HR RESOURCES

Financial Wellness

Financial wellness is critical to employee's health and mental stability with financial literacy at the center. We at AspenHR, encourage you to share these articles as part of your financial literacy program to help improve the lives and financial stability of your employees.

If you are interested in setting up Aspen’s cost-effective 401k plan for your company, contact us at sales@aspenhr.com!

Guest blog provided by Slavic401k

As you get closer to retirement, you’ll have many questions to answer, and the answers will differ based on where you work and the timing of your retirement. As a result, it’s best to contact your employer to gather pertinent information about your end-of-work arrangement for an easy transition.

There’s a lot you need to know about retirement. It’s not always easy to ask the right questions, and sometimes difficult to figure out where to begin. Below are a few things to think through as you are preparing for retirement.

What Is My Official Retirement Date?

The day your organization accepts you as a retiree is called your official retirement date, and it’s critical to understand. This date has the potential to make a big difference in the weeks immediately following your retirement, especially when it comes to group benefits.

Knowing this information can be quite beneficial while arranging your Medicare and Medicaid Supplement Plans. For example, let’s assume a retiree intends to leave their job in 2022. On the other hand, their employer’s records list your official retirement date as Jan 3, 2023. This might imply medical coverage continues through January 2023 rather than ending at year-end. It’s crucial to know when your date is so that you can pre-plan for benefits.

Do I Have a Retirement Agreement? If So, What Are the Terms?

There’s a chance you don’t have a contract with your employer regarding your work, but if you’re confused, talk to your human resources department. These retirement contract provisions, such as non-compete clauses, might be critical to your retirement planning. It is a good idea to review your retirement agreement with your employer and a financial advisor.

What Happens to My Health Benefits?

One of the most essential things to consider as you approach retirement is how your health insurance will change. This will partly be determined by your employer’s rules. Find out whether your firm offers group health insurance benefits after retirement. If they do, you will likely be required to pay a higher monthly premium than you did while working.

If your employer doesn’t provide health insurance, or if their rules prohibit you from receiving health benefits after retirement, you’ll have to begin searching for an individual policy when you retire. This can be costly, especially if you have preexisting health conditions.

If you have a health savings account, read our blog for more information on using the money saved in that HSA for health-related expenses after you’ve retired.

What Happens to My Employee Stock Options?

Suppose you have employee stock options from your company. In that case, it’s essential to know how they’ll be treated when you retire, especially whether vesting will continue or cease on your resignation date. Find out what will happen to any unvested shares upon your departure. Will the value of those be forfeited? Unvested shares may have significant value, so it’s crucial to understand how they will be handled when you retire.

Stock options can be a tough nut to crack when it comes to retirement planning. It may be worth consulting with your financial advisor or retirement pro for assistance.

What Happens to My 401(k)?

If you retire and your 401(k) balance is more than $5,000, your employer is required by law to keep your account open, unless you choose to transfer those funds elsewhere. Further, you won’t have to take anything out until you’re 70½; this is the age at which you must start taking minimum payments.

The only circumstance when you would have to cash out your 401(k) is if the account has less than $5,000 invested. In that case, an automatic lump-sum distribution will occur, and those funds will be sent to you.

Every retirement saver’s circumstances are different, so make sure to consult your employer about the specifics of your benefits. For more information on what retirement savers need to know if 2022, visit the Slavic401k blog.

 

Guest blog provided by Fresh Finance

Financial wellness is a state of being in which you are living a healthy economic life and feel good about your financial situation. It is also an essential part of taking care of yourself and those around you. Financial wellness can also reduce money needs, improve mental and physical well-being, and lead to financial security. Those who practice financial wellness tend to spend wisely, have emergency funds, save for retirement, have financial goals, and utilize a budget. Financial wellness encompasses these key areas: 

  • Taking control of your money before it controls you.
  • Determining how safe your money is.
  • Planning what to do with your money.

So how can you start your financial wellness journey?

1. Save for your financial future through investing. Regularly contribute to your retirement savings through your employer’s retirement savings plan, IRA, or Roth IRA.

2. Establish an emergency fund. Extra money put aside to cover living expenses, unforeseeable medical or maintenance expenses. It should not be used for vacations, new cars, etc., but actual emergencies that can lead to more debt or bankruptcy if you don’t have the financial resources to cover them. Emergency fund money should never include your retirement assets or other investments that are stock market performance sensitive.  

