Home About Archives RSS Feed

The Independent Investor: Fringe Benefits Important as Paycheck

By Bill Schmick
iBerkshires columnist
Most of us know to the penny how much we made last paycheck, but how many of us know the details of our fringe benefits? Not many, I suspect, and that is a big mistake.
 
Retirement benefits are available to 77 percent of private industry workers and 91 percent of state and local government employees as of March 2019, according to the Bureau of Labor Statistics. Back in the day, offering perks to workers was a way to stand-out from your competition, but today they are essential tools of recruitment. And countless studies have shown that these benefits are a means to engage employees and increase productivity. That all sounds good on paper but in real life things may be different.
 
In my line of work, I often ask prospective clients to run through their employment compensation.  Salary and bonus, as you might imagine, are right at the top, followed by paid vacation days. After that, things get a bit hazy.
 
With some initial prompting, most clients do know they have some kind of tax-deferred retirement plan, but exactly how it works and even how much they are contributing is usually answered with a "I'll get back to you."
 
In similar fashion, most employees will answer "yes" to medical coverage, but when I burrow down to the details, such as "what are your co-payments, deductibles, and do you have dental or vision coverage," the answers are not forthcoming. In many cases, questions concerning life insurance, paid sick and leave time, disability insurance, educational assistance, flexible schedules and more might be offered, but most confess to not knowing or understanding most of what they are offered.
 
This seems to be the case with most, although not all, of company employees I talk to. At the same time, I know many companies task their human resources person or department to explain in detail all the benefits that an employee can obtain. And yet many employees continue to be either dissatisfied with their benefits or claim that they are too complex and difficult to understand.
 
As someone who reviews fringe benefits plans, I can understand their point. Many plans I have seen are written in financial or medical gobbly gook. Explanations and directions are communicated through company directives (usually via computer programs) or big fat books that confuse more than they help employees. It is not that the employee is stupid, or doesn't care about the benefits, they simply do not have the background and experience to make rational decisions.
 
I have found that once each benefit is explained and applied to their particular life situation, most employees not only "get it" but appreciate it. Zack Marcotte, our resident Certified Financial Planner, recommends a few key points:
  • If your company offers a Flex Spending account, sign up for it
  • Both vision and dental coverage makes economic sense
  • Critical Illness Coverage should be avoided in most cases
  • Accident Coverage should also be avoided
  • Voluntary life and insurance coverage — group coverage is a better way to go
  • Short-term disability coverage — avoid (assumes you have an emergency fund)
  • Long-term disability — critical to have, which should cover 60 percent of your income
  • All and any free coverage should always be accepted
For any readers that may have specific questions along these lines, just send me an email. I will either respond to your question directly, or I may use it as a topic for another column.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
 

 

0 Comments
     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Climate Change Expert: Keep Heat on Banks, Insurers
Williams Women's Basketball Improves to 8-0
Monroe Leads MCLA Men Past Rivier
Williamstown Housing Trust Decides on Ask to Community Preservation Committee
Pittsfield Holds Tree Lighting Ceremony
Whiplash Weather in Store for the Berkshires
Clarksburg Gets 2-Week Vacation to Accommodate Construction
Adams Will Hire New DPW Director Next Week
Youth Football Team Seeking Community's Help for Trip to World Championships
St. Stan's School Announces First Period Honor Roll

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (310)
Independent Investor (423)
Archives:
December 2019 (1)
December 2018 (3)
November 2019 (8)
October 2019 (9)
September 2019 (7)
August 2019 (5)
July 2019 (5)
June 2019 (8)
May 2019 (10)
April 2019 (7)
March 2019 (7)
February 2019 (6)
January 2019 (6)
Tags:
Pullback Taxes Greece Election Retirement Congress Energy Debt Federal Reserve Rally Europe Metals Economy Currency Housing Fiscal Cliff Selloff Markets Recession Japan Banks Debt Ceiling Stimulus Interest Rates Bailout Stock Market Stocks Commodities Oil Deficit Jobs Europe Euro Wall Street Crisis
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
The Independent Investor: Truth About NATO & Defense Spending
The Independent Investor: Will Santa Satisfy Retailers?
@theMarket: Markets Broken Record
The Independent Investor: Diamonds Should Be at Top of Christmas List
@theMarket: Record Highs Again & Again
The Independent Investor: Attention Retirees!
@theMarket: Phase One Deal Keeps Markets Bullish
The Independent Investor: Fringe Benefits Important as Paycheck
@theMarket: Will Record Highs Beget Record Highs?
The Independent Investor: NCAA Up Against Ropes on College Pay for Athletes