Higher Salary vs. Better Benefits Would You

HIGHER SALARY vs. BETTER BENEFITS

Would you rather have better benefits and a modest salary or high salary and lower levels of benefits?

When comparing the choice of selecting better benefits and a modest salary (such as working for the government in the civil service or as a teacher) versus a high salary and few benefits (such as working as a commission salesperson), overall I would prefer to work for a higher salary. This choice suits my naturally independent personality. I would prefer to have the money to invest as I saw fit and to use it for a variety of personally fulfilling goals, such as traveling or a down payment on a house, versus having my benefits and how I should use the additional revenue dictated to me by my employer.

Of course, by taking this choice, I assume certain responsibilities for myself. I might have to buy my own health insurance (or additional health insurance), save more for my own retirement, and provide for my loved ones in case I am no longer there by buying life insurance. But assuming that I am disciplined enough to do so, I do not feel that taking a larger salary is necessarily an unwise or risky choice. Many employees in jobs with 'good benefits' have seen those benefits slashed. Benefits can easily be taken away from employees. Also, unlike a salary decrease, benefit reductions can be quite 'sneaky.' A few changes to the fine print means that an employee may suddenly find that he or she has higher co-pays or must put more money in his or her 401K, rather than having his or her contributions 'matched' by the employer as in the past.

A disciplined worker who makes a high salary should know enough to save more than he or she spends, and to keep an eye on his or her retirement investments, select the best possible health insurance package on the open market, and spend prudently. Another advantage of a high salary is that while salaries can theoretically go up infinitely high, there is a limit to how much healthcare one can consume. After a certain point, the extra doctor's visits and care may be doing 'more harm than good.' And while saving for retirement is necessary, it is possible to be too cautious and to save so much money that the needs of the present (or even the short-term future, such as providing for children's college or paying the mortgage) are forgotten.

I realize that in eras past it might have been considered wiser to take better benefits than a higher salary. It is essential for a job seeker to 'do the math.' "If potential employer A allows you to defer $16,500 to your 401(k) plan on a pretax basis and provides you with a matching contribution, while potential employer B. does not offer a retirement program but offers a higher salary, consider whether the higher salary is such that it allows you to add $16,500 to your nest egg, plus any amount you would receive for matching contributions, profit-sharing contributions and the income tax that you would save through salary deferral" (Job hunting: Higher pay vs. better benefits, 2009, Investopedia). However, even the best prospective employers today rarely offer such generous retirement programs. Fewer still offer "a defined-benefit plan, [in which] your plan benefits are not affected by market performance & #8230; investment risks are borne by your employer" (Job hunting: Higher pay vs. better benefits, 2009, Investopedia). Stock options in a prosperous company can also make more generous benefits a better payoff than a high salary.