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 subsidy: 0.70 × 10 , 000 = 7 , 000 .
Calculate the retirement matching: 0.08 × 50 , 000 = 4 , 000 .
Calculate the value of PTO: 260 10 × 50 , 000 ≈ 1 , 923.08 .
Calculate the benefit rate: 50 , 000 7 , 000 + 4 , 000 + 1 , 923.08 × 100 ≈ 26 . The benefit rate is 26 % .
Explanation
Calculate the value of each benefit First, we need to calculate the value of each benefit.
Health insurance subsidy is 70% of 10 , 000 : 0.70 × 10 , 000 = 7 , 000 $
Retirement matching is 8% of 50 , 000 : 0.08 × 50 , 000 = 4 , 000 $
PTO is calculated based on 10 days out of 260 working days in a year (assuming 5 days a week * 52 weeks): 260 10 × 50 , 000 ≈ 1 , 923.08
Calculate total benefits Next, we sum up the values of all benefits to find the total benefits: 7 , 000 + 4 , 000 + 1 , 923.08 = 12 , 923.08
Calculate the benefit rate Now, we calculate the benefit rate by dividing the total benefits by the annual salary and multiplying by 100: 50 , 000 12 , 923.08 × 100 ≈ 25.85
Round to the nearest percentage point Finally, we round the benefit rate to the nearest percentage point: 25.85 ≈ 26
Examples
Understanding benefit rates is crucial in personal finance and career planning. For instance, 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. For example, if two jobs offer the same salary but one has a higher benefit rate due to better health insurance or retirement matching, the job with the higher benefit rate is generally more financially advantageous. This comprehensive view aids in making informed decisions about employment and financial well-being.
Maria's benefit rate is calculated by adding the values of her health insurance, retirement matching, and PTO, which together total about $12,923.08. Dividing this by her annual salary of $50,000 gives a benefit rate of approximately 25.85%, rounding to 26%. Therefore, the final benefit rate is 26%.
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