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The Spookiness of Open Enrollment

Transcript

What's up Internet? My name is Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd!

Today we are going to be talking about one of the most spooky times of year...open enrollment. You might have thought that I was going to be talking about Halloween and that's completely reasonable. But, unlike Halloween, where all the ghouls and ghosts are in your face, open enrollment is a time of year where you can make a lot of mistakes that will last all year and not even know that you made the mistakes until you're paying for them. So it's a pretty spooky time of year for a lot of people because there are a lot of decisions to be made and maybe not enough information disseminated about how to make them.

I thought I'd get out ahead of it this year and make some videos to help people with this time. So, over the next four weeks we're going to cover health insurance, disability insurance, life insurance, and some of the ancillary benefits that you may have available at your employer such as legal insurance and critical illness insurance. Since open enrollment is a little bit of a specter on the horizon what we're going to try to do over the course of these next four videos is level you up a little bit in order to make it easier for you to deal with some of these decisions.

One of the biggest problems with this time of year is that you have a lot of decisions that you have to make in a very short period of time, maybe without guidance, so you might just click through some of the health insurance options or the disability insurance options that you don't fully understand because you know that you have to get these things submitted or you're gonna end up with all the default plans.

The best resource that I can offer you is A Gamer's Guide to Health Insurance, which is a quick PDF you can download in the description that breaks down all of the health insurance plans and what makes them different in a stat like format. Now, obviously it's general education. I can't get specific about your employer's plans in that document because I don't know them, but that being said it covers the four main categories and breaks down some of the abbreviations that we use in the industry like PPO, HMO, HDHP, all those types of things to make them a little bit easier to understand.

Finally, if you're looking for general financial education and open enrollment videos aren't specifically interesting to you feel free to check out my book in the description. It's called A Gamer's Guide to Money: Level 1, and even though this is a little bit of a shameless plug, I don't blame you if open enrollment isn't what brought you to this channel. If you were hoping for some more general stuff click through all the other videos on the channel, subscribe to it, or download the book because all of that stuff is going to be more general education.

I hope that this video was interesting to you. I just wanted to make something to preview the series that we're going to come out with this month because I think that it's helpful to know what you can look forward to on the channel.

What About My Other Benefits?

Transcript

What's Up Internet? My name is Ian Bloom and this is Nerd Finance. I'm your resident financial life planner and huge nerd!

After the last video you might be saying "Well what about my other benefits?" and in the wisdom of my mentor "Benefits are like air you rarely appreciate it, but when it's not there you really suffer." He's kind of like a Yoda, but if Yoda was less green, and didn't use the reverse speech, and was taller.

But, anyway so there there are lots of benefits and a few of them are very core to most employers. So we'll talk about three main ones here and we'll briefly talk about some others.

Health insurance is the main benefit that most employers that are significant provide their employees. There's usually terms associated with health insurance called a premium, which is how much you pay, a deductible which is how much you have to pay the health care providers before your insurance company covers anything, and then an out-of-pocket maximum which is the most you have to pay in any given year. Insurance policies are very difficult to evaluate in a couple of seconds, but just know that those are all factors and what you should be using to select your health insurance policy.

But do make sure [to understand] that because the health insurance market is so expensive right now, the health care market is actually more expensive. So since you get taxed anyway I would probably recommend everybody take some amount of health insurance coverage, with very few exceptions.

Disability insurance is the next benefit and it's kind of a big deal. I mean what if you get your arm chopped off by a Viking in a raid? You're gonna need to still work afterwards and you might not be able to for some time. So given that, the disability insurance company will pay while you're recovering whether it's from - you know - your arm getting chopped off or something less serious. And typically they will pay a percentage of your salary over a period of time. This income can be pretty necessary to help you get back on your feet or if you're permanently disabled to keep you going.

Then lastly, life insurance is a pretty important one as well it's usually a token amount that's given to you for free by your employer. Sort of like putting a bandaid on that viking wound from earlier. Just keep in mind that having some amount of life insurance is often pretty important to how families recover from the loss of an income earner, and usually the amount that's given to you for free - one or two times your salary - is not gonna cover all of the needs that your family has. So you might want to make sure to evaluate those insurance policies and make sure that you have the right amount of coverage.

