EP. 47 The $15,000 Raise Hiding In Your Benefits Package

There's a financial decision most people spend less than 30 minutes on that could be worth $3,000 to $20,000 a year... and it's not investing, it's not budgeting. It's your benefits package.

In this episode, Jim walks through how to treat your benefits like the deferred compensation they actually are, starting with the most common (and most expensive) mistake people make.

Here's what's covered:

• Why total compensation matters more than your salary line
• How to make sure you're capturing your full 401(k) employer match
• The HSA's triple tax advantage, and why most people who have one aren't actually using it right
• FSA strategy for healthcare and dependent care, and how to avoid losing money to "use it or lose it"
• The four questions to ask before you touch a single open enrollment election

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Net Wealth Nest LLC and Podcast is an educational platform committed to providing resources and information to empower individuals on their financial journey. We do not provide financial, tax, or investment advice. All financial decisions should be made in consultation with a qualified professional who understands your unique circumstances.

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Transcript

Jim 0:00

So what if I told you that there is a financial decision that most people are spending 30 minutes or less on that could impact their annual financial picture anywhere between maybe 3,000 or 10,000 or sometimes even 15 or $20,000 a year? That's right, we're talking about benefits today, and specifically your annual compensation and how benefits plug in. That dollar amount could be worth $100 to $300 per hour, and not taking the right amount of time to sit down and go through it is a huge miss that almost everybody makes Most people, when they're looking at their annual package, especially if they've been in the job for more than a year, they click the same as last year and just kind of move on. There is money in your total compensation package that you have already earned, But most people, they're not collecting it. This is not about gaming the system It is about understanding the compensation deal that your employer actually made with you and collecting on it. Salary is only just a tiny part of it. Today, I wanna show you a practical framework for auditing your benefits package and claiming what is already yours. Welcome to Net Wealth Nest Podcast So most people, they think of their salary, that's their compensation. However, wealthy people, they look at this in a totally different way. They look at total compensation. What do I mean by total compensation? It's gonna be your salary plus employer benefits and contributions, your employer match, any type of group insurance value, any equity or profit sharing. Most W-2 employees, the benefits layer adds somewhere between 20 and 40% on top of the base salary in the employer side value. Your benefits package is deferred compensation. It is part of the deal your employer made with you when you accepted the job. Not using it, it's like the equivalent of leaving part of your paycheck in the employer's account every month. You already earned it. The only question is, are you going to claim it or not Understanding and optimizing your benefits is a financial skill. It's not a perk. It's not a privilege. It's not something HR handles for you. This is exactly the kind of thing wealthy people know that most people were never taught. It does not require more income. It requires more knowledge and where to look. Here's what most people are leaving on the table and what order to fix it in. Okay, so let's talk about what you're probably missing for a second So 401employer match. The single most expensive benefits mistake most people make. If your employer matches any percentage, let's say three, and you are contributing two, you are leaving money on the table every single pay period. Free money. The employer match is 100% instant return on your contribution. There is no investment in any market that consistently delivers this. So you should audit it right now. Are you contributing at least enough to capture the full employer match? If not, this is your absolute first fix. Quick pause for a second. If anything I've shared so far has hit a nerve, if you're carrying debt you can't seem to shake, or if you haven't started investing yet, or you're just not sure where you actually stand financially, I built something specifically for that. It's called the financial pulse check. It's two minutes, seven questions, and it'll tell you exactly which money habit is costing you the most right now, and what to do about it first. It's free. It's at netwealthnest.com/pulse, or you could just head over to our website, netwealthnest.com, and you'll see the floating bubble. And I'll drop the link in the show notes for you, too. But just take it before you forget. One more time, that's at netwealthnest.com/pulse. All right, let's keep going The second one, the HSA. This is a triple tax advantage most people just, they don't understand or use Contributions go in pre-tax, so before the tax comes out of your pay. The growth inside the account is tax-free, and withdrawals, as long as they're w- for qualified medical expenses, come out tax-free. It's the only account that does this three times. It's available only with an HSA-eligible high deductible health plan. And if you missed it, I said it could grow tax-free What I mean by that is inside your HSA, you can actually invest it in stock