Published: March 08, 2008 11:45 pm         

Benefits at one time made up for lower pay

I happened to have lunch the other day with a couple of young men who were discussing their educational goals as they related to their potential future careers.

Both said that while money was important it was not the primary factor to be considered.

They noted that very often money can be offset by good benefits.

Twenty years ago I would have agreed that benefits, such as paid health insurance and the opportunity to purchase life insurance at a discounted rate, a retirement program funded by the company, as well as accrued paid vacation, sick leave and holidays, do offset a lower than hoped-for salary.

That is far from the case today as more and more companies are dropping many of these benefits while not increasing salaries to any perceptible degree, at least not enough to offset the increasing cost to employees to replace the benefits.

While more and more companies are offering group health insurance options, it is not free. Premiums, once paid by the company, are now shared with the employee or, in some cases, picked up entirely by the employee through menu plan options.

These menu plans allow the employee to choose which programs they need for themselves or their families without taking the whole package. For example, you can take the health program, with or without the dental and/or vision programs. Or, you can even take the vision or dental without the health. You can choose the options for your spouse and children as well.

There are also health savings plans to which you can contribute that will pay for a variety of things that the insurance does not. One of those that I was aware of, however, required that you spend the money within the calendar year or lose it. The requirements for health savings plans vary considerably.

Long and short term disability insurance is offered as well to the employees of some companies with some employers paying the premiums for long term and the employee usually picking up the cost of the short term disability.

Depending on the program, the short term disability kicks in after a certain period of time, often up to six months, that allows the employee time to get the documentation to prove they can no longer work and after they have used up any leave that may have accrued, both sick and personal or vacation time.

Going quickly are the days when an employee could expect to use accrued vacation time to receive a “couple” of extra paychecks after stopping work to take another job or retire.

Vacation and sick leave is capped by many employers with a “use or lose” policy in effect during the calendar year. An employee can no longer expect to be paid for unused sick leave or have it applied to his retiree’s health insurance.

Short term disability at many companies used to be paid at 70 percent of the employee’s salary, but in recent years that has dropped to 60 percent with most companies.

Many companies no longer offer retirement programs. Instead they offer 401(k) programs to which the company pays a small percentage and the employee can contribute anywhere from 3 to 10 percent of their salary toward their retirement. The funds are invested by an investment firm. The employee can have some say in how the funds are invested but in many the investment decision-making is out of their hands.

For those 40-something and older employees, I would recommend the 401(k) as a way to supplement any retirement to which they might be eligible to receive. This age group may already be enrolled in retirement programs that will provide income at retirement age, so the 401(k) is an opportunity to boost that level, keeping in mind that most retirements don’t come with cost of living increases.

Many of the white collar workers of this age group may also have other investments, but many of the blue collar workers may not.

This age group does not want to rely on Social Security to supplement their retirement incomes.

Heck, my age group doesn’t want to rely on it but many of us thought it would always be there and I think that we have been sadly mistaken.

For the barely 20-somethings with whom I was having lunch, I would recommend they immediately begin planning for their retirement and the best way for them to do that is to make the money the priority because whatever “benefits” there may be to the jobs of now and the future, they are very likely to disappear over the next 20 years. At the end of 50 years, they will likely have had to create their own worth through 401(k)s, IRAs, private investment and plain old ordinary savings.

And even then, they will likely have to work longer before they can retire and possibly even work to supplement what retirement funds they have managed accumulate.

The future of retirement does not include help from private industry or government. It is going to be an individual’s choice as to how they save for that day.

It is a worry for many people.

Contact Mona Ridder at mridder@times-news.com.