3. Educate yourself. Financial literacy is the combination of economic, credit, and debt management knowledge necessary to make financially responsible decisions. A lack of financial education is one of the reasons why people struggle with saving and investing. The more you know, the more likely you are to make good financial decisions.

4. Save money by making good financial choices.  Identifying wants versus needs is a good place to start. For example, drink watering while you’re eating out instead of ordering a drink from the menu. Or, going through the sales rack or using online coupons to save on items you regularly purchase. 

5. Create a budget. A budget helps you review your revenue and expenses over a period of time that is re-evaluated on a periodic basis. A budget helps you review your revenue and expenses over time, such as monthly. A budget is a tool to help keep your finances on track as you adjust to changing financial situations.

6. Work with a financial professional. A financial professional can help evaluate your financial situation and provide you with ideas to become financially well. They can also help you create a financial plan to prepare you for the future that is aligned with your goals.

 

Guest Blog provided by Slavic401k

Managing debt is a natural part of life. Whether you use a credit card, own a home, drive a car, or pay for school, there are few people who can afford to pay for those big-ticket items in cash upfront. With loans, people can afford to pursue higher education, pay medical bills, start a small business, and so much more. But loans equal debt, so is that okay?

It’s important to note the difference between good debt and bad debt. Good debt is debt that enhances your life and increases your net worth, such as going to college or buying a home. Bad debt involves borrowing money to purchase depreciating assets that have no long-term value, such as a vacation or a designer handbag.

Below are a few tips about managing debt, regardless of the type of debt you have.

Identify Debts, Interest Rates, and Totals

The first step to managing debt is itemizing the debt you have. Start by combing through your accounts and writing a list of the various lenders you owe money to, and what the loans are for. Next, you’ll want to identify the interest rate associated with each so you can better understand where the pain points are.

Once you have your list, review and calculate the monthly total owed and interest accrued. Organize the list from the largest balance to the least so you can identify areas you need to focus on.

Review Your Budget

Budgeting is a great way to help you manage income and expenses. Apps like MintPrism, and Spendee allow users to connect accounts, pay bills, and set goals at the touch of a finger. Using these apps will help you see your overall financial snapshot. Read our blog about the best financial planning apps.

Next, identify areas in your budget where you can afford to cut back. Do you need multiple streaming service subscriptions? What about that monthly gym membership you never use? By identifying gaps, you can reallocate funds to help pay debts faster.

If you need assistance creating a budget, view our guide to creating a monthly budget. By understanding, organizing, and creating a budget, you can establish a solid pathway for managing your finances.

Consolidate Debt

If you have multiple sources of debt, such as credit cards or medical expenses, it may help to consolidate them into one overarching payment. Shop rates and talk to a financial advisor about consolidation before you transfer everything. Make sure the interest rate of the combined debts saves you money over time compared to your existing loans, and note any fees associated with the consolidation.

There are several methods you can use to consolidate your debt, including:

  • Balance Transfer Credit Card: These credit cards typically offer a 0% annual percentage rate (APR) on balance transfers with a set period, such as 12-24 months. With this option, you would roll your debts onto the card to pay them off within the introductory period to avoid paying interest over time.
  • Debt Consolidation Loan: These loans are structured personal loans, which can help you reduce the interest owed on debts, saving you hundreds or even thousands of dollars over time.

Paying Debts

If debt consolidation isn’t a reasonable option for your situation, refer to your budget and list of debts to create a payment strategy. Ways to pay back debt include:

  • Use the Snowball Method: Organize your debts from greatest to least and use that order to make payments. Once your biggest, high-interest debt is paid, move on to the next biggest, etc. Repeat this process until all your debt is paid in full.
  • Pay on Time: By paying your bills on time each month, you will avoid additional accrual interest and late fees. Keep a calendar, set reminders, and utilize a budget tool to stay on track.
  • Pay Outstanding Balances: Every loan has a “minimum balance due” option, which is often beneficial to the lender only. By paying less than the outstanding balance each month, you accrue interest and pay more over time. Try to pay your outstanding balances instead of the monthly minimum to avoid the increase.

Managing debt is not one-size-fits-all and may take some additional strategizing to get it in order. Use your resources, talk to a financial advisor, and stay up to date with financial tools and news on the Slavic401k blog.

Interested in setting up Aspen’s cost-effective 401k plan for your company?

Contact us at sales@aspenhr.com to learn more and get started!

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