When you receive job offers, you might find yourself focusing on one thing - how much will you be paid? It’s true that your salary is important and can have a significant impact on your future and lifestyle, but the perks and fringe benefits that come with some jobs can be nearly as important. This is often referred to as a total compensation package.
Why are Benefits Important?
A good benefits package can make up for a smaller salary because the employer is covering or sharing the cost of certain items detailed below which can add to your overall happiness and save you money, even if it means a little less take-home pay.
Employers vary in terms of the benefits they offer. Some of the most common include:
1. Health Insurance - Health Insurance is one of the most common and important benefits an employer can offer. Nationally, annual healthcare costs average more than $7,000 per year for an individual and more than $20,000 for a family according to a study by the Kaiser Family Foundation. Having to pay all of it out of pocket can be tough. Some employers pay a portion of a worker’s health insurance and may offer family coverage as well. Some also offer dental and vision insurance included with a standard health insurance policy, or it may be a separate policy. Dental and vision insurance helps cover expenses associated with dental visits, eye visits or procedures you may need.
2. Paid Time Off - Paid Time Off (PTO) allows an employee to take vacations and time to run personal errands during working hours and not lose wages. The amount of time offered varies greatly by employer. Some allow unused time to be carried over to the following year.
3. Retirement Plans - Retirement is something to start planning for as early in your career as possible. To help workers develop their future retirement fund, employers typically offer one of two types of retirement benefits - defined contribution plans or defined benefits plans. Defined contribution plans, the most common examples are 401(k) or 403(b) accounts, allow an employee to make regular contributions from their paycheck to a personal retirement account on a pre-tax basis. This means that the amount you put in the retirement account is not taxed when you deposit it, but taxes will be paid on withdrawals before or after retirement. A defined benefits plan, commonly known as a pension plan, is an arrangement where the employer promises a specified lifetime payment based on a formula that considers multiple factors such as employee contributions, length of employment, earnings, and the employee’s age. Learn more about retirement plans from the U.S. Department of Labor.
4. Retirement Plan Matching Contributions – In addition to providing access to retirement plans, some employers will contribute to your retirement account by matching what you contribute. This is free money, and it adds up over time.
5. Sick Leave - We all get sick and need to take time to recover. Sick leave allows an employee to focus on their health without worrying about lost wages. Some policies offer the ability to take paid time off due to extenuating circumstances such as illness or the birth or adoption of a child and can also include time to care for a family member.
6. Life Insurance - Life insurance plans provide cash to your family or designated beneficiary in case of an untimely death. The benefits range widely by employer in terms of how much your family will receive. Nobody wants to think about it, but life insurance provided by your employer can help your family get through an unexpected difficult time.
7. Disability Insurance - Disability insurance offers protection by providing cash payments in the event of an injury that prevents you from performing your work duties. There are two types of disability policies, short-term and long-term. A short-term policy typically pays benefits for up to a year and provides these benefits to the policy holder after being out of work for a relatively short period of time. Conversely, a long-term policy provides benefits for a longer period but requires that the policy holder be unable to work for an extensive period before providing benefits. Learn more about disability insurance from USA.gov.
8. On-site Childcare and/or Childcare allowances – Working parents must think about what their children will do while they are at work. Many parents send their children to a daycare facility which costs almost $9,500 per year on average in NC according to World Population Review. An employer who offers some sort of childcare allowance provides money to help relieve a part of the financial burden associated with childcare. Access to convenient facilities is also a challenge and employers that offer on-site care remove some of those concerns.
9. Discounts for goods and services – Some employers offer workers discounts on the products and services offered by their establishments. Examples could be free food for workers at a restaurant, special “employee only” pricing on products at a retail store or significant discounts on personal services. These discounts could add up to significant savings for products and services if you’re a big fan of your employer’s products.
10. Tuition Assistance - If you’re interested in continuing your education or adding skills to advance your career, look for tuition assistance programs. Employers may help to pay a portion or all your education expenses if you agree to work for the company for a dedicated period. This could save you a significant amount of money and help you obtain a degree or training to advance your career.
There are numerous examples of perks and benefits employers offer to attract the best employees. Additional examples include on-site free or reduced costs meals and snacks, gym/health club memberships, college scholarships for family members, flexible work hours, charity donation matching, company retreats, sports and entertainment tickets and many more.
Not every benefit offered by employers will be valuable to every employee. The important thing is to understand which perks and fringe benefits provide value for you and to take advantage of them.