Looking for a new job is never easy, regardless of whether you left your previous employer because you wanted a higher salary, didn’t get along with your boss, or just wanted to move forward with your career. When we’re job hunting, it’s easy to look at the paycheck as the main benefit a company can offer us, and we may fall into the narrative of “the better the paycheck, the better the job opportunity.”
However, this line of thinking doesn’t always lead to the most optimal career choices. Benefits are valuable, and companies know this. An economic news release from September of 2021 showed that around 70% of employer costs were associated with direct employee compensation, while about 30% went into benefits costs.
Understanding the value that potential employers offer you outside of direct payment is vital when on a job hunt. Unfortunately, recent research has found that less than 10% of HR professionals consider their employees to be “very knowledgeable” about the kinds of benefits they’re being offered.
This article aims to help you become a part of the exclusive group that feels confident when considering the different benefits and retirement options offered by companies. We will discuss all of the standard benefits most jobs have, what they represent, and what you should look for when starting a new position. Along with that, we will talk a bit about retirement plans, what you have to look for from the new employer and why changing your job might be helpful.
The Most Common Benefits
All kinds of benefits can be included when a company makes you an offer. Below is an in-depth look into the most common compensations (besides salary) that most employers offer. Let’s get started.
401(k) Plans
Many companies offer some kind of retirement plan to their employees, and 401(k) is one of the most popular choices. It provides a tax-advantaged way to save for your life after retirement and enables you to contribute up to a set maximum that changes every year. Most experts would agree that the best thing you can do is contribute as much as you can right away, instead of trying to play catch-up later when you’ve already gotten used to having a bigger budget.
When it comes to investment choices in a 401(k), mutual funds are probably the most common. However, you will have to decide how you want to invest your contributions. Of course, you can always go back and change the strategy later if you so desire.
You might also want to see if there’s a fund based on your age. An example of this is a target-date fund, which is essentially a mutual fund that adjusts risk according to your life stage to get you to your retirement goal on time. So if you’re younger, you can handle more risk as the market will balance out in your favor.
Health Insurance
Health insurance is perhaps the benefit most people tend to be interested in when starting a new job. You will likely have to make a choice between a Preferred Provider Option (PPO) or a Health Maintenance Organization (HMO) for medical insurance. If you go with an HMO, you will be allowed to go to doctors that have a contract with a specific insurance company. And while HMOs tend to cost less, you will have to be very flexible about which doctors you see and which hospitals you visit.
On the other hand, a PPO is not as strict as an HMO. Doctors still have a relationship with insurance companies, however, you can visit a doctor that may not be on the PPO’s list and still get reimbursed for the service. The downside here is facing more out-of-pocket expenses, but you will also face fewer restrictions.
When considering whether you should accept a dental plan, consider your previous history with dental work. If you rarely have to go to the dentist, it may be more cost-efficient to pay out of pocket instead of investing in an insurance plan.
Life and Disability Insurance
Employers tend to provide life insurance to compensate survivors for someone’s lost wages if they pass away and another family member has to take over the provider role in the family. That being said, if you’re single and not supporting anyone else, you may not need to have life insurance, so this benefit won’t matter as much.
On the other hand, disability insurance can be an excellent benefit for any individual, regardless of marital status. It helps you know that in the case of unexpected disability, you will receive a payout instead of your income, which of course, is a great safety net both for you and your family.
Paid Time Off (PTO)
This is probably everyone’s favorite benefit to use. Paid time off refers to the number of working hours/days that the company will pay you for even when you aren’t working.
Many employers like to separate the paid time off by vacation days, personal days, and sick leave. Alternatively, some organizations prefer to have a bundled PTO, which means there’s just a set number of days or hours that you can use for any purpose. This can be beneficial for younger employees who don’t get sick as often or those who don’t have children yet and are less likely to stay home for personal reasons.
It’s essential to find out what the company’s paid time off policy is when looking for a new job. Some employers have the so-called “use it or lose it” policy, in which case you need to use all of your days before they go to waste at the end of the business year. However, some companies may let you transfer days, which can be great if you plan to take a more extended trip.
Commuter Benefits
Most of us would agree that it’s kind of unfair that you have to pay to get to work, but you don’t always have a choice—in most cases, employees have to take some form of private or public transportation to get to the office. However, some employers offer to cover some or all of that cost as a part of their benefits package.
Some organizations will reimburse their employees for the price of public transportation or parking, or at the very least determine a set amount of money you receive each month that is specifically dedicated to covering the cost of gas or a public transport card. Companies willing to take this benefit to the next level may offer ride-sharing or shuttle services that take you from your home to the corporate office. Sort of like a school bus, but for company employees.
Whether or not this benefit is relevant to you is highly dependent on your location and your transportation situation.
Other Popular Benefits
If you’re in the process of switching between employers, you’ll likely start wondering what other organizations are offering in terms of benefits. The truth is that benefits vary wildly from one employer to another, from industry to industry, and across positions. We just discussed the most common benefits in-depth. However, you will likely see many other benefits on your job hunt, including:
- Health savings account
- Eldercare benefits
- Employee discounts
- Wellness programs
- Pension plan
- Tuition assistance
If you’re getting offered benefits that you don’t understand, you should ask someone from the human resource department to give you a rundown of what that benefit contains. Alternatively, you can also check the company website to see if they present details on their benefits package and what it offers.
What Benefits Do You Need to Look for?
Retirement plans and health insurance are commonly considered to be the most important benefits. Beyond these, the level of importance of each benefit depends on your personal situation, your lifestyle, and your family’s needs.
Typically, as people grow older, they start paying more and more attention to the benefits their company offers and the value they get from them. So, for example, younger employees might care most about the salary and the PTO they get, while older employees look at things like health and life insurance benefits.
The great thing is that most companies allow employees to go back and change the benefits they’ve chosen as they age and their life situation changes. It’s perfectly normal for a 24-year-old not to have to consider life insurance. However, by the time you reach 40 and you’re married with kids, securing their future will be of vital importance to you.
When it comes to evaluating the benefits you’re being offered, it’s a good idea to consider two things: 1) What will support you and your success in the next two to three years, and 2) What will set you and your family up for health, happiness, and security long-term? However, the answers to these questions are always in addition to securing a great retirement plan and good health insurance, as these are the cornerstones of every good employee benefits program.
Please feel free to reach out to me on this or any of your investment needs or questions. I may not always have the answers at my fingertips, but I promise I will get them for you. Michael Torrence
Calendly link https://calendly.com/mt-awf/intro Work: 435.658.1934 Contact: 330.284.3211
Michael Torrence – Investment Advisor Representative: Michael was born and raised in Ohio and attended The Ohio State University. After College, he was commissioned as a 2ndLt in the United States Marine Corps. He attended his initial training in Quantico, Virginia, then graduated at the top of his Primary Aviator Class and was selected for the Strike (Jet) Platform.
Founded in 2010, our services include boutique hedge funds, separately managed accounts, financial planning, estate & trust services, private placements and in-house concierge services for high net worth individuals, families, and businesses.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All investments involve risk including the loss of principal.
[…] you may have. Here, the financial expert will also try to learn more about the taxes you pay, the employee benefits you have, your insurance package, […]