13 years with one company is a long time in today’s employment market. My tenure has never been about loyalty or career advancement, and it certainly won’t earn me a gold watch.
The company pays me a salary above the market rate for the job I do. That’s why I’ve stayed.
The benefits have always lagged competitors. Benefits weren’t as important when I was single and childless.
But as the sole earner for our family of five, I’m constantly debating: should I sacrifice my higher salary for better benefits?
Speaking to other employers and friends, I’ve realized what a good benefits package looks like and should cost.
I don’t have one. And what’s most annoying is that I’m paying for excellent benefits, but receive substandard ones. How can that be?
Why are the Benefits Bad?
Before I get into the details, I acknowledge I am fortunate to have an employer that has benefits and pays well. Not everybody has access to the same. The local economy is strong and opportunities are abundant for educated IT workers. The benefits I describe are bad compared to similar employers in the area.
Here are a few reasons why my employer’s benefits are bad:
- Healthcare for our family is much more expensive (2x) compared to better plans at larger employers
- Same for dental; the lowest cost dental plan isn’t even accepted by dentists in our area
- The 401k fees are outrageous; a third party siphons off advisor fees and the fund selection consists of only 12 expensive managed mutual funds
- No official maternity or paternity policy; women get nothing (less than 50 employees), not even a guaranteed job when they return from leave
- No training
- No IT support; when the power button broke on my company issued laptop, I had to hail a cab to a repair shop
Healthcare plans have always been structured for large companies to negotiate good deals while many small businesses are left behind. Many small businesses have suffered in the past decade.
On top of that, we don’t have a dedicated benefits specialist. We have the owner and an admin. So every year, they piece together a package that is suitable for them and keeps their costs down but doesn’t consider everybody. And they don’t compare themselves to competitors.
To make up for the bad benefits, the company pays high salaries. But with high salaries come thin profit margins, and thus, no money left over to provide better benefits.
In a way, I’m the walking example of why our benefits aren’t good. My salary is high and my margin is thin, so there’s less to go toward improving benefits.
It’s a situation I’ve struggled with for years.
Chief Forgetful Officer
Every year I receive a salary increase. But I’ve never received a benefits increase. Most years, I get a benefits decrease in the form of cost appreciation. Big ones. I know the cost of benefits is consistently rising for everyone, but the company disproportionately passed the costs onto its employees.
Aside from benefits, sometimes I wonder if working for the company has held back my career. Maybe I maximized my earning potential here and should have left long ago. Leaving a position for a better one can be more lucrative.
Hard to say.
For many years, I’ve believed my current job is the path of least resistance to early retirement (NSFW), a job where I can earn the most for my efforts.
Working for a small company with a direct relationship with the owner does have some perks. Once, I asked for a $22,000 raise and got it.
If I don’t like a company benefit, I tell the boss. He listens.
The problem is I don’t want to be asking for better benefits. I want excellent benefits to be ingrained in the company’s DNA.
For example, I told my boss the 401k sucks years ago. He didn’t understand why so I explained it. No change.
Then a year later I reminded him the plan sucks. He was shocked and upset that didn’t tell him earlier.
In a way, I’m stuck with my company and they’re stuck with me.
Quantifying a Higher Salary vs. Better Benefits
Being a spreadsheet wizard and numbers nerd, I’ve been looking at some hidden costs of my employer. I found some potential savings.
Last summer, the cost of the so-so HMO plan for our family jumped $2,500. The boss blamed politics, but he avoids the truth that bigger companies don’t take hits like that. Plus, they’re not afraid to swallow some of the cost.
To offset the higher health care costs, I opted for the lower cost dental plan. But later I found out no dentists in our area accepts the insurance for adults (only kids).
So I started to look at my health costs (which are well over $10,000 per year) and compared them to the healthcare cost of other similar employers. Google searching led me to some actual plan data, and an interview led to another. Then I asked a co-worker at a partner company to see their data.
I wasn’t surprised to learn that I could get a much better PPO heath plan for my family for half the cost my so-so HMO. Or, a very good high-deductible plan with an HSA for a fraction what I pay now.
Next up is that dirty old 401k. I’ve lost thousands over the years because of the lousy fund selection and high fees. Nonetheless, I’ve managed to save more than $300,000.
The 401k balance must stay in the administering account as long as I’m employed with the company. Meaning, the money is stuck in this account until I leave the company.
I’m fully vested, so that’s not an issue. The problem is the fees. The expense ratios on these funds are 1.0% to 1.5%. So staying employed and in this plan is costing me up to $5,000 annually.
Add that to the $6,000-$7,000 in potential savings health care savings and switching employers could easily save more than $10,000. That can offset a salary decrease.
Two Options Going Forward
Late last year, I sat down with Mrs. RBD and told her I wasn’t thrilled with my employment situation. This wasn’t the first time.
I have a 13-year history with my employer, mostly on good terms. Prior to the job I was broke, unemployed and living with my parents.
But we often disagree on how to run the business and my opinions are often ignored.
The company is always putting out fires instead of preventing them.
Part of creating a life of freedom, happiness, and purpose is to eliminate negative aspects of your life.
I told Mrs. RBD that 2017 would be they year I leave. And I’m ready to make the move, even if it requires some kind of loss of income.
I see two options going forward:
- Continue working for the company and hope that a better one buys it
- Actively look for a new job outside of my current expertise
#1 Stay and hope that a better company buys it
Most of the work I do I enjoy. I’m an IT consultant working for a large institutional organization. I interact with smart people and solve difficult problems. The day-to-day customer interaction is fine.
But nearly every aspect of dealing with my company is unsavory. Added to my client work, I’m asked to manage fifteen or so company employees. The task needs a full-time project manager and I’ve recommended that, but the company won’t make the investment.
There’s no sign the own is going to sell the company soon. He was more active trying to sell it a few years ago.
#2 Look for something new
One problem is that my specialty is fairly narrow. I have significant domain knowledge of the computer systems of our end customer. Those skills are valuable, but only for their specific computer systems.
I have built some expertise that is transferable outside of this end customer. But leaving may be foolish because my skills are more valuable where I am.
My primary goal is to stop working full-time sooner rather than later. So starting a new career trajectory isn’t so appealing right now.
Weighing salary and benefits will change depending on your age and life situation. Not long ago, the benefits weren’t an issue for me. Today, they mean a lot more. I’m supporting a family who relies on me to keep them safe and healthy. I’m there for them as a breadwinner, and as a Dad every day after work.
Prior to early retirement, balancing earnings and quality time with family is difficult for some professions. I know an attorney who doesn’t see his kids many weekdays.
I don’t want to be that kind of Dad. Luckily for me, my profession provides a solid income and flexible schedule.
But there’s more. Benefits are more important as your family grows and everyone ages. I’ve waited too long to make this a priority.
Do you face a similar situation? Am I being too picky? Should I feel more gratitude toward my employer?
Featured photo via Pixabay