Thursday, January 25, 2018
Benefits are Essential in Your Job Hunt
I spoke to it briefly on Monday, but employee benefits are an essential part of any job search. As we all get older, having health coverage becomes more and more important. Furthermore, those of us who are lucky enough to have group pension benefits have a leg up on retirement saving and that is a good thing. It is important to understand how expensive these costs can be if paid for out of pocket. Knowing your employer has your back in these situations is invaluable. Having lived both with and without group health coverage I know how difficult it can be to not be covered. In today’s post, I am going to explain group benefits and show why they should be a huge part of your job search. Not all places offer them, but group benefits might change how you search for work.
Group Health Coverage
For those who are healthy, group health coverage might not seem overly important. Seeing the dentist once a year can be affordable and if you don’t wear glasses it seems you are in good shape. Where it can become a nuisance is over time. Most chronic conditions develop later in life. The sad thing is when your income is lower is exactly when you need this sort of coverage. Those who rely on prescription medication daily can incur massive costs. If this is present at a younger age a decision between food and medication might have to be made, and that is very troubling. This will only lead to your health deteriorating and costs rising further. Recently the Ontario government instituted free prescription medication for those under age 25, which is a step in the right direction. Until the day where prescription medication is universal, it becomes imperative for job seekers to find employment that offers these benefits.
Typical Group Benefit Coverage
-Routine Dental Coverage
-Prescription Drug Coverage
-Optometry
-Paramedical Practitioners (Massage, Rehabilitation, etc.)
-Basic Life Insurance
-Basic Disability and Critical Illness coverage
One of the beautiful things about group coverage is that the cost is pooled amongst all members of the group. There will be group members who rarely use the services, but then others who require constant use. Essentially like all insurance, the healthy pay for the sick. This is great because some people who would not qualify for coverage on their own, now have benefits. In fact, when given the option of a pay raise or the implementation of group benefits, the majority of people choose group benefits. The reason is simple: we never know what the costs will be until we get there, so we would rather not face them alone. Group health benefits are often used as a recruiting tool to set employers apart from their competition. They help boost company morale and promote an overall healthy staff which has less sick days. It has been estimated that the average single Canadian spends about $2000 per year on out of pocket health care costs. If you have a family, this jumps to a whopping $11,000 per year. This illustrates the importance of group health insurance benefits for employees.
Why you need benefits for your employees – The Globe and Mail
Group Pension Benefits
While the Defined Benefit Pension Plan (full ride pension) has become a thing of the past, there are some companies that are willing to invest in the future of their employees. Many employers these days will provide a matching program for their employee’s retirement savings. This amount often hovers between 2-5%. While it might not seem like much coming out every paycheque, this amount can really add up. Doubling your savings is huge, and the compounding effects will be felt dramatically as you approach retirement. Check out these simple examples:
Age 35, $50,000 salary, 30 years of contribution (Age 65) 8% return
3% matching (Both contribute $1500 annually)
$367,037.60 at retirement ($183,518 if no matching)
5% matching (Both contribute $2500 annually)
$611,729.34 at retirement ($305,864.67 if no matching)
As you would expect, you have exactly double come retirement time. This makes a massive difference as you can see. The important thing is that this program is offered and that you take advantage of it to its fullest. A question you might have to ask yourself is would you save for retirement on your own? These types of plans come directly off your paycheque, so you don’t have a chance to spend the money. It truly is a thing of beauty and everyone knows my favorite kind of money is free money.
Why both employers and employees should care about the company pension plan – Financial Post
For Employers:
As mentioned, having group benefits have been proven to boost company morale, help retain key employees, and be used as an effective recruiting tool. In a knowledge-based economy, employees are becoming more apt to weigh benefits as their deciding factor when choosing employment. There are also tax-advantages for offering group benefits that could help offset the costs. While it might seem like an unnecessary expense, it might be better thought of as an investment in your business’s most precious resource, your workforce.
Job hunting is never a fun process, but using group benefits as a barometer might be the best way to weed out certain jobs. While you may not need coverage today, the costs in the future could be crippling and if you plan on having a family it is a no-brainer. It is also important that if you have group benefits, you understand how they work and what you are actually covered for. You might not be covered enough given your particular situation. This is especially true for life insurance as most group plans only cover you for a basic amount. Group benefits provide a great base from which you can offset the costs of personal coverage so obtaining a job with them is vital. Until the day where we actually have universal healthcare, it will be on us and our employers to foot the bill. Make sure you understand the dynamics of your current and potential workplace benefits.
Thanks for tuning in today as Career Week continues at Budget Boss. Make sure you tune in tomorrow as we conclude the week. If you would like a group benefits analysis, please do not hesitate to contact me at joe@budgetboss.ca. Have a great day Bosses!
“Good health and good sense are two of life’s greatest blessings.” – Publilius Syrus
Email – joe@budgetboss.ca
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