According to the survey, Americans are four times as likely to choose a job with benefits over an identical job that offered 30 percent more salary but no benefits. What’s your reaction to this?
Neal Stern: I find it encouraging that so many Americans recognize the value workplace benefits bring to an overall financial plan. Some benefits, like health insurance, protect you from exposure to tremendous expenses that could seriously derail your financial wellness. These benefits often come at a lower cost than what it would take to buy the coverage on your own. This is largely because of employer subsidies and possibly more favorable pricing through a group, which leaves you more breathing room in your monthly budget. Looking beyond the financial benefit of a broad benefits package, it’s hard to over-estimate the value of peace of mind you get from being free of the worry of catastrophic expenses from an accident or illness.
And thinking of the longer term, workplace benefits like 401(k) plans can help you get on the right track for building retirement savings, in a much more effective and powerful way for many people than trying to set aside money on your own each month.
Nearly 9 in 10 employed adults are confident they understood all the benefits available to them when they accepted their current job. However, concerningly, less than a third said they’re very confident they’re using their benefits to their fullest potential. Is this consistent with what you have seen professionally?
NS: Unfortunately, it’s often the case that despite understanding the value that comes with having good benefits, Americans are not taking full advantage of them. This is particularly concerning because leaving benefits underutilized is essentially leaving money on the table that you’ve earned. For example, many companies offer to match retirement contributions up to a maximum percentage, like 3%, but workers often contribute less than the maximum and are walking away from money their employer is willing to give them. This can make a huge difference in what you ultimately can accumulate for retirement, especially when you consider the compound growth of the extra money that would’ve taken place over a decades-long career.
401(k) match, health insurance and paid time off topped the list of workplace benefits that Americans said would help them reach their financial goals. Did anything about the priority Americans placed on specific benefits surprise you?
NS: It’s not that surprising people place a higher priority on what seems to be closer at hand in their situation. For example, retirement is at the top of the radar screen for Baby Boomers, while it may seem ages away for Millennials. Many of the decisions Americans make when starting off their careers can have an exponential impact on their financial futures. It’s important they leverage whatever benefits are offered to them by their employer to the best of their ability throughout their careers. And when prioritizing and evaluating benefits, Americans should consider the whole picture. Benefit packages should ideally be a mix of different options that bring financial benefit in both the short and long-term.
Three in ten Americans are considering switching jobs in the next year – for those looking for new employment, how would you advise they compare two offers?
NS: When considering a new position, think about future prospects, not just the current offer. Advancement prospects should be high on your list – will the job provide the training, experience, and opportunities to keep you on a good path for career growth and success? Your financial future will be tied to your company’s fortunes, so it pays to invest some time in researching how your prospective employers are performing and where they’re heading.
In comparing compensation, look at the total package, not just the salary. The value of employer-subsidized health insurance, a solid retirement plan with a company match, and other benefits may contribute more to your bottom line than a somewhat higher salary. Also, some of the benefits may not be taxable while your salary will be. Keep in mind, too, the intangibles that can affect your pocket and your lifestyle. For instance, a long commute can be expensive and place a big dent in your personal time, while policies like flexible working hours and telecommuting can contribute to your quality of life.
For more information on workplace benefits, check out the free resources available on the AICPA’s 360 degrees of financial literacy website. There you can find information on what questions to ask when evaluating benefits, as well as articles full of insight on a wide range of financial topics, and even a tool to help you build your own financial plan.
Jon Lynch, Manager, Public Relations, Association of International Certified Professional Accountants
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Originally published by AICPA.org
