Your pay

Let’s say you earn $50,000. After all taxes you take home $40,000. You want a raise.

The boss says, hey you don’t earn $50,000 you earn $65,000.

Oh yeah, show me.

Well, I pay about 8% of your salary for your and your families health benefits, I pay another 6.2% for your Social Security and 4% more for your 401k match and then there is the pay when you are not working, plus sick days. Hey, it adds up.

Great, but what good is it if I can’t spend it?

Well, most of it’s tax free, and it offsets expenses that may come out of your pocket. It certainly will go a long way in your retirement. But I will give you a choice. I will raise your pay to $65,000, but not pay for all that other stuff.

Do we have a deal?


  1. I would take the extra money in my pay check. My average earnings would go up, employer would still be responsible for the additional SS tax and I would receive more SS in retirement.
    After paying my own medical insurance any extra would go into a Roth IRA. I know it is a gamble on the healthcare costs, but I never spent much income on medical costs.
    Four children less than $1,000. I have only been to the doctor 3 times from age 40 to 62, same for the wife.


  2. No Deal … 1) all or part of future expense increases for ‘benefits’ provided will be supported by the company – even in a small way, and 2) $15,000 pay increase is only worth $11,000 – $12,000 cash in my pocket and 3) your group medical plan would be much more expensive as an individual/family.


    1. I am in the no deal camp. I know that I would have to pay extra and above the medical insurance premium for what little extra I got to take home. The retiree medical insurance as offered to me is $15,515 for the less expensive plan to $35,471 for the most expensive plan that is offered. Since these are self-insured plans, I would expect that it would cost me more in the individual market, if I could get a plan. Thankfully, I only have to pay a percentage of the total premium or I would still be working. If the employer offers an early retirement now, it is another reason not to get greedy by taking the money resulting in the lost of medical. Otherwise you better plan to pay for 100% of medical and all of it will be coming out of your pocket until you reach Medicare age.

      I would still owe extra income taxes at the end of the year. I like the idea of having paid sick days although I only used three in my working career. Usually vacation is counted toward your “total compensation” so I would want to make sure that I still got paid vacation and holidays as it is not noted here.

      I am not sure what is meant by the 4% 401K match here. But I’ll go with matching 4% of your salary in which case losing the 4% match toward the 401K is big. Assuming that I could contribute 10% of $50k, that would be $5,000 + $2,000 match = $7,000 each year. If the employer gets rid of the 401K totally, then a private IRA contribution for those under 50 is only $5,500 / year. You would lose out on not having an additional $1,500 compounding in investments. Also you would have $500 less in your pocket if you tried to max out your IRA. Even less if you are over 50 and can contribute $6,500 per year.


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