markets and index funds and all of that to grow just like your 401k is.. that is a big miss by a lot of people who even have an HSA. They just continue to put money in it and don't actually invest it to allow it to grow exponentially over time. Doing that, again, you put the money in pre-tax, it can grow without, accumulating taxes, and if you spend it on medical expenses, it will come out tax-free. Triple tax advantage. No other account does this in this way, and is a huge, huge opportunity if a high deductible plan is right for you Now let's talk about the FSA. This is a use it or lose it, but it's significant for predictable medical expenses. So healthcare FSA you can put into $3,400 in 2026 for medical, dental, and vision. It's all contributed pre-tax and reduces your taxable income Then you have the dependent care FSA, and that actually allows you to put in $7,400. Again, in 2026, this changes every single year. But that allows you to put in money pre-tax and pull it out to pay for things like daycare, Again, saving you and lowering your taxable income annually The key with these is you have to forecast your expenses before you do elections. Do not guess high because you can lose a lot of money All right, then we have group life and disability insurance. Now group rates, they are almost always cheaper than the individual market rates. Disability insurance is one that is consistently underused or even under-purchased, keep in mind that one in four workers, you're gonna experience a disability during your working years. Check what your employer offers and compare it to what you would pay on the open market. The same goes with life insurance and supplemental life insurance. Supplemental life insurance at group rates may be one of the lowest cost ways to increase your coverage. Now, people who typically get insurance, usually people that have a family or have some sort of dependents, that rely on their income, they typically look at outside, term life insurance, which is usually very affordable and, will cover you at high dollar amounts. But most people miss out on what their employers offer with that supplemental. Usually you can add onto your current life insurance you have at a very, very low rate, more often than not less expensive than what it would be to increase that rate on any other insurance plan outside of your W-2 Okay, so let's actually talk about how to read your benefits package. Most people, open enrollment is default, "Eh, let's just do the same as last year," mode. This is expensive. Plans change year to year. Premiums, deductibles, what's actually covered, the employer contributions, they all shift every single year. What was optimal last year might not be optimal this year, especially after a life change or a plan redesign. So just three questions to ask for every single benefit in your package. First one: what does this actually cover? You should read the summary of the plan description, not just the premium line or the expense line. Number two: what does it cost me? Employee contribution per pay period times pay periods equals your annual cost, and most corporations do this for you. Number three: what is my employer actually contributing? This is the value you are claiming or potentially leaving behind. Calculate your annual total compensation in benefit dollars. So basically, add up your employer 401match, plus your employer premium contribution, plus HSA employer contribution if they have it, and any other employer-paid benefits. For most W2 earners, this adds up to 5,000 to maybe even 15,000 in additional compensation that doesn't show up blatantly in your paycheck. Now, the key is knowing this number changes how you evaluate job offers if you're looking for a new job or a raise negotiation. One thing I want to dive just a little bit deeper into is the HSA and how you can make that decision for you. Here's the key. If you are generally healthy and your employer offers an HSA-eligible plan with an employer HSA contribution, or sometimes not, the math often favors that plan for you. And the reason is the lower premium plus the HSA and potentially the growth can more than offset the higher deductible for healthy years, especially when you start thinking about how tax advantaged it is and if you are going to continue to save that and grow that year over year for when you get closer to retirement age or as you get older and you might need it later in life. The key is model it. Annual premium savings plus the HSA contribution and potential growth versus your expected out-of-pocket increase So let's talk a second. What does that actually mean? So let's say that you are just contributing to an HSA the full amount every year, and you have relatively standard health, like you need a annual checkup, you're in a, in the doctor a couple times a year for different things, whatever. Like, you could easily assume that you could spend, let's just say $10,000 a year on your HSA and your medical. That is a pretty standard dollar amount over the course of the year. But half of that went into your HSA, and half of that, that went into your HSA got invested. So you actually didn't spend that money. You've actually saved that money and invested it at this point, compared to, like an average person could spend on their premiums and maybe some out-of-pocket costs, about $8,500 a year. So you could lose money, quote unquote, in the HSA versus the, the low deductible, health insurance plan. But over time, if you were on that same route, you could have over $65,000 saved by the time you turn 60 that had been