Let Me Teach You About Total Compensation
“What is your desired salary range?” In my experience, this is the #1 most difficult question for veterans to answer. For the last several years your pay has been determined by your rank and years of service, there was no negotiation. It’s hard to determine what you think you are worth once you have a say in the matter. I see a lot of veterans undervalue themselves and some of them may have too high of expectations. There are also all kinds of variables to consider with pay, such as bonuses, benefits, stocks, etc. This week we will dive deeper into what total compensation means and how you can determine the best answer to the question above.
First of all, don’t sell yourself short! All too often I hear “Well I don’t care about salary. I just want a job I like.” While this is a great mindset, and I have personally declined offers that had great pay, but I knew I wouldn’t be happy with the work, you will still be expected to give at least a minimum amount of pay during the interview process. I’ve also heard “I don’t want to price myself out of the running.” The reason recruiters ask for your salary requirements is because they want to make sure the company is also meeting your requirements. If you need at least $80,000 minimum a year to cover your expenses but this job maxes out at $60,000 then you will most likely decline the offer in the end. Trust me, more than likely you will not price yourself out, and you won’t want to even if that is the case.
Base Salary. The best way to determine your minimum salary is to figure out what your expenses are. I would first create a budget to determine what you need annually to cover your monthly bills and start there. Be sure to allow plenty to spend on fun stuff too! Also, take into consideration what you are making now, and if you are on active duty, what parts of your pay will become taxable after the military, such as Basic Assistance for Housing (BAH) and Basic Allowance for Subsistence (BAS), so you can determine how much you will need to make up to cover those taxes. You may also need to start covering medical insurance and costs, so include that in your budget as well. Here is a great calculator to help you determine what your annual military salary is. (Please note this does not account for medical expenses). From there you can use this tax calculator to determine what your taxes will be. You can play with the numbers to figure out how much you will need to make up so you are taking home the same amount. Doing this should give you the minimum amount you will need to make as a civilian.
You can also use GlassDoor to find out how much others in your desired field are getting paid. Please note that this number is not always accurate. It can sometimes be much higher or lower than what you will make but it should at least give you an idea. If you need to make $80,000 and GlassDoor estimates that you can make $100,000 in this role then you can say your range is $90,000 -$110,000. You are not obligated to share your current pay. If the recruiter responds with, “Well the range for this role is $75,000 -$85,000” then you can say “The minimum I can accept is $80,000.” This is just a guideline to help you figure out a range, but you should also feel confident asking for what you believe you are worth. You can also ask the recruiter what the range for the role is before answering that question. I have talked to a lot of people who were concerned that they would give too low of a number and get underpaid. Most larger companies will not do that. If the set range for the role is $100,000 – $120,000 and you say your desired salary is $80,000 they will pay you within the range, and not lowball you by only paying you what you asked for.
Bonus. In addition to the base salary, your company may also offer bonuses. This is definitely something to consider when negotiating salary. Maybe the range for the role is $65,000 -$75,000 but they offer a 10% annual bonus. Therefore, you would need to make a $73,000 base salary and a $7,300 bonus to meet your minimum desired salary or in this case $80,300. One thing to keep in mind is that most bonuses are determined by the company’s and the individual’s performance so this number could potentially go up or down each year.
Stocks. Many publicly traded companies will also offer Restricted Stock Units. This means that they will grant you shares of stock that will be vested over time. The price of those stocks could increase or decrease based on the company’s performance. This is extra money that is being held as an investment for you. Depending on your company’s policy you will have access to these shares after they are vested or can be cashed out when you leave the company. This is different from stock options where you can buy a number of the company’s shares at a discounted price, they are not granted to you like Restricted Stock Units are.
