7 Valuable Benefits You May Not Even Know You Have ...

Originally posted on Yahoo Finance

Most of us know about Social Security, Medicare, our employer?s retirement plan and IRAs, but if you?re like many Americans, you could be eligible for other benefits worth tens or even hundreds of thousands of dollars that you might not even be aware of. These are benefits that you?ve paid for either by working for a particular employer or through your tax dollars. Here are some of the most common:

1)?Lost Pension Benefits

Just like bank accounts are insured by the FDIC, pension plans are partly insured by the Pension Benefit Guaranty Corporation or PBGC. In a recent?blog post, my colleague Linda Robertson, details how 37,000 people have claimed $ 252 million in missing pension benefits from the PBGC since 1996. However, there are still over 36,000 people with almost $ 197 million in unclaimed pension benefits, ranging from $ 1 to as high as $ 676,436! If you were you in a terminated pension plan, you may want to check out the PBGC?s Pension Search to see if you?re one of them.

2)?Retirement?Accounts from Previous Jobs

Just as there are lost pension benefits, many people have retirement plans from previous jobs that they?ve left ?out there.? A?recent survey?showed that half of Americans left a retirement plan with a previous employer and almost 20% of them left accounts worth $ 50k or more. This usually just entails neglecting to manage the investments and keep the beneficiaries updated, but sometimes it can even mean completely forgetting and essentially losing the account altogether, especially for beneficiaries who may not even know the account ever existed. To make sure this doesn?t happen, consider consolidating your previous retirement accounts into an IRA or your current employer?s plan.?Here?are some of the pros and cons of your options.

3)?Spousal Social?Security?Benefit Windfall

If you apply for Social Security before your normal retirement age, you?ll either get your benefits or a spousal benefit equal to 1/2 of your spouse?s benefits. (You can also qualify for a spousal benefit based on your ex-spouse?s benefits as long as you were married for at least 10 years and you haven?t re-married.) However, there?s also a way to get both. Here?s how it works. First, you must wait until your full retirement age and your spouse has to have filed for their own Social Security benefit. You can then apply for a spousal benefit and allow your benefit to continue to grow (about 8% per year) until age 70. At that point, you would apply to switch to your higher benefit. Using this strategy, you?re basically getting paid a bonus spousal benefit while delaying your benefit. If your full retirement age is 67 and your spouse receives the average Social Security benefit of $ 1,230 per month, that?s a windfall of over $ 22k.

4)?Social?Security?Survivor Benefits

You may think of Social Security as a retirement and maybe a disability program, but Social Security is a life insurance program as well. While the lump sum benefit is only $ 255, your family may be able to collect thousands of dollars in monthly?survivor benefits?when you pass away. It?s not just when your spouse retires either. Minor children and your spouse if they?re taking care of a child under age 16 would be eligible too. (Be aware of the family maximum amount if you have lots of kids though.) This can save you thousands of dollars in unnecessary life insurance premiums. Since Social Security is no longer mailing out annual statements, you can check out their?website?to see how much your family would be eligible for.

5)?Discounted Employee Stock Purchase Plan

While it?s generally not a good idea to have more than 5-10% of your portfolio in your employer?s stock (do you really want your job AND your retirement account tied to the same company?), you may want to see if your employer offers a program allowing you to purchase their stock at a discount (typically up to 15%). Even if the stock never appreciates, it?s like getting an automatic return on your money. You can then sell the stock and diversify the money, although there are tax benefits if you keep the stock at least 2 years past the offering date and 1 year past the purchase date. This?blog postdemonstrates how lucrative this can be. Just don?t forget to limit it to no more than 5-10% of your total portfolio and to factor in the company stock as part of the equity portion of your overall allocation.

6)?Free or Discounted Estate Planning Documents

Do you have a will, power of attorney, and health care directive? If not, don?t let the hundreds or even thousands of dollars it can cost to hire an estate planning attorney be an obstacle in getting these essential documents drafted. You can get a basic health care directive from your hospital or download a state-specific form from the National Hospice and Palliative Care Organization?here?at no cost. Another resource for health care decisions is the?Five Wishes, which is a popular, low-cost living will form made available from the non-profit Aging with Dignity organization. You can also draft other legal documents like a power of attorney and a simple will for free at sites likeDoYourOwnWill.com?or for a relatively low cost at sites like?LegalZoom?and?Nolo. While it?s generally advisable to have an attorney look over your will (and especially if you have or want a trust), you can reduce those fees by putting together the first draft yourself. You may be able to get legal help through your employer at discounted rates.

7)?Free or Low Cost Investment Help With Your Retirement Account

Finally, an increasing number of employers are providing employees low cost access to investment management, advice, or guidance.? According to a?study?by Hewitt Associates and Financial Engines, the median 401(k) participant who used investment help through their employer earned close to an average of 2% more per year in their accounts (net of fees) with less risk. While that may not sound like much, the study pointed out that ?a 45-year old who uses professional investment help will have saved 47 percent more by age 65 than if he or she had not used help, assuming the almost 2 percent higher median annual return is maintained over the 20-year period.?The difference becomes even more dramatic if the initial investment is made at a younger age. A 25-year-old who uses professional investment help when investing $ 10,000 could have $ 105,800 by age 65 compared to just $ 52,100 had he or she not used help?a 103 percent increase, again assuming the higher median annual return is maintained over the entire period.?

The simplest method of help is through asset allocation funds like balanced and target date funds. These funds are designed to be fully diversified ?one stop shops.? The latter also automatically adjust your asset allocation to be more conservative as you approach retirement. The problem is that very few employees actually use them as intended and instead treat them as just another fund to be added to the rest of their portfolio.

In addition, asset allocation funds aren?t for everyone. You may not like the way they are managed or you may want your retirement account to complement outside holdings. For that purpose, many employers offer some form of managed advice service either online or over the phone, like Financial Engines or Schwab GuidedChoice?. These programs can recommend a more customized portfolio for you and even provide basic retirement planning on whether you?re on track and how much you need to save, often at no additional cost to you.

Finally, there?s a growing trend of employers offering on-site financial education and planning. You can talk to a financial professional and get your financial questions answered, covering not just investments but possibly a broader range of financial issues like budgeting and taxes. But make sure that the financial planner isn?t just there to sell you something.

In these tough economic times, it?s easy to focus on what we don?t have. Who doesn?t feel that your portfolio could be bigger and your home could be worth more these days? But with a little investigation, you may find that you?re a little better off than you thought.

TheTradingReport

Source: http://www.thetraderswire.com/7-valuable-benefits-you-may-not-even-know-you-have/

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