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)
Calculate the value of health insurance: 0.60 × 10000 = 6000 .
Calculate the value of retirement matching: 0.08 × 62000 = 4960 .
Calculate the value of PTO: 260 62000 × 10 = 2384.6 .
Calculate the benefit rate: 62000 6000 + 4960 + 2384.6 × 100 ≈ 22 . The benefit rate is 22 % .
Explanation
Calculate Individual Benefit Values First, we need to calculate the value of each benefit provided to Joe by his employer. These benefits include health insurance, retirement matching, and paid time off (PTO).
Health Insurance Value The health insurance benefit is 60% of $10,000. To calculate this, we multiply 0.60 by 10000: 0.60 × 10000 = 6000 So, the value of the health insurance benefit is $6,000.
Retirement Matching Value The retirement matching benefit is 8% of Joe's annual salary, which is $62,000. To calculate this, we multiply 0.08 by 62000: 0.08 × 62000 = 4960 So, the value of the retirement matching benefit is $4,960.
Calculate Daily Rate To calculate the value of Joe's PTO, we first need to determine his daily rate. We assume there are 260 working days in a year (52 weeks \times 5 days/week). We divide his annual salary by 260 to find his daily rate: 260 62000 = 238.46 (approximately). So, Joe's daily rate is approximately $238.46.
Calculate PTO Value Now, we multiply Joe's daily rate by the number of PTO days he receives (10) to find the value of his PTO: 238.46 × 10 = 2384.6 So, the value of Joe's PTO is approximately $2,384.60.
Calculate Total Benefits Next, we calculate the total benefits by summing the value of health insurance, retirement matching, and PTO: 6000 + 4960 + 2384.6 = 13344.6 So, Joe's total benefits are approximately $13,344.60.
Calculate Benefit Rate Now, we calculate the benefit rate by dividing the total benefits by Joe's annual salary ($62,000): 62000 13344.6 = 0.215235 So, the benefit rate is approximately 0.215235.
Convert to Percentage To express the benefit rate as a percentage, we multiply by 100: 0.215235 × 100 = 21.5235 So, the benefit rate is approximately 21.5235%.
Round to Nearest Percentage Point Finally, we round the percentage to the nearest whole number, which is 22%.
Final Answer Therefore, the benefit rate is approximately 22%.
Final Answer The benefit rate is 22%.
Final Answer 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 the employee's overall well-being through health insurance, retirement plans, and paid time off. This broader perspective helps individuals make informed decisions about their financial futures and job satisfaction.
Joe's benefit rate is calculated based on the total value of his health insurance, retirement matching, and paid time off, resulting in a benefit rate of approximately 22%.
;