For most other benefits offered by employers they're either optional or they are specific to one employer. So we're not going to cover most of those, but just know that with things like critical care insurance, legal insurance, and those things it can be a really good fit for certain individuals. Don't immediately write them off, but in a lot of cases you'll want to evaluate where those dollars are going and whether it's worth it to have those insurance benefits.

That's all for today. This video again [was] probably a review for some people who are very familiar with their employee benefits. But, it's pretty hard for me to cover a 401k policy and then not say well what are the other benefits that you might have so I wanted to make sure to go over that. If you have suggestions for future videos or ideas that you want to make sure get brought up somewhere, don't hesitate to reach out. Find me on social media at OpenWorldFP or email me at This email address is being protected from spambots. You need JavaScript enabled to view it.. Lastly, there's of course my website openworldfp.com. If all this seems like a lot to you go there to look at what services we offer that might be helpful. Thanks everybody, have a great day.

What's a 401(k)?

Transcript

What's up Internet? My name is Ian Bloom and this is Nerd Finance. I'm your resident financial life planner and huge nerd!

So, our topic today is "What Is a 401(k)?" and in Nerd Finance terms 401(k)s are kind of like Spindas from Pokemon. They're all pretty much the same, but at the same time they're all a little different from one another. So, we'll cover them a little bit here, but ultimately, they're gonna be pretty unique to the one offered at your employer.

Section 401, subsection K, of the IRS tax code describes what a 401(k) is. So, the name is not very complicated. It's just from a document.

They are ultimately retirement plans with your employee contributions (from your paycheck) either on a deferred basis or an after-tax basis going to the 401(k), often with a match from your employer. I won't be covering the differences in a traditional or Roth 401(k) as much here> But ultimately, know that if you make traditional contributions your dollars are not taxed that day, but they will be taxed when they're withdrawn from the 401(k) later. And, if you make Roth contributions your dollars are taxed today, but will most likely not be taxed at withdrawal. So, depending on your tax situation, the advantages, and how long you have till retirement there are a couple of different ways you can handle it.

Most 401(k)s have different investment options - typically mutual funds. And mutual funds are very unique, kind of like baskin-robbins flavors, you can almost find a different one every time you look for them. The difference between mutual funds is ultimately not that great, and as long as you know what categories you're looking for you can probably select the options in your 401(k).

Know that if you don't select one there's often a target date fund which is a specific type of mutual fund that your employer put you into and those can be okay. They are based on the life cycle that you have, but ultimately, they're probably not the most efficient way for you to have your money invested. So, think about that and maybe work with an investment professional on how you should be allocating your 401(k).

All the money in your 401(k) is your money unless it was contributed by an employer and most of the time even your employers funds can be taken with you if you leave the employer (after a vesting period). Given that, you have the ability to move this money around if you should leave your employer and it's your money for retirement. That said, don't necessarily move your money just because you've changed employers. You'll want to know what the terms of the next employers 401k are, or what your other investment options available to you are out in the open market, before you decide what's best. So, doing some of that research can pay off pretty big.

The last question I get surrounding 401(k)s is "How much should I save?" and that's kind of a "Well, it depends." sort of thing. I can't really give you specific directions until I know your circumstances. Just like in strategy games, it's really hard to tell people what the best strategy is until you know what the enemy they're up against is. When you're looking at a financial plan there are different ways to tackle all sorts of issues and it's going to depend on what the circumstances of the individual are.

That said, there's a pretty good hard and fast rule that saving at least as much as you need to earn the match is probably going to benefit you in some way. Free money is free money, and you might want to take that from your employer.

There's a lot of layers to investing in 401(k)s and 401(k)s themselves, but I wanted to make sure to provide at least an overview here since they are a very common investment vehicle and people often ask me about them.

So that's all for today. Thanks for tuning in to this episode of Nerd Finance. I hope there was enough nerd and just enough finance in there for you - but if you have suggestions future videos, content you would like to see, comparisons you would like to see made, follow us on social media @openworldfp on Twitter and OpenWorldFp on Facebook and LinkedIn. You can also subscribe to this channel or check out our website at openworldfp.com. Thanks so much! Have a great day!

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