accumulating, that you can use for medical expenses going forward tax-free. You would have nothing under the normal plan. So that's the advantage there, is that money is growing and building over time. Now, a caveat to this, if you have a spouse or significant other or dependents, children, any of that, that HSA plan might not make sense because the expenses when you start adding in other individuals could really accelerate that and flip the math upside down. The whole point here is h- do the math or have somebody help you do the math. That way you can understand what is best for you and your situation Okay, so let's talk about what the strategy should be as you get towards open enrollment. Wealthy people, they plan before the enrollment opens. They don't react to it. So here's the key: calendar the enrollment now, before it opens. Give yourself two to three sessions where you can go over your benefits, not just on your lunch break. Treat enrollment like a financial decision. It's not an HR task. It's one of the simplest wealth behaviors that most people never adopt. Four pre-enrollment questions that you should be answering before you touch a single election. First one: have my healthcare needs changed over this year? New medications, planned procedures, new dependents, major lifestyle change. Okay? Question number two: am I contributing enough to capture the full 401k employer match? If you're not, make sure you are. Three: should I open, increase, or invest my HSA this year? And lastly, is my current life and disability insurance coverage still appropriate for my situation? Now, one thing to keep in mind as well is there are qualifying life events that trigger a mid-year or special enrollment period. You don't actually have to wait. Things like marriage, divorce, birth, or an adoption, loss of other coverage, or job change. Most people do not know that they can change their elections outside of the open enrollment period with one of those qualifying events So if a major life event has happened to you this year and you didn't update your benefits, nows probably the time to fix it. Lastly, as you set that calendar reminder right now, Again, pick two to three dates several weeks before your enrollment window that allow you to sit down and actually kind of peruse through your current benefits. And usually your employer will put out the benefits earlier in the year or earlier before enrollment so that you can start to walk through them Again, the key is to treat your benefits package like a financial account. You should be reviewing it annually, not just when enrollment decisions force you to Before we wrap, here's what I want you to do. Everything I share on this podcast is meant to help you understand the game of money, but knowing where you stand in that game is actually what changes the next 30 days. That's why I built the financial pulse check at netwealthnest.com/pulse. It's two minutes, a handful of questions. It'll show you whether the biggest leak in your financial life right now is your spending, your income, or your follow through. Because the fix is different for each one, and most people are working on the wrong one. I've been on the other side of this. I know what it feels like to be doing all the right things and still feel stuck. The pulse check is the same diagnostic I start every coaching conversation with. Take it. It's free. Netwealthnest.com/pulse. All right, let's wrap it up so our three-point recap. Think in total compensation, not just your salary. Your benefits layer five to $15,000 in value that most people never claim or think about. Start with that 401match, then your HSA, then your FSA in that priority order, and run those questions as you go through each election. Lastly, set a calendar reminder to audit your benefits two to three weeks before enrollment happens. Give yourself more than 15 minutes or over your lunch break. And honestly, this is exactly the kind of thing wealthy people know that most people, we just weren't ever taught. And the cool part about it, costs you nothing to learn this. I hope this episode has been helpful for you. If it has, please don't forget to like, subscribe, and share our podcast or our YouTube channel. As always, leave comments and questions and reviews for us. We love to interact with the community. I hope this is putting you on the path to breaking out of that paycheck to paycheck cycle and growing your net wealth nest. My name's Jim. Bye everybody Net Wealth Nest LLC and Podcast is an educational platform committed to providing resources and information to empower individuals on their financial journey. Please note, we do not provide financial, tax, or investment advice. All financial decisions should be made in consultation with a qualified professional who understands your unique circumstances. Seeking personalized advice is a smart and necessary step before making any major financial commitments. Thanks so much for joining us today. If you found value in this episode, please like and subscribe to our YouTube channel, Net Wealth Nest, and leave us a review on your favorite podcast platform. We read every comment, and they help us improve and guide what topics we dive into next. And hey, if something you heard today resonated with you, don't keep it to yourself. Share it with a friend, a family member, a coworker, your barber, your barista, even a stranger in line. You never know who might need this message. Remember, building net wealth is a journey, but you don't have to do it alone. Stick with us, and together, let's grow your net wealth nest