How to Evaluate a Benefit Package Before Accepting a Job Offer
When it comes to a job offer, it’s easy to focus on the paycheck because, well … you need money to live . But you will also want to carefully evaluate the benefits on offer, as they have a monetary value of thousands of dollars, which can make a decent wage lower than expected. Here’s what you should look for when it comes to benefits.
Look for 401 (k) with matching contributions
Your employer may offer a 401 (k) retirement savings plan, and if you’re lucky, they’ll offer equal to your contributions, usually 50% and sometimes even 100%, usually no more than 4.3% of your paycheck (Balance has a good overview of options here ). This is as close to free money as possible, as it corresponds to funds that increase with interest over time.
To use the example from Fidelity , let’s say you are offered a complete match of up to 4% of your paycheck. If you make $ 50,000 a year, that means an extra $ 2,000 in “free” money every year. Assuming the rate of return on your 401 (k) remains the same (say 7%), combine your employer’s matching contributions and add an additional $ 320,250 to your retirement time savings.
Use this calculator to find out how much 401 (k) is worth and take that value into account when evaluating a job offer.
Make sure your employer pays health care costs
Unfortunately, above average wages can be offset by high health care costs if your employer does not provide adequate health insurance. The plans and options can be daunting, but one thing you can focus on is the percentage difference of what you pay versus what your employer pays.
According to US News, on average, employees cover 81% of the cost of coverage, with the average deductible for the most popular major employer plans being around $ 1,500 for in-network service. You will also want to explore the benefits and see how they fit your medical needs.
Finally, check if the plan offers a Health Savings Account (HSA) or a Flexible Spending Account (FSA), as these can save you up to a couple thousand dollars in taxes on medical expenses.
See if vacation rules can be negotiated
Compared to retirement accounts or health insurance, employers are usually much more willing to negotiate the amount of vacation days you get per year. Excluding sick leave and paid leave, the average employee has ten days off . Before accepting a job, consider arranging additional leave if the employer does not change wages.
Understand how bonuses work
Bonuses are great, but they come in two flavors: discretionary and guaranteed . As the name suggests, discretionary bonuses are based on some form of achievement (commissions, quotas) or are one-off (such as a hiring bonus). If the bonus is achievement based, make sure the parameters are clear and truly achievable. For example, a bonus based on company-wide performance may not matter as much to you as it does to an individual, especially if the benchmarks are unrealistic and not directly related to your job.
Look for affordable insurance options
Often employers offer insurance at a reduced rate, which saves you the hassle of shopping on your own (for example, disability and life insurance are often fully covered as part of your compensation package). With annual dental costs typically around $ 600 , low vision plans $ 240 , and dental services around $ 600 , these costs are skyrocketing. However, not all plans are the same – you need to take a close look at what exactly is offered in each plan and make sure they suit your needs.
Calculate also the monetary value of other benefits
Perks such as work from home, childcare subsidy, free meals, gym membership and scholarships to your phone bill or other equipment cost thousands of dollars, and some of them can also be negotiable. As with the other benefits described above, you need to know the total cost of benefits in order to have a complete understanding of the benefits package offered to you.