Could you be leaving money on the table? Probably…
In my experience as a financial advisor, I see an average of $5,000-$15,000 left on the table every year in tax advantages from under-utilized employee benefits.
You might say,“Really? I’m not doing that.”
Well, let’s see.
When you don’t contribute the max to your 401(k) plan because your employer’s match stops at“x”, then you’re making a mistake.
Here’s the flaw…
You’re overlooking the fact that every dollar you contribute on a pre-tax basis (regardless of the match) reduces your taxable income dollar-for-dollar. This in return reduces your tax liability. So, if you’re in the 22% tax bracket, it’s like putting a $1.22 in your 401(k) for every $1 you contribute.
There are several strategies similar to this that I fully explain during our Benefits X-Ray. This is when I go through your benefits package with a fine-tooth comb providing you with a “tax savings” report to detail what you could be saving given full optimization. It’s usually the difference between being financially independent several years earlier or not.