Find Financial Advisors for FirstEnergy Employees & Executives: Q&A Insights from the Experts

FirstEnergy employees are in a unique position to take advantage of company benefits many others are not afforded. For starters, FirstEnergy is one of a handful of companies offering a defined benefit pension plan. This plan is often the cornerstone for retired FirstEnergy employees when it comes to retirement income. However, there are over 20 different options available for FirstEnergy employees, with many of those options involving the benefit continuation of a surviving spouse.

By getting to better understand the current financial picture of the FirstEnergy employee and the goals of the employee and his/her spouse, we can recommend a pension benefit that maximizes income, while protecting a surviving spouse in the event of a premature passing of the retired FirstEnergy employee.

Coordinating this pension benefit with Social Security benefits, other retirement savings (such as the 401(k) plan), and the age difference between spouses can help us formulate a recommendation that is best suited for the retiring FirstEnergy employee.

To better understand FirstEnergy employee’s goals, we like to understand the goals presented to us, and the expenses that correspond with those goals. Oftentimes, we see some employees have a dream to pursue a beach property, recreational vehicle, or some other larger expense to enjoy in their golden years.

What many retirees may not be considering is that while they can afford the purchase with retirement savings, there are almost always tax implications that should be considered prior to making this decision. Rather than seeing the tax implication after the fact, when there is not much of anything the employee can do to fix the mistake, we like to make sure these goals are communicated ahead of time and properly planned for.

One company benefit that we see that is often not utilized, or worse yet, not even known is available to FirstEnergy employees, is the benefit to have their basic legal documents completed at no out of pocket cost.

This option is available for FirstEnergy employees who take advantage of the company-offered supplemental life insurance policy. If you’re enrolled in this program, you are eligible to have your estate planning documents completed at no cost by an attorney. FirstEnergy maintains a list of qualified local attorneys for this purpose. Unfortunately, we notice many employees are either unaware of this benefit, or haven’t taken the time to take advantage of it.

FirstEnergy offers high-deductible health insurance plans that allow you to enroll in a Health Savings Account (HSA). For qualifying FirstEnergy employees, FirstEnergy will contribute $500 to an individual plan, or $1000 to a family plan each year. Specifically, in the FirstEnergy lineup, Consumer & Enhanced High Deductible Plans aHSA are eligible, while the Base PPO plan is not.

As is the case with HSAs and is often a misconception, these accounts are not “use-it-or-lose-it” accounts. Rather, if the funds haven’t been utilized while the employee is working at FirstEnergy, he/she can utilize the account in retirement, which can provide an excellent tax-efficient way to pay for health expenses.

For FirstEnergy employees, specifically ones who have been at FirstEnergy for 30+ years, transitioning to retirement can be both a financial and psychological event. While many employees have grown accustomed to the benefits that a stable salary can provide, they would also like to enjoy the next phase and achieve other goals they may have.

The retiring employees we’ve seen who have had the most success have made sure to plan in advance, usually about 1-2 years prior to retiring. Specifically, we work with the FirstEnergy employees in coordinating if they would like to fully retire and live off their savings and guaranteed income streams, or if they’d like to transition to a part-time role (whether at FirstEnergy or otherwise).

By coordinating the 3 common benefits most retiring FirstEnergy employees have, the pension, 401(k), and Social Security, we can come up with an income plan that allows the retiree to enjoy peace of mind, achieve their retirement goals, and account for the unknown, such as taxes, inflation, healthcare costs, etc.

For FirstEnergy employees who have managed their own finances to this point, it can be a challenge to introduce someone who is essentially partnering with them to help coordinate their financial lives.

We’re not unaware this can be a hurdle, so we’ve made it our mission to try to alleviate this concern. The first is that we make sure that the FirstEnergy employees understand we have their best interest at heart, and we view achievable goals as something we’re equally vested in achieving.

But we’ve also made sure to take the time to understand the benefits available to each retiring employee in great detail. When working with a financial planner, you should have someone who has your best interest at heart, but also understands the benefits you have available to you as a FirstEnergy employee.

For most FirstEnergy employees, especially ones who have spent the vast majority or all of their career with FirstEnergy (or one of its subsidiaries), the challenge isn’t necessarily that the employee will have sufficient retirement income. It can actually be the case that the retiree may be in the position of having 100% (or more) of their pre-tax salary. This is an enviable position to say the least!

But the problem the employee may encounter is the corresponding tax liability that could result. The simplicity of how earned income is taxed usually allows the employee to understand what his/her taxable liability will be each year. But when the employee transitions to retirement, pension income, 401(k) income, and Social Security income are all taxed differently than earned income, and when combining these income sources, it can further complicate matters.

Instead, FirstEnergy retirees should take a more active approach to tax planning, that will allow them to save on taxes in a given tax year, but also over their lifetimes. When the retiree becomes Required Minimum Distribution-Age eligible, it can potentially push him/her into a higher tax bracket. We’ve also seen employees have to plan to stay below IRMAA thresholds, which can increase the monthly premiums for their Medicare plans Parts B & D.

By planning ahead for these scenarios, the retiring employee can be in control of their tax planning, not the IRS.

There should be some basic questions a FirstEnergy employee should ask their financial planner/advisor. Some of those include:

• Do you have a fiduciary responsibility to your clients?
• What is your fee schedule, and how are fees deducted?
• What credentials and experience do you have?
• What does your process of onboarding new clients look like?
• What does your client review/client service process entail?

In addition to that, it’s worth seeing if the advisor/planner has helped other employees who have been in a similar situation. Therefore, you can have confidence that your advisor/planner is familiar with the FirstEnergy company benefits, in addition to making sure you’re working with a planner who is looking out for your best interests.