A bigger salary is always good news, right? Not always. A recent story we came across proves that sometimes a raise looks better on paper than it does in your bank account.
The Story:
Someone recently accepted a new job with a $20,000 raise. They checked the benefits, thought everything looked fine, and signed on. But when payday rolled around, their take-home pay was only about $100 higher than before.
What Happened?
- Spousal Premium: Their new company charged an extra fee for covering a spouse on the health plan. Their old employer didn’t. That doubled their benefits cost.
- Taxes: A bigger salary often means a bigger tax bite. Think of it as the IRS throwing themselves a party every time you get a raise.
- HSA Confusion: They thought the company contributed to a Health Savings Account. It didn’t. That’s a missed opportunity for tax-free healthcare dollars.
The Real Lesson:
This isn’t just a cautionary tale—it’s a reminder that compensation is more than just salary. Benefits, fees, and taxes can quickly eat away at what looks like a big win.
How to Avoid This Trap:
- Always get benefits costs in writing before accepting a new job or signing up during open enrollment.
- Ask about spousal surcharges, wellness program requirements, and hidden fees.
- Don’t rely on verbal assurances—if it’s not in the packet, assume it’s not real.
- Work with a financial planner to run the numbers before you make a big career move.
Conclusion:
A raise that doesn’t improve your financial life isn’t really a raise. At Paragon Wealth, we help our clients see beyond the offer letter to the paycheck that actually matters: the one that funds your lifestyle, your savings, and your future.
About Phil Rosenau
As a graduate of Germantown Academy, Phil Rosenau earned his bachelor’s degree in economics at Drew University, while also earning a minor in business management. His passion for creating and maintaining business relationships drove him to join the Prudential Advisors team, where he met Charlie and Ricardo before starting Paragon Wealth together.
Phil is a lifelong resident of Bucks County and the son of a local entrepreneur. He understands the unique needs of small business owners, takes pride in providing his clients with the knowledge to understand their unique financial situation, and helping them navigate their financial future with confidence. He enjoys spending time with his wife, Caroline, and two children, he is the current president of the MDM networking group, and he is active with the local CrossFit community. Phil is also proud to be part of the Drew University Lacrosse Legacy where he played all four years. You can find Phil here on LinkedIn, or here on Facebook.
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Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Paragon Wealth Management and Great Valley Advisor Group are separate entities from LPL Financial.