401(k) Retirement Plan. Another variable to consider in your total compensation is your employer’s 401(k) matching program. This is something that may be new to you after the military. Most larger companies will offer to match up to a certain amount of what you contribute into your 401(k)-retirement account. This could be a percentage of your pay or up to a certain amount like $15,000 a year. If you decide to contribute 10% then the company will match 5% and you will have the amount of 15% of your pay going into your retirement account. Some companies may even automatically contribute a percentage of your pay even if you do not make contributions. In all this is still money they are paying on your behalf and can be included in your total compensation package. To learn more about 401(k) plans click here.
Medical Benefits. This is one of the things I did not understand when I separated from the military. As you know the military covers your premium, as well as your costs, and very little to nothing comes out of your pocket. I believe when my daughter was born at Balboa Hospital, we only had to pay $160 for an extra overnight stay. I thought all companies completely covered the cost of medical benefits. I was so excited to sign up for them after 7 years of not having any while working part-time. Since I didn’t understand what I was reading I was surprised when they started taking hundreds of dollars out of my paycheck each month. This amount is called a premium. In most cases, you will have to pay a few hundred dollars a month towards your insurance. The premium will vary based on your family size and which options you choose. There are some companies that will cover the entire cost of the premium and you just pay the copays.
In addition to the monthly premium, you will still have to cover some of your medical costs until you have met your deductible. For example, your premium may be $400 a month. This amount will be deducted from your pay automatically. Your deductible could be $3000 a year. At the beginning of the year, this amount resets. If you go to the doctor or emergency room, you will have to pay the costs up to that amount. Once you reach that amount, in say April, then your insurance will start covering the costs either 100% or maybe 80%for the remainder of the year based on your plan. There are also different costs if you use doctors in-network (meaning they have partnered with the insurance company) or out-of-network (meaning they have not partnered with your insurance company). The costs of doctors out-of-network will be higher. There may also be medical situations that are not covered by insurance. I will be honest with you, I still have a hard time wrapping my head around it all. In the end, be sure to thoroughly read over all of your options for insurance. Be aware that a lower premium often means a higher deductible and vice versa. If you choose a play with a high deductible your company may also contribute up to a certain amount towards a Health Savings Account or HSA. This is money you can set aside before taxes to use to pay for medical expenses. You may contribute the amount of your deductible each year, $3000 for instance, and your employer may contribute $1000 a year. In the end, you have $4000 to spend on medical expenses in a year’s time. Be sure to check if your employer contributions roll over.
Paid Time Off. This is my favorite benefit! It is so important to take time off to decompress and enjoy life! Many larger companies offer at least 1 week of Paid Time Off or PTO. Some companies may offer more! The longer you stay at the company the amount of PTO may increase to an extra week. In addition to PTO, does the company offer paid holidays, sick days, or parental leave? If you decide to say in the reserves after the military, do they offer separate time off for that? Many companies will even pay you the difference you make while on drill (if you are paid hourly) or if you get activated. I would highly suggest finding out what the company’s policy for time off is when considering your offer.
Perks and Other Benefits. Many companies don’t stop at what is listed above. They may offer additional perks and benefits. Maybe they offer Tuition Assistance or Reimbursement. Maybe they cover your business travel (my favorite perk!). Maybe they host great destination holiday parties every year and pay for your travel and accommodations. They may even offer discounts from partnering companies, for instance, 10% off your monthly cell phone plan. Do they pay a monthly allowance for working remotely? Some companies do! Before signing your offer, you should be sent a list of all the perks and benefits that your company offers.
I hope this article helps you feel more confident answering the dreaded question about your desired salary. The important thing is to make sure that you and the company are on the same page. There are a lot of things to consider outside of pay such as company culture, company mission, company performance, and upward mobility. Pay may be the most important but at the end of the day are you feeling personally fulfilled and are your needs and goals being met? Tune in next week when I’ll be focusing on tips and tricks for Military Spouses!
By Bre Cameron
September 27, 2022
Originally posted at https://www.linkedin.com/feed/update/urn:li:activity:6980551197241835520/ reposted with permission from the author Bre Cameron