Home About Archives RSS Feed

The Independent Investor: Fringe Benefits Important as Paycheck

By Bill SchmickiBerkshires 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
EforAll Ask The Experts Series
Mass MoCA Appoints New Director
Pittsfield Halloween Parade Canceled, Trick or Treat Is On
Pittsfield Police Investigating Armed Home Invasion
Berkshire Money Management promotes Zack Marcotte to Director of Financial Planning
Big Y's Big Vax Week
Cheshire Clean Up Day Saturday
Medical Matters Weekly Welcomes American Nurses Credentialing Center Executive
Voices From The Grave
Festival Latino of the Berkshires
 
 


Categories:
@theMarket (382)
Independent Investor (451)
Retired Investor (59)
Archives:
September 2021 (7)
September 2020 (2)
August 2021 (6)
July 2021 (8)
June 2021 (6)
May 2021 (6)
April 2021 (9)
March 2021 (8)
February 2021 (8)
January 2021 (5)
December 2020 (6)
November 2020 (8)
October 2020 (7)
Tags:
Retirement Stock Market Selloff Metals Banks Greece Markets Energy Euro Europe Commodities Pullback Rally Debt Japan Recession Congress Wall Street Fiscal Cliff Stimulus Crisis Stocks Economy Deficit Federal Reserve Jobs Oil Interest Rates Election Taxes Currency Europe Debt Ceiling Housing Bailout
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
@theMarket: Corrections Are Good for the Soul
@theMarket: The Bottom Is In
@theMarket: No More Than 5 Percent
@theMarket: 707 Days
@theMarket: One Down, One to Go
Independent Investor: Time Is Running Out
The Independent Investor: Ole Man River Bolsters Agriculture Investment Case
Recent Entries:
The Retired Investor: Weather Worsens Global Trade
@theMarket: Markets Enter the Danger Zone
The Retired Investor: Moderates Winning on Tax Debate
@theMarket: Some Brokers Are Getting Bearish
The Retired Investor: Japan Is Worth a Look
@theMarket: Investors Are Chasing Stocks Higher
The Retired Investor: Non-Fungible Tokens Come of Age
@theMarket: Taper Talk Tanks Stocks
The Retired Investor: Corporate Activism Comes of Age
@theMarket: Stocks Grind Higher