I’ve got a personal question to ask you. I know this is a taboo subject in the workplace, but just between you and me – how big is your package? Your benefits package.
We spend a lot of time comparing jobs based on the hourly rate or annual salary, but solely focusing on a job’s wages is very shortsighted. If you put too much emphasis on your paycheck you may be missing out on all sorts of benefits that can help you build wealth and minimize taxes.
Anyone who tries to impress you with their high income is clearly overcompensating for their small package. Many employers are quick to brag about their high hourly rate, but when you ask to see their benefits they hang their heads in shame.
Locums jobs are famous for high rates, but when you factor in value of your employer’s benefits your day job may pay similarly on an hourly basis. In my experience, these locums jobs are enticing you with high rates because they are going to squeeze you for every last penny.’s worth. In locums work, every shift is a bank robbery. Some days you’re holding the gun, while other days your hands are in the air.
It’s How You Use It
You can do a lot of things with a big benefits package.
Attract New Partners – I’m not going to lie. It’s easy to attract and retain new partners with a big package. If you’ve always settled for minimal benefits you won’t believe your eyes. I can assure you that once you go pre-tax, you never go back. There is very little turnover at my job because there are very few jobs that offer so many tax-deductible perks.
Build Wealth – My partners’ wealth-building is on autopilot. A huge portion of their total income is funneled into vehicles that will make them financially independent before retirement age.
Cut Taxes – Every extra dollar that goes into a tax-free benefit is 35 cents I don’t send the IRS. My benefits package trims more than $50,000 off my tax bill every April. Hands off my package, Uncle Sam!
Bigger is Better
When it comes to pre-tax benefits, the bigger the better. Yes, I do like that it slashes my taxes, but that’s not my favorite part.
The best part about having such a benefits-heavy structure at my job is that I get used to living on a fraction of my overall income. It is a built-in safety mechanism that makes it easier to live below my means.
The other perk is that if our group took a big financial hit, there is plenty of wiggle room to cut benefits and maintain cash flow.
A Sneak Peek
My package is nothing to brag about. I’ve seen bigger. I’ve seen smaller. You have to work with what you’ve got. Luckily for me it’s enough to get the job done.
Here is the actual breakdown of my 2017 benefits package:
Cell Phone $960
Group Disability Insurance $5,497.20
Individual Disability Insurance $5,579.28
CME / Medical Dues / License Reimbursement – $7,069.08
Financial Advisor reimbursement $650
Fitness Reimbursement $1,000
Health and Dental Insurance $15,983.04
HSA Contributions $6,000
Medical Expense Reimbursement $6,727.99
Internet Reimbursement $1,019.40
Life Insurance $1,025.66
Medicare / SS Tax (Employer half) $15,114.88
Liability Insurance $25,725.10
Profit Sharing Contribution $36,000
Cash Balance Plan: $50,000
Total Benefits: $179,509.63
Clinical Hours worked: 1,803
Hourly value of benefits package: $99.56 / hour
Would it be more impressive if my hourly rate was $99.56 higher than it currently is? Who cares? I’m more impressed by someone who has taken advantage of every incentive the IRS throws at them. Let people be impressed when you achieve financial independence before your kids start college.
There’s No “One Size Fits All”
There are times when you may not need or desire a benefits package at all. When it comes to side hustles, it’s all about the hourly rate. Yes, I do take advantage of a solo 401(k) and self-employed tax breaks, but I don’t need my part-time employers enticing me with anything other than cold hard cash.
There are other scenarios where you may choose cash over benefits. Maybe your spouse already has a big package and you don’t need a second one in your life. Maybe you’re trying to pay off your student loans as fast as possible and you prefer the extra cash. Maybe you’ve already achieved financial independence and at your age you just don’t have as much use for a big package as you used to.
Regardless of your reasons, don’t let someone talk you into a big package if it doesn’t fit your needs.
How Do You Measure Up?
This isn’t a competition. I hope everyone reading this has a bigger package than me. If you’re working with a tiny package and all your hard-earned money is going to the IRS, don’t despair! Let this be the motivation you needed to take a more active role in your job’s benefits. It’s time to stand at attention and let the world know you’d gladly trade your big paychecks for a bigger package.
What do you think? Does your job have a lot of valuable benefits that slashes your tax bill? Do big dollar signs distract you from tiny packages? Share your thoughts and comments below.