Calculate the employer-subsidized health insurance: $0.70 \times $10,000 = 7 , 000 .
Calculate the value of PTO: $\frac{$62,000}{260} \times 15 \approx 3 , 576.92 .
Calculate the retirement matching: $0.06 \times $62,000 = 3 , 720 .
Calculate FICA: $0.0765 \times $62,000 = 4 , 743 . The benefit rate is 31% .
Explanation
Analyze the benefits First, we need to calculate each of the benefits to determine the total benefit amount. We are given the following information:
Annual Salary: $62,000 * Health Insurance: 70% of $10,000
PTO: 15 days
Retirement Matching: 6% of annual salary
FICA: 7.65% of annual salary
Calculate individual benefit amounts Let's calculate the employer-subsidized portion of health insurance: 0.70 \times $10,000 = $7,000
Next, we calculate the value of the 15 days of PTO. To do this, we need to determine Ian's daily rate. Assuming 260 working days in a year (5 days a week times 52 weeks), we can calculate the daily rate as: \frac{$62,000}{260} \approx $238.46
So, the value of the PTO is: 15 \times $238.46 \approx $3,576.92
Now, let's calculate the retirement matching amount: 0.06 \times $62,000 = $3,720
And finally, the FICA amount: 0.0765 \times $62,000 = $4,743
Calculate the benefit rate Now, we sum all the benefits to find the total benefit amount: $7,000 + $3,576.92 + $3,720 + $4,743 = $19,039.92
To find the benefit rate, we divide the total benefits by the annual salary: \frac{$19,039.92}{$62,000} \approx 0.3071
To express this as a percentage, we multiply by 100: 0.3071 × 100 = 30.71%
Rounding to the nearest percentage point, we get 31%.
Final Answer The benefit rate is calculated by summing the values of health insurance, PTO, retirement matching, and FICA, then dividing by the annual salary and multiplying by 100 to express it as a percentage. After rounding to the nearest percentage point, the benefit rate is 31%.
Examples
Understanding benefit rates is crucial in personal finance and job negotiations. For instance, knowing your benefit rate helps you compare job offers effectively. If two jobs offer the same salary but different benefit rates, the one with the higher benefit rate provides more overall compensation. This comprehensive view aids in making informed decisions about your financial well-being and career path. It's not just about the paycheck; it's about the total value you receive.