Your initial job right out of college may come with a lot of firsts: Your first paycheck, your first professional role, and, in some cases, your first company benefits package.
Your benefits package can make up more than 37% of your total compensation, so it’s one of the most valuable parts of a full-time job. Taking full advantage of your benefits could save you thousands of dollars a year.
“A lot of times, recent grads are obsessed with the number on their paycheck,” says Rebecca Blekht, 21, who accepted a full-time position at Synchrony, a financial services company, as an enterprise operations BLP after graduating from Syracuse University in 2019. But your wages are only part of your compensation. Benefits are valuable and essential to your overall well-being—financial and otherwise.
Benefits offer gains that are hard to measure: Health care protects workers outside the office, and 80% of employees say benefits increase their productivity and satisfaction, according to a 2017 MetLife study.
Here’s how to make the most of what you’ve got.
1. Analyze your health-care options
Health care is a core benefit that shouldn’t be ignored, even if you’re young, healthy, and just starting out in the workforce.
In some cases, individuals under 26 can be covered by their parents’ insurance plan, thanks to The Affordable Care Act. That was the case for Blekht, who received a full benefits package but ultimately decided to forgo Synchrony’s options and stay on her parents’ plan.
"It'll help me save money and my mom has a great plan through J.P. Morgan. My parents are supportive and I'm lucky to have that, not everyone does," says Blekht.
If staying on your parents’ plan isn’t an option, though, then you need to know how to navigate between the various health-care plans offered by your company.
Keep in mind the relationship between premiums (the amount you’ll contribute that is deducted from your paycheck each month) and your deductible (the amount you’ll pay up to before insurance starts coverage). Plans with higher monthly premiums tend to have lower deductibles, meaning your insurance company will start paying out sooner.
If you’re willing to take a little risk with your health-care costs, a plan with a lower premium but a higher deductible can make sense. The reverse is true if you know you're going to have extensive medical bills because, for instance, you have a preexisting condition.
2. Maximize your retirement savings
Getting into the habit of saving in your 20s, rather than putting it off until later in your career, can help you end up a millionaire: If you save $5,000 every year starting from when you’re 25 years old, you’ll have more than $1.5 million saved by the time you reach 70.
Consider that if you start saving at 25, you should set aside 10-17% of your income if you want to retire by 65. However, if you wait until you’re 35, you’ll have to save 15-20%, according to a 2018 report from the Stanford Center on Longevity.
If your company offers a 401(k), a fund in which pre-taxed retirement contributions are automatically deducted from your paycheck, make sure you enroll—and take advantage of employer contributions. Some companies will match your contributions dollar for dollar, and you can contribute up to $19,000 annually to your 401(k), according to the IRS. Missing out on an employer match could cost you $100,000 in retirement contributions over 20 years in the workforce.
Plus, employee contributions can help you reach your savings goals. If you plan to set aside 10% of your income for retirement and your employer matches 4%, you only need to save 6% to get to 10%, instead of having to save all that yourself.
3. Take advantage of perks
When considering a new job, potential employees are looking for a combination of benefits—health care, paid time off, retirement plans, and life insurance—and perks, or added bonuses offered by a company. Perks like gym memberships or on-site dry cleaning improve can quality of life, and they can also save you money.
Some of the most desirable perks are flexible schedules and student loan repayment plans, says Vanessa Nelson, author of “101 Costly HR Mistakes.”
When Blekht accepted the job at Synchrony, she considered both the perks and benefits offered by the company, including remote work options, a retirement plan, a gym membership, and discounts on products and services.
Your salary is “not the only thing that comes with working full time, and it’s important to understand what is beneficial to yourself as an individual and what company can provide that to you,” says Blekht.
4. Capitalize on PTO
A paid-time-off policy, or PTO, lumps vacation, sick, and personal days into a single bank, allowing employees to draw from it and take time off at their discretion. This system can be advantageous for employees, provided they don’t take too many sick days, says Nelson.
Find out if your company lumps all time off together in one bank of days. If they do, be sure to space out the days you take off, in case you catch a cold down the line. But if your employer distinguishes vacation days from sick and personal days, don’t let the former go unused.
Find out if vacation days can be carried over from year to year, and if your employer requires you to take them in increments or allows you to use them all at once. American employees had $52.4 billion in unused paid time off in 2015, according to The Wall Street Journal.
You don’t want to miss out on those vacation days, says Nelson: “I would also recommend that all employees take some time off during the year to keep themselves healthy.”
5. Plan for the unexpected
When you accept a new role, it’s important to think about your future at the company. Common future-focused benefits include maternal and paternal leave, sabbatical opportunities, educational benefits, relocation assistance, and salary advancement.
“Being an entry-level and 21, I wasn’t super concerned about maternity leave at the moment, although Synchrony has good benefits for mothers,” Blekht says. “It’s so important for recent graduates to look at the benefits their potential employer offers so they essentially know what they’re getting themselves into.”
Look out for alternative time off for bereavement, jury duty time, and sick leave as safeguards to protect you in case of unexpected events, says Nelson.
Be sure to review your organization’s inclusion of the National Family and Medical Leave Act, which provides 12 weeks of unpaid leave for an employee’s serious illness or the illness of a spouse, child, or parent, Nelson adds.
While a paycheck may seem like the biggest takeaway from your first job, you should always go through your benefits package with your future self in mind. If you’re ever in doubt, Nelson suggests you consult with your HR representative.
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June 13, 2019