As the end of the year approaches, it's important to make sure you're not leaving any money on the table when it comes to your workplace benefits. Making the most of what your employer offers can save you a bundle, and if you don't take the right steps now, you could lose your chance to maximize your savings.
Here are some must-do tips for the days between now and Dec. 31.
1. Check up on your flexible spending account.
If your employer offers them, flexible spending accounts give you an excellent way to save taxes on money that you pay toward medical expenses. You're allowed to save flex money on a pre-tax basis and then spend it on eligible expenses, including doctors' visits and co-pays, trips to the dentist, and hospital stays.
Now's the time to do two things with your flex accounts. First, make sure that you've spent down the flex money that you've saved for 2012, because if you don't use it, you'll lose it. Some plans give you a grace period into next year to make purchases, but others don't, so check with your employer.
Also, for many employees, now's the time to decide how much money you want taken out of your paycheck over the coming year to be put into your flex account. The key is to find the right balance between making the most of your flex account while not setting aside so much that you can't reasonably expect to spend it on your medical needs. Look back at your expenses in previous years to gauge what you're likely to spend.
2. Pick the right health insurance plan.
Open enrollment periods differ from employer to employer, so for some, it may already be too late for you to choose among various health insurance options. But if you still can, take a detailed look at the insurance plans that are available to you before deciding which one will best meet your needs this year.
Health insurance is complicated, but one way to simplify matters is to remember that, as with so many things, you get what you pay for: With most policies, the higher your monthly premiums, the better your coverage will be and the less you'll spend on out-of-pocket expenses like co-pays. Therefore, in general, if you have a lot of health-care expenses, it's likely that a higher-cost plan that will cover more of those costs. On the other hand, if you're relatively healthy, then taking a lower-cost plan will typically save you money overall.
3. Look in on your retirement savings.
Saving for retirement is an essential part of your long-term financial health, so a useful resolution to make for 2013 is to raise the amount you contribute to your 401(k) plan or other employer-sponsored retirement account. With contribution limits on 401(k)s rising next year from $17,000 to $17,500 for those younger than 50 and to $23,000 for those 50 or older, most workers have a lot of capacity to boost their savings.
In addition, if you haven't checked your investment options in a while, this is a good time to look at how your account has performed and to consider whether making some moves within it might help keep you on track to retire comfortably. After a year in which both stocks and bonds have had pretty strong performances, rebalancing may not be necessary if you've stayed on top of 401(k) maintenance in recent years. But if you haven't checked on your investments for a while, the nearly four-year-old bull market in stocks may have left you overexposed to market risk.
Employers are getting stingier and stingier about employee benefits, so you really have to make the most of the ones you have. By taking these steps now, you'll ensure that you're getting maximum benefit from your benefits.