Maria earns $50,000 per year, receives 10 days PTO, 8% retirement matching, and receives 70% employer-subsidized health insurance which totals $10,000. Calculate the benefit rate.
Employee Benefits
Health Insurance 70 %
FICA 7.65 %
Paid Vacation (PTO) 10 days
Retirement Matching 8 %
[ ? ]%
Round to the nearest percentage point.
Answer (2)
Calculate the health insurance benefit: 0.70 × $10 , 000 = $7 , 000 .
Calculate the retirement matching benefit: 0.08 × $50 , 000 = $4 , 000 .
Calculate the PTO benefit: 260 10 × $50 , 000 = $1 , 923.08 .
Calculate the benefit rate: $50 , 000 $7 , 000 + $4 , 000 + $1 , 923.08 × 100 ≈ 26% . The final answer is 26 .
Explanation
Calculate Health Insurance Benefit First, we need to calculate the value of each benefit. Maria's health insurance is subsidized at 70% of $10 , 000 .
Health Insurance Value The health insurance benefit is calculated as: 0.70 × $10 , 000 = $7 , 000 .
Calculate Retirement Matching Benefit Next, we calculate the retirement matching benefit, which is 8% of Maria's annual salary of $50 , 000 .
Retirement Matching Value The retirement matching benefit is calculated as: 0.08 × $50 , 000 = $4 , 000 .
Calculate PTO Benefit Now, we calculate the value of Maria's paid time off (PTO). She receives 10 days of PTO per year. We'll assume there are 260 working days in a year (5 days a week × 52 weeks).
PTO Value The value of the PTO is calculated as: 260 days 10 days × $50 , 000 = $1 , 923.08 .
Calculate Total Benefit Value Next, we sum up the values of all the benefits to find the total benefit value.
Total Benefit Value The total benefit value is: $7 , 000 + $4 , 000 + $1 , 923.08 = $12 , 923.08 .
Calculate Benefit Rate Now, we calculate the benefit rate by dividing the total benefit value by Maria's annual salary and multiplying by 100 to express it as a percentage.
Benefit Rate Value The benefit rate is calculated as: $50 , 000 $12 , 923.08 × 100 = 25.846% .
Round Benefit Rate Finally, we round the benefit rate to the nearest percentage point.
Rounded Benefit Rate Rounding 25.846% to the nearest percentage point gives us 26% .
Final Answer Therefore, the benefit rate is 26% .
Examples
Understanding benefit rates is crucial in personal finance and career planning. For example, when evaluating job offers, knowing the benefit rate helps you compare the total compensation packages, not just the salaries. A higher benefit rate can significantly increase your overall earnings and financial security, considering aspects like health insurance, retirement plans, and paid time off. This comprehensive view aids in making informed decisions about employment and financial well-being.
The benefit rate for Maria is calculated to be 26%. This includes the value of her health insurance, retirement matching, and paid time off. Rounding the final percentage gives us an accurate reflection of her overall benefits compared to her salary.
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