Joe earns $62,000 per year, receives 10 days PTO, 8% retirement matching, and receives 60% employer-subsidized health insurance which totals $10,000. Calculate the benefit rate.
| Employee Benefits |
| --- |
| Health Insurance | 60% |
| FICA | 7.65% |
| Paid Vacation (PTO) | 10 days |
| Retirement Matching | 8% |
[?] %
Round to the nearest percentage point.
Answer (2)
Joe's total benefits are calculated to be approximately $13,344.62, resulting in a benefit rate of about 22%.
;
Calculate the retirement matching: 0.08 × 62000 = 4960 .
Calculate the health insurance subsidy: 0.60 × 10000 = 6000 .
Calculate the PTO value: 260 62000 × 10 = 2384.62 .
Calculate the benefit rate: 62000 4960 + 6000 + 2384.62 × 100 ≈ 22 . The benefit rate is 22 % .
Explanation
Understanding the Problem We are given Joe's annual salary, PTO, retirement matching, and health insurance subsidy. We need to calculate the benefit rate as a percentage of Joe's salary.
Calculating Retirement Matching First, let's calculate the retirement matching amount. This is 8% of Joe's annual salary of 62 , 000. 0.08 × 62000 = 4960 $
Calculating Health Insurance Subsidy Next, let's calculate the employer-subsidized portion of health insurance. This is 60% of 10 , 000. 0.60 × 10000 = 6000 $
Calculating PTO Value Now, let's calculate the value of the 10 days PTO. We'll approximate this by calculating the daily rate: 62 , 000/260 (assuming 5 days a week, 52 weeks a year), and then multiply by 10. 260 62000 × 10 = 260 620000 = 2384.62 Rounding to two decimal places, the PTO value is approximately $2384.62.
Calculating Total Benefits Now, let's sum the values of retirement matching, health insurance subsidy, and PTO to find the total benefits. 4960 + 6000 + 2384.62 = 13344.62 The total benefits are approximately $13344.62.
Calculating Benefit Rate Next, we calculate the benefit rate by dividing the total benefits by the annual salary ( 62 , 000 ) an d m u lt i pl y in g b y 100. 62000 13344.62 × 100 = 21.52358 ≈ 21.52 $ The benefit rate is approximately 21.52%.
Rounding the Benefit Rate Finally, we round the benefit rate to the nearest percentage point, which is 22%.
Final Answer Therefore, the benefit rate is approximately 22%.
Examples
Understanding benefit rates is crucial in personal finance and career planning. For instance, when evaluating job offers, comparing the benefit rates alongside the salary provides a more comprehensive view of the total compensation. A higher benefit rate indicates that the employer is investing more in your overall well-being, which can include health, retirement, and paid time off. This holistic approach helps in making informed decisions about your financial future and job satisfaction.
