EVER. Not only that, many companies will automatically contribute $1,000 or more to your HSA every year.

HSAs deserve a post of their own, but if you have access to one, and you’re reasonably healthy it may be a great option. Unlike a flexible savings account (FSA), you do NOT lose the money you contribute if you don’t spend it. If you are using an HSA, I recommend contributing the maximum per year.

Disability insurance

Disability insurance is one that is often overlooked or misunderstood. I sincerely hope your employer offers disability insurance, and if it’s optional, PLEASE opt in. Disability insurance is right up there with health insurance in terms of importance. If you’re young, your future earning potential is one of your biggest (if not THE biggest) assets. Disability insurance, specifically long-term disability (or LTD) protects you in the event you are unable to work for a period of time. 

Disability insurance is fairly complicated and there are all sorts of terms that may sound foreign if you’ve never encountered them- own vs. any occupation, elimination period, percentage of replacement income. In a future post, I’ll dig into those details further. In the meantime, if your company offers LTD, sign up for it! The ideal coverage will include the following provisions:

  • replace 60% or more of your income, 
  • have an elimination period of 90 days, and 
  • cover you for anything that prevents you from doing your own occupation.

One of the local colleges in Seattle (University of Washington) recently offered a special one-time open enrollment for LTD with NO medical review. This is HUGE. It meant that individuals who were previously denied coverage due to their medical history could sign up. If this happens in your company, I cannot stress enough, that you should sign up!

One final thing to be aware of, especially for those in tech who a) have high salaries and b) receive a significant portion of their income from equity comp: your coverage likely will be pretty limited. For instance, if you work at Amazon and your annual salary is $160,000, but you receive another $250,000 in RSUs, the disability coverage is only replacing salary income. If you rely on that $250,000 in equity compensation, you may want to consider a private policy.

Life insurance 

I generally prefer clients to have private term insurance, which isn’t tied to an employer. But your employer provided insurance can be an important component, and often does not require underwriting (in other words, they may not look at your medical history). It’s worth speaking to a financial planner to confirm how much life insurance you need.

Other benefits

Companies are offering a whole range of cool benefits these days, which you might not even know are an option. 

  • Access to legal insurance. This can be a great way to get a basic will completed. 
  • Discounted movie tickets or passes to Disney can also be a fantastic benefit (if and when we ever want to actually GO to Disneyland or a movie again). 
  • If you’re planning to have children, ask about the company’s maternity/paternity leave options. 16+ weeks is becoming more common with everyone from Deloitte to Lyft expanding their leave policies.
  • Financial planning benefit! I might be biased, but I love to hear about companies that reimburse for financial planning (Thanks, Nordstrom).
  • Travel stipend. (hmmmm. Maybe I should get a job at Airbnb!)
  • I recently learned that Goldman Sachs will pay for gender reassignment surgery. I had no idea they were so progressive. Go GS!

While open enrollment is the obvious time to review your company’s benefits, it’s a good idea to ask about the full breadth of benefits any time you are interviewing for a job. 

Xena Financial Planning is Born!

Xena Financial Planning blog introduction

Welcome to Xena Financial Planning (Xena FP).

I am so very glad you are here! Allow me to introduce you to my new firm.

I honestly did not set out with the intention of creating my own practice. In 2014, when I first entered the industry, I was eager to learn from more seasoned planners and get as much experience as possible. Fast forward 6 years and I feel called and emboldened to offer a new kind of planning firm.

My focus is on women (and their partners) in the early to middle stages of their careers. Specifically, I absolutely love helping clients who receive equity compensation as part of their income. It’s extremely common in the tech world and while there are plenty of brilliant people working in tech, many of them do not have the time or inclination to manage the influx of stock. I also offer a unique perspective and advice for women who own small businesses, based on many years of working in finance for small businesses and start-ups.

Not only do I feel compelled to serve a more specific demographic, I can improve on the process, which is in dire need of a facelift. The world of financial planning is in the midst of a seismic shift; the way that advice is delivered is dramatically different from the way prior generations received it. 

What I love about financial planning is the relationships and the process. I’m not overly focused on investment performance, nor do I plan to deliver a massive financial plan which might be better used as a doorstop. In my view, financial planning is a highly dynamic process, with many moving pieces that are constantly in flux. At Xena FP, I work with my clients on an ongoing basis, to help them navigate whatever life delivers. I strive to both educate and empower clients as we develop a collaborative relationship.

My desire to specialize, as well as build a process that works for our highly volatile world, led me to found Xena Financial Planning. Largely based on the fact that I founded the business in the midst of a global pandemic, my intention is to be 100% virtual. One of the things I have loved about the pandemic is not having to spend a lot of time in traffic; I am sure my clients can appreciate that! I’m so happy to have you here for some part of the journey. Together, we will build something extraordinary.