help with new job numbers

Jobseeker

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Jul 12, 2018
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Hello - I’m no math wiz (as you’re about to see for yourself) but I have a problem that has me and my wife thouroughly stumped. I have a new job opportunity and I can’t figure out how much more I should ask for to account for the difference in their 401k matching. First world problems, I know. For ease of doing things let’s forget about tax rates and just play with pre tax numbers

my current salary is $90,000. My current company matches my 401k contributions up to 6%. 6% of 90k is $5400, so my company would also put in 5400 for a total of $10,800 a year.

The new company salary is $120,000 (yay!). They match 60% of the first 6%. 6% of 120k is 7200. 60% of 7200 is 4320, so total contributions are $11,520 a year.

I know now that the overall contributions are higher, but here’s the question - how much more should I ask for from the new company (total salary) to make up for the difference in contribution percentage?
 
Hello - I’m no math wiz (as you’re about to see for yourself) but I have a problem that has me and my wife thouroughly stumped. I have a new job opportunity and I can’t figure out how much more I should ask for to account for the difference in their 401k matching. First world problems, I know. For ease of doing things let’s forget about tax rates and just play with pre tax numbers

my current salary is $90,000. My current company matches my 401k contributions up to 6%. 6% of 90k is $5400, so my company would also put in 5400 for a total of $10,800 a year.

The new company salary is $120,000 (yay!). They match 60% of the first 6%. 6% of 120k is 7200. 60% of 7200 is 4320, so total contributions are $11,520 a year.

I know now that the overall contributions are higher, but here’s the question - how much more should I ask for from the new company (total salary) to make up for the difference in contribution percentage?

Initial Impression:

You are being irrational and your new prospective employer will rescind the offer with "negotiations too distant".

Second Impression:

Old: 6.0% pre-tax subsidy
New: 3.6% pre-tax subsidy

If you think ONLY about percentages, I guess this looks like a worse deal. You would need to project your future income at BOTH employers and calculate the future subsidy-losses to come up with a good "Present Value" number for a signing bonus. Of course, these projections would have to include longevity and security. Are both positions permanent and unlikely to be terminated by some disruptive technology? For example, read the fascinating history of this man's career: https://en.wikipedia.org/wiki/Jerome_Clarke_Hunsaker It took a few turns along the way. Same scientific field all along, but VASTLY different pursuits every decade or so.

Third Impression:

Maybe I'm not understanding the question. Let's see if I can get closer:

Old You: $90,000 * 0.06 = $5,400
Old Them: $5,400 * 1.00 = $5,400
Old Total: $5,400 + $5,400 = $10,800

New You: $120,000 * 0.06 = $7,200
New Them: $7,200 * 0.60 = $4,320
Old Total: $7,200 + $4,320 = $11,520

You did all that, but this display might make the conversation easier.

Where, exactly, are you feeling that the offer is inadequate?
Old You vs. New You :: $5,400 vs. $7,200 - That doesn't seem like much of an argument.
Old Them vs. New Them :: $5,400 vs. $4,320 - Okay, maybe you're missing $5,400 - $4,320 = $1,080 -- What salary would you need for "New Them" to be $5,400? Keep in mind that you would also be increasing "New You", so there may be other considerations.
Old Total vs. New Total :: $10,800 vs. $11,520 - Again, it's not real clear what your objection is.

YOU do have to make up your mind EXACTLY what you want - and where EXACTLY you are feeling the offer is inadequate - and how much you are willing to risk actually getting the job offer.

Fourth Impression:

Why not just ask for a better parking spot? Maybe you're totally remote and that doesn't matter.
 
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To be very clear I don’t necessarily think the offer is inadequate, it’s quite generous actually. I’m strictly looking at this mathematically. This is part of a much larger equation and I’m trying to figure out if this is the right fit for my family. For instance their healthcare is MUCH worse and I’ll have to pay a lot more out of pocket, I will have to purchase a car since they don’t offer a company car (yes I’m remote), etc. I’m just trying to figure out if I need to bump up my ask to make up for some of the differences. Much of the gains will be eaten up by other lack of benefits. I’ve got the other stuff figured out but this component has me scratching my head. Thanks for any who can help!!
 
my current salary is $90,000. My current company matches my 401k contributions up to 6%. 6% of 90k is $5400, so my company would also put in 5400 for a total of $10,800 a year.

The new company salary is $120,000 (yay!). They match 60% of the first 6%. 6% of 120k is 7200. 60% of 7200 is 4320, so total contributions are $11,520 a year.
Old co. was "giving you" 90000*1.06 - 90000 = 5400

New co. should be 120000*1.06 - 120000 = 7200

So just ask those crooks for 7200 - 4320 = 2880 extra

Why isn't it that simple?
 
Old co. was "giving you" 90000*1.06 - 90000 = 5400

New co. should be 120000*1.06 - 120000 = 7200

So just ask those crooks for 7200 - 4320 = 2880 extra

Why isn't it that simple?

$2880 * 0.06 * 0.6 = $103.68 -- Because asking for $2,880.00 means you just asked for $2,880.00 + $103.68 = $2,983.68

Plus, ANYTHING you ask for is multiplied by the "Benefit Factor". This creates the employers perception of what $1 of salary means. Asking for $2,880.00 may mean you are asking for $2,880.00 * 1.26 = $3,628.80.

There may also be Job Grade limitations. Maybe $120,000 is already the very top of the Job Grade - or maybe $122,000 is the very top. A gentleman of my acquaintance had a job offer that required a PhD. He didn't have one, but they still wanted to hire him. Bureaucracy actually figured out the problem. The employer created a new Job Class that required the "REx" designation - same job, same pay scale, just a Recognized Expert, rather than a PhD. He then held the REx designation and the job.

In any case, unless there is a very strong position from which to negotiate, I'd still be worried about my "Initial Impression".
 
I tried to write this response earlier but I don’t think it worked. I’m also concerned with initial impressions, and I’m strictly thinking about this mathematically. This would be a big move for me and my family and I just want to have all of the cards face up before I make a decision. This is also a single component of the decision. Yes making a lot more money however their health care is far inferior so there would be lots more out of pocket, I would need to purchase a vehicle because I currently have a company car, etc. If a large percentage of my gains are eaten up by various lack of benefits then I need to weigh the merits of changing career paths. Also in trying to do the math I just needed some help, so thanks everyone.

Clearly i don’t know what I’m doing when I’m coming up with stuff like below, I know the problem isn’t even complete :)

120+X = (.06*120) + (.6*(.06*120))
 
I tried to write this response earlier but I don’t think it worked. I’m also concerned with initial impressions, and I’m strictly thinking about this mathematically. This would be a big move for me and my family and I just want to have all of the cards face up before I make a decision. This is also a single component of the decision. Yes making a lot more money however their health care is far inferior so there would be lots more out of pocket, I would need to purchase a vehicle because I currently have a company car, etc. If a large percentage of my gains are eaten up by various lack of benefits then I need to weigh the merits of changing career paths. Also in trying to do the math I just needed some help, so thanks everyone.

Clearly i don’t know what I’m doing when I’m coming up with stuff like below, I know the problem isn’t even complete :)

120+X = (.06*120) + (.6*(.06*120))
I'm glad we had this chat. You're not so bad at the math as you say. :) You're on the right track.

Established
$90,000 * .06 = $5,400
$120,000 * 0.06 * 0.60 = $4,320

What you want is ($120,000 + X)*0.06*0.6 = $5,400 -- It may be a bigger number than you might be imagining.
 
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