Should I take a job with no benefits? Here’s what to know

Carefully consider the implications of covering your own health insurance, retirement savings and more before accepting a job without benefits.

At some point in your career, you may come across the dream job post: a challenging opportunity complete with the perfect location, room for growth and great company culture—but the employer doesn’t offer benefits.

Whether you’re currently interviewing for a job with no benefits or want to learn more before applying, ask yourself: What should I consider before accepting a job without benefits?

These insights from the experts will help you weigh your options to decide if accepting a job with no benefits is right for you both professionally and financially.

But first: Here’s why employee benefits are so important.

What is the importance of employee benefits?

To give you a sense of how much employer benefits are worth, a federal employment survey found that they make up about 30% of an employer’s total compensation cost. Broken down, only two-thirds of your paycheck is actual pay, so benefits are a major incentive to employees and a major cost for employers.

So, what are job benefits? Job benefits generally include health insurance, a 401(k) or other retirement savings plan and paid time off. A company may offer other fringe benefits too—such as free meals in the office, mental health days or daycare—which can have a surprisingly large impact on whether or not you accept a job without benefits.

In certain situations—for example, if you’re looking for career opportunities during a recession—benefits may be off the table. Whether the lack of benefits is related to economic conditions or another factor, it’s important to assess your own finances before deciding: Should I take a job with no benefits?

A woman interviews a man for a job.

How can accepting a job with no benefits affect me financially?

To determine the financial impact of accepting a job without benefits, it helps to have a budget that covers your current job, says Tim Jordan, certified financial coach. 

Your budget will help you crunch the numbers to see if accepting a job without benefits is a smart move. If you’re switching from a job with benefits to one without, you may find that once you budget for the additional expenses currently covered by your benefits, a higher salary wouldn’t result in a net financial gain, Jordan says.

If you accept the new job, you will be responsible for paying for your own insurance, contributing to a retirement plan and budgeting for unpaid time off. Your updated budget will make it much easier to manage those new costs.

To determine how these expenses will fit into your budget, rules of thumb aren’t precise enough. You need real numbers, says Ashley Patrick, financial coach.

These are the biggest expenses you’ll need to calculate if you accept a job without benefits:

1. You’ll pay for your own medical insurance

Health insurance coverage can vary widely depending on the plan you select. That’s why you should write down your specific health needs before getting quotes from potential insurers, Patrick says.

A young girl gets her height checked by a doctor, while her mother and brother look on.

Do you take prescription medications? Do you require specialized treatment for a condition? Your answers to these questions can influence the type of health insurance plan you choose. From plan types to coverage, you have a lot of options. You want to make sure your needs are taken care of and that you’re not paying for coverage you don’t need.

For health and dental insurance, you can search your state’s marketplace to gauge the monthly premiums for your medical needs, Jordan says.

“If you want to keep health, dental and vision insurance packaged together, contacting an insurance broker will be your best bet,” Jordan says.

Jordan recommends gathering three to five quotes. From there, you can add your monthly premium cost into your budget, as well as estimate how your new insurance coverage will impact your current medical spending on things like medication and doctor visits.

2. It’s up to you to keep your retirement savings on track

Even if you don’t have an employer-sponsored retirement plan, you should still save for retirement with an IRA (Individual Retirement Account), Jordan says.

“The opportunity cost of not investing is too high,” he says. “I strongly recommend investing in a Roth IRA or Traditional IRA so you can continue to grow your money. Start with the same percentage you’re investing now and add that to your list of monthly expenses.”

If you were investing more than the allowable annual limit for IRAs, which the government sets at between $6,500 and $7,500 per year, Jordan recommends investing the difference into low-cost index funds that track the performance of the broader market. This money won’t reap the same tax advantages, but your retirement savings will still grow over time.

If your current employer matches a percentage of your retirement savings, calculate this figure to help you better understand the financial loss, Jordan says. While this will reduce your retirement savings rate going forward, it won’t necessarily have an impact on your budget—unless you choose to replace the loss with money from your salary.

The bottom line: Whether you receive benefits through work or not, make retirement saving a priority. If you need some tips to get started, here’s how to make a retirement budget.

“I strongly recommend investing in a Roth IRA or Traditional IRA so you can continue to grow your money. Start with the same percentage you’re investing now and add that to your list of monthly expenses.”

