1350: [Part 1] Higher Salary vs. Better Benefits by Craig Stephens of Retire Before Dad on Choosing A Career

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[00:00:52] with the Beyond the Box podcast on logistics insights at Maersk.com slash insights. This is Optimal Work Daily episode 1350 Higher Salary vs. Better Benefits, part one by Craig Stevens of RetireBeforeDad.com. And I'm Dan, I'm your host and welcome back to Optimal Work Daily.

[00:01:11] And if you're a regular listener, you already know that this is where I simply read articles to you focusing on work, productivity, and entrepreneurship. And today's post is a little bit longer than normal so what I'll do is read the first half for you right now

[00:01:24] and then finish up the rest tomorrow in the Wednesday show. So for now let's get right to part one from Craig and start optimizing your life. Higher Salary vs. Better Benefits, part one by Craig Stevens of RetireBeforeDad.com. What's a more important consideration? Higher salary or better benefits?

[00:01:48] As someone who's experienced the best of both options, it's time to compare the two. Fourteen years with one company is a long time in today's employment market. My tenure was never about loyalty or career advancement

[00:02:00] and it certainly didn't earn me a gold watch. The company paid me a salary above the market rate for the job I did. That's why I stayed. The benefits always lagged competitors. But benefits weren't as important when I was single and childless.

[00:02:13] But as the sole earner for our family of five, I decided I was done sacrificing my higher salary for better benefits. Speaking to other employers and friends, I realized what a good benefits package looks like

[00:02:25] and should cost. So I finally left my employer and started a new job with my ideal company. Why were the benefits so bad? Before I get into the details, I acknowledge I was fortunate to have an employer that had benefits and paid well.

[00:02:38] Before I get into the details, I acknowledge I was fortunate to have an employer that had benefits and paid well. Not everybody has access to the same. The local economy is strong and opportunities are abundant for educated IT workers.

[00:02:52] The benefits I described from my previous employer were bad compared to similar employers in the area. Here are a few reasons why my former employers' benefits were bad. Health care for our family was much more expensive, two times more, compared to better plans at larger employers.

[00:03:07] Same for dental. The lowest cost dental plan wasn't even accepted by dentists in our area. The 401k fees were outrageous. A third party siphoned off advisor fees and the fund selection consisted of only 12 expensive managed mutual funds. No official maternity or paternity policy. Women got nothing,

[00:03:26] less than 50 employees, not even a guaranteed job when they returned from leave. No training and no IT support. When the power button broke on my company issued laptop, I had to hail a cab to a repair shop. Health care plans have always been structured for large companies to

[00:03:42] negotiate good deals while many small businesses are left behind. Many small businesses have suffered in the past decade. On top of that, we never had a dedicated benefits specialist. We had the owner and an admin, so every year they pieced together a package that was suitable for them

[00:03:58] and kept their costs down, but never considered everybody else. And they never compare themselves to competitors. To make up for the bad benefits, the company pays higher salaries. But with high salaries come thin profit margins and thus no money left over to provide better benefits.

[00:04:13] In a way I was the walking example of why our benefits weren't good. My salary was high and my margin was thin, so there was less to go toward improving benefits. It's a situation I struggled with for years. Chief Forgetful Officer. Every year

[00:04:29] I received a salary increase, but I've never received a benefits increase. Most years I got a decrease in benefits 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.

[00:04:45] Aside from benefits, sometimes I wonder if working for the company for so long held back my career. Maybe I maximized my earning potential and should have left long ago. Leaving a position for a better one can be more lucrative. Hard to say.

[00:04:58] For many years I believe my job was the path of least resistance to early retirement, a job where I can earn the most from my efforts. Working for a small company with a direct relationship with the owner did have some perks. Once I asked for a $22,000 raise

[00:05:12] and got it. If I didn't like a company benefit, I told the boss. He listened, then would forget. The problem was I didn't want to ask for better benefits. I wanted excellent benefits to be ingrained in the company's DNA. For example, I told my boss the 401k sucked.

[00:05:28] He didn't understand why so I explained it. No change. Then a year later I reminded him the plan sucked. He was shocked and upset that I didn't tell him earlier. In a way I was stuck with my company

[00:05:40] and they were stuck with me. That's why I was so relieved to find a better employer. Quantifying a higher salary versus better benefits. Being a spreadsheet wizard and numbers nerd I looked at some hidden costs my previous employer and I found some potential savings.

[00:05:55] The cost of the so-so HMO plan for our family jumped $2,500 one year. The boss blamed politics but he avoided 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 healthcare costs

[00:06:11] I opted for the lower cost dental plan but later I found out no dentists in our area accept the insurance for adults only kids. So I started to look at my health costs which were well over $10,000 per year and compared them to the

[00:06:25] healthcare cost of other similar employers. Google searching led me to some actual planned data and an interview led to another. Then I asked a co-worker at a partner company to see their data.

[00:06:36] I wasn't surprised to learn that I could get a much better PPO health plan for my family for half the cost of my so-so HMO or a very good high deductible plan with an HSA for a fraction of what I pay now. To be continued

[00:06:49] you just listen to part one of the post titled higher salary versus better benefits by Craig Stevens of retirebeforedad.com. We're driven by the search for better but when it comes to hiring the best way to search for a candidate isn't to search at all. Don't search, match

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[00:07:55] right now and support our show by saying you heard about Indeed on this podcast Indeed.com slash startup. Terms and conditions apply. Need to hire? You need Indeed. And thanks to Craig for letting us share his post. Craig Stevens is a 43 year old IT professional,

[00:08:42] investor and blogger based in the Washington DC metro area. When he started the blog his primary financial goal was to retire at age 55 one year before his dad retired and hence the name retire before dad. He writes about how to build income streams so you can explore the

[00:08:58] unusual. Craig's first love is his beautiful wife and three kids and his second love is travel. Combining both in early retirement is the ultimate goal and his primary motivation for financial independence. So come by retirebeforedad.com to learn a whole lot more

[00:09:13] and thanks again to Craig for letting us share his work. Okay that is going to do it for today for part one of this post have a great rest of your day and of course I hope you'll join me tomorrow for part two where your optimal life awaits.