Assessing your benefits package
Weighing a job change? Before you blindly leap for a fatter salary, take a hard look at your prospective employer’s benefits package. If it doesn’t measure up to your current benefits, you could be taking a financial bath.
The human resources or employee benefits department should be able to tell you the value of the benefits package. "Get the compensation package quantified so you’re comparing apples to apples," said Charles King, a compensation consultant with William M. Mercer Inc., a human resources management consulting firm. "If you’re looking at a job that pays $50,000 but has no pension vehicle, you might be better off taking a job making $40,000 that has retirement benefits."
Healthcare insurance premiums average $2,000 a year for an individual and $5,000 a year for a family, according to Martha Priddy Patterson, director of employee benefits policy and analysis for KPMG Peat Marwick’s Compensation and Benefits Consulting Practice. "That’s what you would have to pay in after-tax dollars if your employer is not providing it," she said. "For an individual, that’s $2,000 you’re getting tax free—and that’s a big savings."
If you are comparing an employer that offers a 401(k) retirement plan and matches 50 cents for every dollar you put in against an employer who does not provide a retirement plan, consider these figures: If you put $3,000 into the plan, tax-deferred, your employer would contribute another $1,500 in tax-deferred dollars. "That’s $4,500 you can save on a tax-deferred basis. You might have to earn $7,000 [in taxable income] to equal that benefit,’’ Patterson said.
Talk to other workers at the new job about the company’s benefits to gauge their level of satisfaction. Most importantly, know yourself and set goals, both financially and professionally, for five, 10, and 20 years down the road.