Tim Jordan, certified financial coach

3. You won’t have paid vacation days

If you won’t be paid for time off, it’s likely you won’t take as much time off, Jordan says. But don’t be tempted to just barrel through without planning for any vacation or sick time, because that will quickly lead to burnout, he adds.

Do the math: Use an online paycheck calculator to get a very close estimate of how much your biweekly paycheck will be after taxes and withholdings for programs like Social Security and Medicare. Divide that by 10 days to calculate how much money you would make each workday at your new potential place of employment, Jordan says. Then multiply that by how many days you think you’ll take off.

That will give you the total cost of your time off. Then, to determine how much should go into a monthly budget line item to cover this, simply divide by 12. Once this number is accounted for in your budget, you’ll have a realistic idea of the impact—and you’ll be able to afford a well-deserved break should you end up accepting a job without benefits.

How can I calculate whether a job with no benefits is a good offer?

Now that you’ve determined the extra expenses you need to cover in your budget, the next step is to determine whether this is actually a good offer for you. 

Jordan recommends using a paycheck calculator to see what your monthly income would be after state and federal taxes. Then, subtract the new monthly expenses you would have (medical, retirement and vacation) to get an idea of your real take-home pay. Lastly, pull out your latest paychecks to compare this figure to your current monthly salary. Looking at these numbers side by side can help you get closer to your decision.

When should I reject a job without benefits?

After you’ve calculated what your new salary would amount to after taxes and expenses and compared it to your current salary, Jordan wants you to ask yourself a couple questions. “Does the new salary cover your new expense amount and still give you room to live and breathe? Are you coming out ahead with more cash flow or behind with less cash flow?”

If you’ll be in the same or an even better financial position with your new job with no benefits, then you may want to seriously consider accepting the offer. However, if the loss is greater than the gain, then your next step is to negotiate.

A woman in her office, working out some calculations.

What are some tips for negotiating a salary without benefits?

After receiving an offer, don’t be afraid to negotiate a higher starting salary in light of the lack of benefits, Patrick says. “It doesn’t hurt to ask, and the worst they can do is tell you no,” she says.

This can be key as you contemplate: Should I take a job with no benefits? Here are a few tips for negotiating a job offer before accepting a job without benefits:

  • Tell your potential new employer what your current job is paying, including all the benefits (your true salary), and how much money replicating those benefits will add to your monthly expenses, Jordan says. Then say, “Based on those amounts, I am going to need $X per year. Is this possible?”
  • If a salary bump is a no-go, ask for non-salary benefits like a health insurance stipend; reimbursements for day care, tuition or housing; moving expenses; flexible scheduling; some or more paid time off; or funding for professional development opportunities, Patrick says.

It will likely be more difficult to get a bump in pay or benefits after you’ve started your new job, so be sure to take Patrick’s advice before you do.

How do I financially prepare after accepting a job with no benefits?

If you choose to accept a job with no benefits, you will have to manage your own “benefits.” Patrick calls this “the awareness bump.” You are responsible for not only budgeting the money, but for setting up your necessities like health insurance and paying for them on time each month.

After establishing your own self-funded benefits, Patrick recommends doing two important things that will re-create the experience of a benefits-carrying job:

  1. Create separate accounts for key expenses. Open a separate savings or checking account dedicated to each expense, such as one account specifically for your monthly insurance premiums. Multiple savings accounts can help you manage these expenses, ensuring you always have the money.
  2. Automate payments and savings. When you have a job with benefits, you don’t have to do much of anything to fund these expenses. Mimic that experience with automatic payments, like monthly contributions to an IRA, to ensure the money gets where it needs to go.

Be sure to choose what’s right for you

Still asking yourself, “Should I take a job with no benefits?” If you take these steps, you should have a clear idea about the unique-to-you financial pros and cons of accepting a job without benefits. At the end of the day, your job isn’t just about money, Patrick says. While you want to ensure the job offer is financially sound, that’s not the only consideration.

“Just because a job doesn’t have benefits doesn’t make it a bad financial decision,” Jordan says. “If your current job is making you unhappy, or if the opportunity to fulfill what you feel is your life’s purpose comes around, the benefits may not matter as much.”

By carefully weighing your options and considering your unique situation, you’ll be able to determine whether a job with no benefits is right for you, both career-wise and money-wise. If you decide to take the plunge, here’s how to financially prepare for a job transition.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information. The information contained in this article is for informational purposes only and is not intended as a substitute for professional advice.