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benefits

More “benefits” of FI/RE

April 25, 2016 by Shae Leave a Comment

My employer announced changes to the paid time off (PTO) policy today. Though it’s being touted as “better” and “more in line with industry standard,” like most benefits changes it’s meant to help the employer not the employee.

The current system is set up such that for XX number of years of service you get XX days of personal vacation (renewed in June), XX days of personal sick leave (renewed on your anniversary), and 3 days of personal time (renewed every January). The rules for how you can use each vary. The new system will do away with that and combine everything into one bucket with some special rules for long term federally protected leaves and one-off events like jury duty and funerals. Instead of once a year allotments, employees will get a fraction of their PTO days every pay period. Less tenured employees who don’t use a lot of sick time, like myself, will see an bump up in usable PTO days. Pretty nice huh?

The extra days up front will be a boost in the short term but after you do the math anyone staying long term will lose out compared to today’s plan especially with the new accrual caps and timings.

It is always good to have a back up plan as employee benefits packages can change suddenly and without warning. Just a few years ago there was a radical change to the post-retirement healthcare subsidies that left many retirees and soon-to-be retirees confused as to what exactly was going to happen to their healthcare and how they could afford it. In the past you could put in 35+ years of service and retire with a guaranteed pension. That doesn’t happen much anymore. Employers have to change to stay solvent. I wouldn’t be surprised if our own pension and 401k plans were to change over the next decade given the aging workforce.

By taking responsibility for your own finances and not relying on anyone else to provide for you (whether that be your employer or the government’s Social Security) you cushion yourself from the sudden benefits changes that may devastate someone else. Our goal to be financially independent by 40 makes the new PTO policies an non-issue for us. We’ll happily take the extra days off that we would have had to wait years for. By the time that the new policy would become a negative we’ll hopefully be in a spot where we are a) completely retired b) cut back to part-time or c) selfishly employed somewhere else (in no particular order of preference).

Posted in: Finance, Savings Tagged: benefits, Budget, retirement

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