When it comes to a job offer, it’s easy to fixate on salary because, well…you need money to live. But you’ll want to carefully evaluate the benefits being offered, too, as they have a monetary value worth thousands of dollars that can make a lower-than-expected salary worth accepting. Here’s what you should look for when it comes to benefits.
Look for 401(k)s with matching contributions
Your employer might offer a 401(k) retirement savings plan, and if you’re fortunate, they’ll offer to match your contributions, usually 50%, or sometimes even 100%, typically capped at about 4.3% of your pay (The Balance has a good overview of the options here). This is as close as you get to free money, as they are matching funds that compound with interest over time.
To use an example from Fidelity, let’s say you are offered a full match for up to 4% of your salary. If you’re making $50,000 per year, that would mean an additional $2,000 of “free” money every year. Assuming the rate of return on your 401(k) stays steady (say, 7%), your employer’s matching contributions compound and add an additional $320,250 to your savings by the time you retire.
Use this calculator to get a sense of how much a 401(k) is worth, and factor in that value when evaluating a job offer.
Ensure that your employer will cover healthcare costs
Unfortunately, above-average salary can be negated by high healthcare costs if your employer doesn’t provide adequate healthcare insurance. Plans and options can get complicated, but one thing you can focus on is the difference in percentage of what you pay compared to what your employer pays.
Per U.S. News, on average, employees cover 81% of the cost for coverage, with the average deductible for large employers’ most popular plans being around $1,500 for in-network care. You’ll also want to examine the benefits and see how closely they align with your medical needs.
Lastly, check if the plan offers a health savings account (HSA) or a flexible spending account (FSA), as they can save you up to a couple thousand dollars on taxes when paying for healthcare expenses.
See if the vacation policy is negotiable
Compared to retirement accounts or healthcare coverage, employers are usually much more willing to negotiate the number of vacation days you get in a year. Excluding sick days and paid holidays, the average employee has ten days off. Before accepting a job, consider negotiating for more time off if the employer won’t budge on salary.
Understand how the bonuses work
Bonuses are great, but they come in two forms, discretionary and guaranteed. As the name implies, discretionary bonuses are contingent on some form of achievement (commission, quotas), or are non-recurring (like a hiring bonus). If a bonus is based on achievement, make sure that the parameters are clear and actually achievable. For example, a bonus based on company-wide performance maybe won’t mean as much to you as an individual, especially if the benchmarks are unrealistic and not directly related to your job.
Look for affordable insurance options
Often employers will offer insurance at a discounted rate, which can save you the bother of having to shop on your own (as an example, the costs for disability and life insurance are often fully covered as part of your compensation package). Considering that yearly cost for dental is typically around $600, low-end vision plans are $240, and dental is about $600, those costs add up quickly. Not all plans are the same however—you’ll want to look carefully at exactly what’s actually offered in each plan and make sure they meet your needs.
Calculate the monetary value of other perks, too
Perks like working-from-home, subsidized childcare, free food, gym passes, and stipends for your phone bill or other equipment are worth thousands of dollars, and some of them might be negotiable, too. As with the other benefits described above, you’ll want to know the total value of the perks so that you have a full understanding of the compensation package being offered to you.